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Facts
The assessee, a society running a working women's hostel, filed its return declaring Nil income. It claimed application of income for charitable purposes and set apart accumulated income. The CPC disallowed the exemption claimed under section 10(23C) due to belated filing of Form 10B.
Held
The Tribunal held that the belated filing of Form 10B should not necessarily lead to denial of benefits, especially when the revenue expenditure claim is significant. The matter was restored to the AO to verify the revenue expenditure and tax only the net income.
Key Issues
Whether the disallowance of exemption under section 10(23C) due to belated filing of Form 10B is justified, and if the assessee is entitled to deduction of revenue expenditure.
Sections Cited
10AC, 10(23C), 143(1), 154, 11, 12
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2022-23 All India Womens Conference v. The Income Tax Officer Kanpur Ward 1(1)(1) 16/4, Mahila Park, Civil Lines Civil Lines Sarsaiya Ghat, Kanpur Kanpur TAN/PAN:AACTA1200E (Appellant) (Respondent) Appellant by: Shri Swaran Singh, C.A. Respondent by: Shri Sanjeev Krishna Sharma, D.R. O R D E R This appeal has been preferred by the Assessee against the order dated 25.06.2024, passed by the Addl/JCIT(A)-2, Kolkata for Assessment Year 2022-23.
2.0 The brief facts of the case are that the Assessee is a Society registered under the Societies Registration Act XXI of 1860 and running Working Women’s Hostel at subsidized rate under the name and style of ‘ALL INDIA WOMENS CONFERENCE’, Kanpur. The Assessee-Society is also registered under section 10AC of the Income Tax Act, 1961 (hereinafter called “the Act’). During the year under consideration, the Assessee-Society e-filed its return of income, declaring Nil Income. The Assessee-Society during the year under consideration had shown gross receipts of Rs.10,52,829/- and claimed application of income for charitable or religious purposes at Rs.10,19,724/- and the amount accumulated or set apart at Rs.32,755/-. The CPC, Bangalore passed Intimation Order under section 143(1) of the Act on 28.03.2023, disallowing the exemption claimed by the assessee under section 10(23C) of the Act, amounting to Rs.10,52,829/- and added the same to the total income of the Assessee-Society for the reason that Form No.10B was filed belatedly.
2.1 Aggrieved, the assessee preferred an appeal before the Ld. First Appellate Authority, who dismissed the appeal of the assessee on the ground that Audit Report in Form 10B had been filed after the due date for filing Return of Income.
2.2 Now, the assessee has approached this Tribunal challenging the impugned order of the Ld. First Appellate Authority by raising the following grounds of appeal:
1. That the Ld. Addl./Joint Commissioner of Income Tax (Appeals)-4, Kolkata has erred in law and on facts in sustaining the Disallowance of Rs.10,52,829/- arbitrarily made by the Deputy Director of Income Tax, CPC Bengaluru in the income of the appellant without appreciating and considering the facts of the case correctly, therefore the addition made by the Ld. A.O. is unsustainable in law and liable to be deleted.
2. That the Ld. Addl./Joint Commissioner of Income Tax (Appeals)-4, Kolkata has erred in law and on facts in sustaining the Intimation passed under section 143(1) of the Income Tax Act, 1961 ignoring the facts that the same is without jurisdiction and Deputy Director of Income Tax, CPC Bengaluru has exceeded his powers under section 143(1) of the Income Tax Act, 1961.
3. That the Ld. Addl./Joint Commissioner of Income Tax (Appeals)-4, Kolkata has erred in law and on facts in sustaining the Impugned Intimation passed by the Deputy Director of the Income Tax, CPC Bengaluru under section 143(1) of the Income Tax Act, 1961 which is without Lawful jurisdiction, therefore the impugned Intimation passed under section 143(1) of the Income Tax Act, 1961 is void ab-initio and liable to be quashed.
That the Ld. Addl /Joint Commissioner of Income Tax (Appeals)-4, Kolkata has erred in law and on facts in sustaining the determining the total income at Rs.10,52,829/- being gross receipts of the appellant, no deduction of revenue expenditure was claimed as per audited Profit & Loss Account has been given, therefore the impugned Intimation passed under section 143(1) of the Income Tax act, 1961 is deserves to be set aside and appropriate relief may be granted to the appellant.
That the Ld. Addl./Joint Commissioner of Income Tax (Appeals)-4, Kolkata has erred in law and on facts in sustaining the arbitrarily disallowing an amount of Rs.10,52,829/- towards exemption claimed under section 10(23C) of the Income Tax Act, 1961 therefore deduction under section 10(23C) of the Income Tax Act, 1961 is liable to be allowed.
