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Facts
The assessee, Odisha Sports Development And Promotion Company, filed appeals against the orders of the CIT(A) for Assessment Years 2015-16, 2016-17 & 2017-18. The assessee is a company promoted by the Government of Odisha, and its accounts were audited by statutory auditors. The assessment was completed at Nil income, but later revised under Section 263, denying the benefit of Section 11(2) for belated filing of returns and Form 9A.
Held
The Tribunal held that the requirement of filing Form 10/10B is merely directory and failure to furnish it before the due date is not fatal to the claim of exemption under Section 11(2), especially when the forms were available on record when the assessment and subsequent orders were passed. Following the decision of the coordinate bench, the assessee is entitled to deduction u/s.11(2).
Key Issues
Whether the denial of exemption under Section 11(2) for belated filing of return/forms is justified when the procedural requirement is considered directory and the forms were available on record.
Sections Cited
11(2), 11(5), 139(1), 139(4), 143(3), 263
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
O R D E R Per Bench : These are the appeals filed by the assessee against the separate orders of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated all dated 30.09.2024, passed in ITBA/NFAC/S/250/2024- 25/1069244316(1), ITBA/NFAC/S/250/2024-25/1069244321(1) & ITBA/NFAC/S/250/2024-25/1069244327(1) for the assessment year 2015-2016, 2016-2017 & 2017-2018.
Shri P.R.Mohanty, FCA appeared on behalf of the assessee. Shri Sanjay Kumar, ld CIT DR represented on behalf of the revenue.
It was submitted by ld AR of the assessee that the assessee is a company promoted by the Government of Odisha. It was the submission that the company’s accounts were audited by statutory auditors. It was the 2 submission that the assessee had filed his return of income on 31.03.2017 and Form 9A of the Act for the assessment year 2015-2016 on 30.03.2017. It was the submission that the same was filed belatedly as its accounts were delayed on account of statutory audit. It was the submission that the assessment came to be completed u/s.143(3) of the Act on 21.11.2017 assessing the income of the assessee at Nil. It was the submission that subsequently notice u/s.263 of the Act has been issued for revision. The assessee had replied to the notices issued u/s.263 of the Act but the ld. CIT(E) had not considered the explanation and had set aside the assessment order with a direction to revise the same. it was submitted that unfortunately the assessee has not challenged the order u/s.263 of the Act. It was the submission that subsequently a consequential order 143 r.w.s.263 came to be passed on 31.03.2023 wherein the assessee has been denied the benefit of Section 11(2) of the Act. It was the submission that the benefit of exemption u/s.11(2) has been denied on the ground that return of income has been filed along with Form 9A beyond the due date of filing of the return u/s.139(1) of the Act. It was submitted that the AO further went on to hold that the assessee has not complied with the notices issued to the assessee. Ld. AR placed before us copy of the show cause notice issued which is shown at page No.31 of the paper book which reads as under :-
To Additional/Joint/Deputy / Assistant Commissioner of Income Tax/Income-tax Officer, National Faceless Assessment Centre, Delhi 3 Sub Submission in reply to the letter No- ITBA/AST/F/143(3)(SCN)/2021-22/1041451762(1) dated 24/03/2022. Respected Sir In respect to your above cited show cause notice, we wish to following information as sought by you a) The assessee has merely furnished the P&L account stating that the fund was utilized for its objects. Compliance: The details of expenditure wise GL was never asked by AO earlier. Hence, not furnished. However, it is now attached at Annexure 1 b) The assessee has not furnished the type and nature of activities conducted over and above its regular activities, which were carried out for utilizing the said funds. Compliance The company has been incorporated for promotion of sports in the state of Odisha. It was explained to AO earlier that "The main objects of the assessee board are To undertake talent search, promotion of & participation in welfare schemes like health insurance, group insurance, life insurance, pension or superannuation schemes, and any other schemes for sports persons". The said fact has been reproduced by AO in this show cause notice. OSDPC has no other activity other than its objective of promotion of sports, c) The assessee has not furnished any documentary evidences in support of its activities, Compliance The details of expenditure wise GL was never asked by AO earlier Hence, not furnished. However, it is now attached at Annexure 1 d) The assessee has not furnished the copies of Resolutions and Extract of Minutes, passed in the