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Income Tax Appellate Tribunal, DELHI BENCH ‘D’ : NEW DELHI
Before: SHRI R.K. PANDA & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
Appellant, DCIT (E), Circle 1 (1), New Delhi (hereinafter referred to as the ‘Revenue’) by filing the present appeal sought to set aside the impugned order dated 19.04.2016 passed by the Commissioner of Income - tax (Appeals)-40 (Exemption), New Delhi qua the assessment year 2012-13 on the grounds inter alia that :- “1. Whether on the facts and in the circumstances of the case, can the provisions of Explanation 2(b) of the section 11(1) be ignored because the authority under Rule 17 with regard to prescribing limitation for exercising option u/s 11 (2) has not been held to be valid by the High Court for the reason that the time limit in the matter of giving notice was not within the delegated authority under Rule 17 of the I.T. Rules, 1961.
2. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in ignoring the fact that as per provisions of Section 199 of the LT. Act, TDS is a tax paid by the recipient on income on which tax has been deducted at source, therefore, allowance of TDS as application of income will tantamount to allowance.”
Briefly stated the facts necessary for adjudication of the issue at hand are : Assessee is a Trust registered under section 12AA of the Income-tax Act, 1961 (for short ‘the Act’) and is also notified u/s 80G of the Act. Assessing Officer (AO) disallowed an amount of Rs.17,55,00,000/- and added back the same to the income of the assessee by rejecting the claim of the assessee in respect of accumulation u/s 11 (1) Explanation (2) on the ground that the assessee has failed in filing the return of income and intimation/application for accumulation in accordance with section 11 (1) Explanation (2) of the Act. AO also made disallowance of Rs.45,22,539/- on account of claim of the assessee on TDS on the ground that allowance of TDS as application of income will amount to allowance of tax as application of income.
Assessee carried the matter by way of an appeal before the ld. CIT (A) who has deleted the additions by allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
At the very outset, ld. AR for the assessee contended that both the issues raised in this case have already been settled in favour of the assessee in assessee’s own case for AYs 2010-11 and 2011-12 and drew our attention towards order passed by the coordinate Bench of the Tribunal in for AY 2011-12. The factual position moot out by the ld. AR for the assessee has not been controverted by the ld. DR for the Revenue.
Bare perusal of the order passed by the coordinate Bench of the Tribunal in for AY 2011-12 order dated 22.11.2017, available on the file, goes to prove that identical issue was racked up by the Revenue by challenging the order passed by the ld. CIT (A) before the Tribunal which has been decided in favour of the assessee by returning following findings :-
“6.3. The Ld. AR submitted that under such circumstances option exercised by assessee under Explanation to section 11 (1) of the Act along with belated return filed under subsection (4) of section 139 will have to be held to have been exercised “before the expiry of the time allowed under subsection (1) or subsection (2) of section 139 as contemplated by Explanation to section 11 (1) of the Act.
We have perused the submissions advanced by both the sides in the light of the decisions relied upon by Ld. AR.
On going through the decision of Hon’ble Supreme Court in the case of Nagpur Hotel Owners Association (supra), it is necessary that the assessing authority must have information under Form 10 at the time he completes the assessment as in its absence it is not possible for the assessing officer to give benefit of such exclusion. Therefore, requirement of the Act as per Rule 17 will have to be fulfilled at any time before the assessment proceedings are completed.
In the facts of the present case and as observed from the assessment records, assessee had furnished the details under Form 10 before the assessment proceedings had been initiated. Therefore the assessing officer had the benefit of verifying claim of exemption during the pendency of assessment. 9.1. On a careful reading of section 139 of the Act, we are of the opinion that subsection (1) and (4) of section 139 have to be read together and, on such a reading, it is very clear that return is filed within the specified period under subsection (4) has to be considered as having been made within the time prescribed in subsection (1) or subsection (2) of section 139 of the Act. In other words if a return is filed within the time specified under subsection (4) of 139 of the Act and the action contemplated by Explanation to section 11 (1) of the Act exercised in writing along with such a return filed under subsection (4) of section 139, the requirements of Explanation to section 11 (1) would stand satisfied. 9.2. Accordingly we do not find any infirmity with the findings of Ld. CIT (A) and the same is up held. Accordingly the grounds raised by the revenue stand dismissed.”
7. So, following the decision rendered by the coordinate Bench of the Tribunal, we are of the considered view that the AO has merely made disallowance on account of accumulation u/s 11 (1) Explanation (2) on the ground that the assessee has failed to file return of income and intimation/application for accumulation, but when it is undisputed fact that the delay of 17 days in filing the return of income for the year under assessment was neither intentional nor deliberate and in these circumstances, provisions u/s 139(1) and (4) are to be read conjointly, meaning thereby, the return filed within specified period under section 139(4) is to be treated having been filed within prescribed period u/s 139(1) and (2) of the Act. The aforesaid order passed by the Tribunal has been upheld by Hon’ble Delhi High Court in ITA 492/2018 dated 25.04.2018. In view of the matter, we are of the considered view that the ld. CIT (A) has rightly and validly deleted the additions made by the AO on account of disallowance u/s 11(1) Explanation (2) of the Act.
8. So far as, question of deletion of amount of Rs.45,22,939/- by the ld. CIT (A) made by the AO on account of TDS is concerned, this issue has already been settled by the Tribunal in favour of the assessee in AY 2010-11 by following the decision rendered by Hon’ble jurisdictional High Court in case of DIT (E) vs. National Association of Software and Services Companies (2012) 345 ITR 362. So, in view of the matter, ld. CIT (A) has rightly and validly decided the issue by allowing the deduction of TDS as application of income. So, we find no illegality or perversity in the findings returned by the ld. CIT (A). 9. In view of what has been discussed above, we find no illegality or perversity in the impugned order passed by the ld. CIT (A), hence the appeal filed by the Revenue is hereby dismissed. Order pronounced in open court on this 4th day of October, 2019.