GOPALA GOWDA SHANTHAVERI MEMORIAL HOSPITAL TRUST ,MYSORE vs. INCOME TAX OFFICER, (EXEMPTIONS), 1 , MYSORE

The brief facts of the case are that the assessee trust could not upload Form 10B, necessary for claiming exemption of s. 12A of the Act on time. The facts of the case reveal that the last date for uploading Form 10B was 07.10.2022. However, the assessee had uploaded the audit report, i.e., Form 10B on 14.10.2022, which means there was a delay of 7 days in uploading Form 10B. Observing this the CPC, Bangalore (Assessing Officer) (AO) has Gopala Gowda Shanthaveri Memorial Hospital Trust not allowed the expenses claimed by the trust for carrying out the charitable activities. It is pertinent to note that assessee has also filed an application for condonation of delay before the Concerned CIT(E) and the same was rejected by the CIT(E) vide order dated 15.11.2023.

Aggrieved with the order of the AO the assessee filed appeal before the CIT(A) and contended that the AO is erred in ignoring the circular of CBDT NO. 16/2022 dated 19.07,2022, extending time limit for filing Form 10B report for assessment year 2018-19 or for any subsequent assessment year. Alternatively, the ld. Counsel for the assessee argued that the AO has grossly erred in disallowing all the expenses while processing the return of income. However, the learned CIT(A) relying on the provisions of section 12A(1)(b) and rule 17B dismissed the appeal of the assessee holding that filing of Form 10B is mandatory.

Now the assessee has further come up in appeal before us and reiterated the submissions made before the lower authorities.

After considering the rival submission we observe that CBDT vide its circular no-19/2021 has delegated the power to condone the filing of audit reports with the concerned CIT(E). In the case at hand the assessee has duly filed an application praying to condone the delay, but remain unsuccessful. Now the issues which require consideration is a) whether non filing of any of Form 10B, would vitiate the entitlement of assessee for the benefits of section 11 and 12 b) whether AO can tax the entire receipts in such a situation. In respect of first issue, we find that recently the Ahmadabad Bench of the ITAT in the case of Gagan Deep Charitable Trust in ITA Number 555/Ahd/ 2023 has held that filing of Form 10B report is a mere a procedural lapse. We are conscious that decision of Gagan Deep is rendered by SMC Bench. However the SMC Bench in turn has followed the decisions of Division Benches of the Gopala Gowda Shanthaveri Memorial Hospital Trust Ahmadabad in the cases of Hari Gyan Parcharak Trust & Shir Visha Oswal Jain Sewa ITA no 59/Ahd/2022.

We think it appropriate to quote the observation made by Ahmadabad ITAT in the case of Hari Gyan Pracharak(Supra). “7. We have carefully considered the order passed by the authorities below and the judgment passed by the Hon’ble Jurisdictional High Court in case of Association of Indian Panelboard Manufacturer (supra) on the issue involved. While passing order in favour of the assessee, the Hon’ble Jurisdictional High Court has been pleased to observe as follows: “5.6 The tribunal further committed an error in appreciating the import of Section 119 2(b) of the Act inasmuch as the application contemplated thereunder is only additional remedy for the assessee which could not be said to be compulsorily resorted to by the assessee. The circular No.7/18 dated 20.12.2018 issued under Section 119 of the Act could not be, therefore said to have taken away the appellate remedy. 5.7 The tribunal misdirected itself in yet another way when it observed that The Finance Act, 2015 with effect from 1.4.2016, that is from assessment year 2016-17 changed the legal position. There is no such change which could be said to have altered the legal position. The only change is with regard to compulsory filing of audit report in Form 10B in electronically form which is made mandatory under Rule 12 (2) of the Income Tax Rules, 1962 but there is no change with regard to the substantive law about filing of audit report as stated above.

They are accordingly decided. The appeal is allowed.”

With respect to the issue of taxing of entire receipt, due to procedural lapse it is worthy to note that the coordinate bench in the case of HMV Educational Cultural & Social Trust v. ITO – has held that only income portion net-off all the expenses is to be taxed not the entire receipt.

In view of the above, we hereby condone the delay in respect of filing the Form 10B and restored the matter to CIT(A) to allow the benefits of section 11in accordance with law.

In view of the above, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 25th June, 2024.