Board Meeting, for conducting the activities. Compliance: The copies of Resolutions and Extract of Minutes, passed in the Board Meeting was never asked by AO earlier Hence, not furnished. We will furnish the same within a week. e) The assessee has not furnished the funds flow of the income of subsequent year and that of the amount to be accumulated. [9:22 am, 9/4/2025] Prakash Kumar Mishra: 1) Mere filling of profit and loss account does not suffice and discharge the onus of the assessee to prove the utilization of funds. Compliance The details of expenditure wise GL was never asked by AO earlier Hence, not famished. However, it is now attached at Annexure 1 we would like to humbly submit that during the financial year 2016- 17 the trust instead of spending the entire amount of the income derived from its asset decided to invest a portion of it for future expenses and thereby chose to elect the option granted u/s 11(2) of the Income Tax Act 1961. The amount referred in this regard was invested in the mode specified u/s 11(5). At the time of filing of Income Tax Return the option under explanation 2 to sub-section (1) of section 11 was exercised and consequently, form-9A (Copy Enclosed) was filed. It may be seen from the subsequent year account i.e AY 2017-18 that we have spent expenses in excess of income by Rs.3,30,06,672/- indicating that money set apart was spent in the subsequent year. (Copy of audited P& L Attached). As during the subsequent assessment year the assessee has applied a sum of Rs. 3.30,06,672/- for attaining the object of the company which is more than the amount specified in Form 9A i.e. Rs. 3,14,63,464/- the amount deemed to have been applied has been duly spent as declared In view of this we request you to kindly complete the assessment proceeding without any addition. Thanking You Yours faithfully For ODISHA SPORTS DEVELOPMENT AND PROMOTION COMPANY 4. It was the submission that the returns of the assessee have also not been considered. He further placed reliance on decision of the coordinate bench of the Tribunal in the case of Ramji Mandir Religious & Charitable Trust, passed in vide order dated 20.12.2023, wherein it has been held as follows :-
INCOME TAX OFFICER (EXEMPTION) vs. RAMJI MANDIR RELIGIOUS & CHARITABLE TRUST, Asst. yr. 2019-20 Date of Decision 20th December, 2023 Source (2024) 38 NYPTTJ 6 (Ahd) Charitable trust-Application of income-Benefit of s. 11(2) denied for non-filing of ITR and Form No. 10 within due-date prescribed under s. 139(1)- Requirement of filing Form 10/10B is merely directory in nature and failure to furnish Form 10/10B before due-date prescribed under s. 139(1) cannot be so fatal so as to deny they 5 ITA No.496-498/CTK/2024 very claim of exemption under s. 11(2) especially when Form 10/10B was available on record when the intimation was passed by CPC under s. 143(1)-Dy. CIT vs. Croygas Equipments (P) Ltd. in ITA No. 415/Ahd/2020 followed; Principal CIT vs. Wipro Ltd. (2022) 327 CTR (SC) 381 : (2022) 216 DTR (SC) 1 distinguished 5. Ld. AR also placed reliance on the decision of the coordinate bench of the Tribunal in the case of ITO Vs. Takshshila Foundation (NGO), reported in (2024) 208 ITD 677 (Ahd), wherein it has been held as follows:- INCOME TAX OFFICER vs. TAKSHSHILA FOUNDATION (NGO) ITA No. 118/Ahd/2024 & Cross Objection No. 8/Ahd/2024; Asst. yr. 2022-23 Date of Decision 2nd July, 2024 Source (2024) 38 NYPTTJ 1345 (Ahd): (2024) 208 ITD 677 (Ahd) Charitable trust-Exemption under s. 11-Rejection on account of delay in iling Form 10A/10B-Not correct-Procedural requirements like filing Form 10B should not override the substantive claim of exemption, when the assessee has substantially complied with the requirements-Requirement of filing Form 10/10B is merely directory in nature and failure to furnish Form 10/10B before due-date prescribed under s. 139(1) cannot be so fatal so as to deny they very claim of exemption under s. 11(2) In the case the delay in filing Form 10B was due to technical issues and was beyond the control of the assessee Procedural requirement should not deny the substantive claim of exemption under s. 11-In view of this the AO is directed to grant exemptionunder s. 11 claimed by the assessee- Shardaben Education Trust vs. ITO (ITA No. 2312/Ahd/2018, dt. 16th Nov., 2022), CIT vs. Xavier Kelavani Mandal (P) Ltd. (2014) 221 Taxman 43 (Guj), Zenith Processing Mills vs. CIT (1996) 134 CTR (Guj) 288: (1996) 219 ITR 721 (Guj) and CIT vs. Mayur Foundation (2005) 194 CTR (Guj) 197: (2005) 274 ITR 562 (Guj) followed.
It was the submission that as the assessee has filed its return u/s.139(4) and also filed Form 9A and the same was available with the AO when the assessment was being framed, the assessee is therefore entitled to exemption u/s.11(2) of the Act. It was the submission that even Form 10 was filed on 31.03.2009 through the same was not actually required to be filed and he may be assuming but not considering the Form