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Income Tax Appellate Tribunal, DELHI BENCHES: ‘F’, NEW DELHI
Before: SHRI R S SYAL & SMT. BEENA A PILLAIDr.Shyama Parsad
ORDER PER BEENA PILLAI, JUDICIAL MEMBER This is an appeal filed by the Revenue directed against the order of the Ld. Commissioner of Income Tax (Appeals)-40, New Delhi dated 09.12.2015 pertaining to the Assessment Year (A.Y.) 2011-12 on the following grounds:- “
1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in ignoring the provisions of Explanation 2(b) of ITA 1246/Del/2016 Assessment Year 2010-11 Jamnalal Bajaj Foundation section 11(1) just 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 limit in the matter of giving notice was not within the delegated authority under Rule 17 of IT Rules, 1962.
2. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing.”
2. Brief facts of the case are as under: The assessee filed its return of income along with audited report on 22/03/12. The case was selected for scrutiny and notice under section 143 (2) was issued. In response to various notices, authorised representative of assessee attended assessment proceedings from time to time. Information called for were placed on record. 2.1. Ld. AO observed that assessee is a trust registered under section 12 A (a) of the Income Tax Act, 1961 (the Act) vide order dated 22/05/76. On perusal of statement of income, Ld. AO observed that assessee had availed option of accumulation of Rs.6,50,00,000/-, being excess income over expenditure, under the provisions of, section 11 (1) Explanation 2 of Income tax Act, 1961. Assessee filed response on 24/03/14 to the query raised by Ld. AO. He also placed reliance upon various decisions of Hon’ble Supreme Court, jurisdictional High Court and Bombay High Court, to substantiate its claim. Page 2 of 8 ITA 1246/Del/2016 Assessment Year 2010-11 Jamnalal Bajaj Foundation • CIT vs. Nagpur Hotel owners Association, reported in 247 ITR 201 (SC); • Association of Corporation and Apex Societies of Handlooms vs. ADIT, reported in (2013) 351 ITR 287; • Trustees of Tulsidas Gopalji Charitable and Chaleshwar Temple Trust vs. CIT reported in 207 ITR 368. 2.2. It was contended by assessee that all the relevant information regarding the exercise of option under explanation 2 to section 11 (1) of the Act was filed along with the return of income. Assessee submitted that as it received donation aggregating to Rs.17,15,32,000/- in the last week of March 2012, it had to exercise the option under section 11 (1), explanation 2. Assessee also submitted that the decisions relied upon by him supported the arguments advanced by assessee. 2.3. Ld. AO however disallowed the claim of assessee.
3. Aggrieved by the assessment order, assessee preferred appeal before Ld. CIT (A), who allowed the claim by relying upon the decision of Hon’ble Supreme Court in the case of CIT vs. Nagpur Hotel Owners Association (supra). Ld. CIT (A) held as under: “4.5. I have considered the facts of the case, the observations and reasoning of the AO and the submissions made by the appellant as well as the relevant case laws. It is noted that the provisions of section 11 (1), explanation relating to exercise of option for Page 3 of 8 ITA 1246/Del/2016 Assessment Year 2010-11 Jamnalal Bajaj Foundation accumulation and section 11 (2) of the act relating to accumulation for specific purpose/project are identical to the provisions of explanation 2, section 11 (1 relating to exercise of option for accumulation. Hon’ble Supreme Court in its landmark judgment in the case of CIT versus Nagpur Hotel owners Association (supra) has held that the time limit prescribed under section 11 (2) of the act is only declaratory and if the requisite form number ten is furnished any time before the completion of the assessment, the same will meet with the requirements of the law and the assessee will be entitled to accumulation under section 11 (2) of the act. In my view, as has been held by various high courts, this rule of law laid down by the Hon’ble Supreme Court will also apply in respect of identical provisions of section 11 (1), explanation also.” 3.1. Ld. CIT (A) also dealt with the issue regarding whether the returns filed by assessee could be considered as a return required to be furnished under subsection (1) of section 139 of the Act. He held that though the return was filed beyond the time specified in subsection (1) of section 139 but was within the time prescribed under subsection (4) of section 139. It was held by Ld.CIT(A) that under such circumstances. It has to be considered to be a return filed within the time allowed under subsection (1) of section 139 of the Act.
Aggrieved by the order of Ld. CIT (A) the revenue is in appeal before us now. Page 4 of 8 ITA 1246/Del/2016 Assessment Year 2010-11 Jamnalal Bajaj Foundation
Ld. DR placed reliance upon the assessment order.
Ld. AR submitted that the requirement as per Form 10 was produced by assessee at the time of original assessment proceedings under section 143 (3) of the Act. He submitted that assessee has not violated any conditions prescribed under Rule 17 of the Act and placed heavy reliance upon the reasoning adopted by Hon’ble Supreme Court in the case of Nagpur Hotel Owners Association (supra). 6.1. Ld. AR submitted that the conjoint reading of section 11 and section 139 of the Act makes it clear that a charitable or religious trust whose income is exempt under section 11 or 12, is required to submit a return of income by virtue of subsection (4A) of section 139 of the Act. It was submitted that subsection (1) of section 39 provides the time within which return is required to be submitted voluntarily. Subsection (4) of section 139 however permits an assessee who has failed to furnish a return within the time allowed by subsection (1), to file the same at any time before the assessment is completed. 6.2. Ld. AR submitted that in the present facts of the case assessee had filed its return of income on 22/03/12 and thereafter a notice under section 143 (2) was issued on 11/09/12. He thus submitted ITA 1246/Del/2016 Assessment Year 2010-11 Jamnalal Bajaj Foundation that the assessee did not violate any of the provisions of section 139, as the return has been filed under subsection (4) is held to be a return filed within the time allowed under subsection (1) of section 139 in the instant case. 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. 7. We have perused the submissions advanced by both the sides in the light of the decisions relied upon by Ld. AR. 8. 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. 9. 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 Page 6 of 8 ITA 1246/Del/2016 Assessment Year 2010-11 Jamnalal Bajaj Foundation 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.
10. In the result appeal filed by the revenue stands dismissed. Order pronounced in the open court on 22nd November, 2017. Sd/- Sd/- (R.S. SYAL) (BEENA A PILLAI) Vice President Judicial Member Dated: 22nd November, 2017.