6. That the Ld. Addl./Joint Commissioner of Income Tax (Appeals)-4, Kolkata has erred in law and on facts ignoring the facts that impugned Intimation under section 143(1) has been passed without following the laid down procedure as per provisions of Income Tax Act, 1961 and CBDT Circular/Notification/Instruction, therefore the impugned order is unsustainable in law and liable to be quashed.
7. That the Ld. Addl./Joint Commissioner of Income Tax (Appeals)-4, Kolkata has erred in law and on facts in holding that the appellant is not entitled to exemption under section 10(23C) of the Income Tax Act, 1961, therefore no income is exigible to tax, therefore the disallowance made is liable to be deleted.
8. That the Ld. Addl./Joint Commissioner of Income Tax (Appeals)-4, Kolkata has erred in law and on facts sustaining the Disallowance of Rs.10,52,829/- made by the Ld. A.O. because such disallowance is contrary to the principles of natural justice and equity and deserves to be deleted.
That any other relief or reliefs as your honour may deem fit in the facts and circumstances of the case, be granted.
Your humble appellant craves leave to add, amend or withdraw of any Grounds of Appeal on/or before hearing of appeal. 3.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that admittedly Form 10B was filed belatedly and, therefore, the CPC, Bangalore, while processing the return of income under section 143(1) of the Act, did not consider the revenue expenditure incurred by the assessee to the tune of Rs.10,19,724/- and assessed the income of the assessee at Rs.10,52,829/-, i.e., at the gross receipts, without allowing any deduction therefrom. It was further submitted that even after passing of intimation under section 143(1) of the Act, the assessee had obtained Form 10B on 28.03.2023 and had filed application under section 154 of the Act on 30.03.2023 and thereafter had also filed appeal against intimation under section 143(1) of the Act before the Ld. First Appellate Authority, which had come to be dismissed without granting any relief to the assessee.
3.1 The Ld. A.R. further submitted that the gross receipts of the assessee were less than Rs.1 crore and, therefore, the benefit of section 10(23C) of the Act was also available to the assessee automatically. However, the same also was not accepted by the lower authorities. It was prayed that the assessee be atleast allowed relief in terms of grant of deduction of revenue expenditure which was to the tune of Rs.10,19,724/-. The Ld. A.R. placed reliance on the order of ITAT Hyderabad Bench in the case of Shri Ramalingeswara Swamy Temple, Hyderabad vs. ADIT, Exemption Ward 1(4), Hyderabad in & 492/Hyd/2023, wherein, vide order dated 12.01.2024, under identical circumstances, the appeals of the assessee were restored to the file of the AO with a direction to tax only the net income after giving benefit of deduction of expenditure claimed by the assessee in the form of regular expenditure.
4.0 Per contra, the Ld. Sr. D.R. supported the order of the Ld. First Appellate Authority and submitted that the assessee had filed the Audit Report belatedly and, therefore, the benefit of accumulation or the deduction in terms of income having been applied for charitable or religious purposes had been rightly denied. It was the prayer of the Ld. Sr. D.R. that the appeal of the assessee be dismissed.
5.0 I have heard rival submissions and have also perused the material on record. The fact that the assessee had filed Form 10B after the processing of return under section 143(1) of the Act is not disputed. However, the assessee did file Form 10B after processing of return is also not in dispute. Various Benches of the Tribunal have held that even if Form 10B is filed during the first appellate proceedings or during the course of reassessment proceedings, the benefit of sections 11 and 12 of the Act cannot be denied to the assessee. However, since the request of the Ld. A.R. is that the assessee should be allowed the benefit of deduction of revenue expenditure and the Ld. A.R. has not made any specific argument for being allowed the benefit of sections 11 and 12 of the Act, and looking into the facts and circumstances of the case, I deem it appropriate to direct the AO to verify the assessee’s claim of revenue expenditure and tax only the net income after giving benefit of deduction of expenditure claimed by the assessee in the Income and Expenditure account. The order of ITAT Hyderabad Bench in the case of Shri Ramalingeswara Swamy Temple, Hyderabad vs. ADIT Exemption (supra) is respectfully followed. Therefore, the order of the Ld. First Appellate Authority is set aside and the file is restored to the Office of the AO to examine the claim of expenditure claimed by the assessee against gross receipts for the captioned assessment year.
6.0 In the final result, the appeal of the assessee stands allowed with the above mentioned directions and is treated as partly allowed for statistical purposes.
Order pronounced in the open Court on 04/07/2025.