ACIT., (EXEMPTIONS), CIRCLE-1(1), HYDERABAD vs. THE YACHT CLUB OF HYDERABAD, HYDERABAD

Assessee is a Club with the objectives of fostering, encouraging and training the people in the sport of yachting and allied water sports. Its case is that while processing the return of income filed by the assessee under section 143(1) of the Income Tax Act, 1961 (for short “the Act”), the CPC denied the application of income claimed under section 11 of the Act, without offering any reason or following the procedure prescribed under proviso to section 143(i)(a) of the Act.

Assessee preferred appeal before the learned CIT(A). Learned CIT(A) by way of impugned order held that so long as the learned Assessing Officer does not dispute the objects of the society and the registration of the society under section 12A is intact, denial of exemption under section 11 is not justified without assigning any reasons, that too when the assessee filed the return of income under section 139(1) of the Act for the assessment year 2020-21 on 12/02/2021, namely, before the due date for filing the return of income for the assessment year 2020-21 as extended by the CBDT by press release dated 30/04/2021 extending the same till 31/05/2021, in view of the prevailing Covid pandemic, is bad and on that ground directed the learned Assessing Officer to allow application of income towards the objects of assessee within the provisions of section 11 of the Act.

Hence the aggrieved Revenue filed this appeal contending that the time limit to file the audit report is one month prior to the due date for furnishing the return of income for the assessment year 2020-21 under section 139(1) of the Act and though the due date for filing the return of income was extended till 31/05/2021, the due date for filing the audit report remains 15/01/2021 only. On this ground, Revenue seeks the set aside of the impugned order and restoration of the denial of the application of income claimed under section 11 of the Act. 5. Per contra, argument of the Learned AR is that the requirement of filing Form 10/10B is merely directory in nature and failure to furnish the same one month before the due date prescribed in section 139(1) of the Act cannot be so fatal as to deny the claim of exemption under section 11 (2) of the Act, especially when such Form was available on record when the intimation was processed by CPC under section 143(1) of the Act. She placed reliance on various decisions including the one in the case of ITO vs. Ramji mandir religious and charitable Trust (2024) 158 Taxmann.com 114 (Ahmedabad-Trib) in support of her contention. Apart from this, assessee also produced a copy of the order dated 24/08/2023 passed by the learned CIT(E) condoning the delay in filing Form 10B under section 119(2)(b) of the Act, and it forms part of record.

We have gone through the record in the light of the submissions made on either side. It is not in dispute that the learned CIT(E) condoned the delay in filing Form 10B under section 119(2)(b) of the Act by order dated 24/08/2023. In these circumstances, we set aside the impugned order and restore the issue to the file of the Learned Assessing Officer with a direction to consider Form 10B and to pass appropriate orders.

In the result, appeal of the assessee is allowed. Order pronounced in the open court on this the 29th August, 2024.