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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
Assessment Year: 2019-20 ACIT, Exemptions Circle, Vs. Alhira Education and Aurangabad. Welfare Society, Iqra School Society Premises, New S.T. Colony, Kat-Kat Gate, Aurangabad- 431001. PAN : AABTA7063Q Appellant Respondent C.O. No.27/PUN/2024 (Arising out of
िनधा�रण वष� / Assessment Year: 2019-20 Alhira Education and Welfare Vs. ACIT, Exemptions Circle, Society, Aurangabad. Iqra School Society Premises, New S.T. Colony, Kat-Kat Gate, Aurangabad- 431001. PAN : AABTA7063Q Appellant Respondent Revenue by Shri Rakesh Jha : Assessee by : Shri Suhas P. Bora Date of hearing : 22.07.2024 Date of pronouncement : 07.10.2024 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the Revenue is directed against the order dated 09.01.2024 passed by LD Addl./JCIT(A)-5, Chennai for the C.O. No.27/PUN/2024 assessment year 2019-20. The assessee is also in cross objection bearing Cross Objection No.27/PUN/2024.
The facts of the case, in brief, are that the assessee is an educational society receiving more than 50% grant from the Government. The return of income was furnished on 23.10.2019 declaring Rs. Nil income after claiming exemption u/s 11 of the IT Act. The return was processed by CPC on 09.06.2020, wherein, exemption of Rs.8,20,35,646/- claimed u/s 11 of the IT Act was denied. The CPC has denied exemption on the ground that the details of registration u/s 12A were not provided.
Being aggrieved with the above assessment order, the assessee preferred first appeal before the ld. Addl./JCIT(A)-5, Chennai. After considering the reply of the assessee, the ld. Addl./JCIT(A)-5, Chennai accepted the alternate plea of the assessee & partly allowed the appeal by observing as under :- “4.1 The appellant is a society registered u/s.12AA and is eligible for exemption u/s.11 provided the conditions laid down u/s.12 are complied with. The Trust is running an educational institution and for the AY 2019- 20, it had returned an income of Rs.Nil after claim of exemption u/s.11 through the ITR filed on 23/10/2019. The CPC processed the ITR u/s.143(1) and arrived at a total income of Rs.8,20,35,646/-. Aggrieved by the addition to total income, the appellant made its grounds of appeal and statement of facts. Amongst other grounds, it had raised an alternate ground that even in case of denial of exemption u/s.11, since the appellant is running an C.O. No.27/PUN/2024 educational institution, which is funded in excess of 50% of the gross receipts by way of Government grants, the claim of exemption u/s.10(23C)(iiiab) has to be granted. 4.2 The facts of the case were carefully considered on in order to ascertain the correctness of the claim of exemption u/s.11 and also the alternate claim of exemption u/s.10(23C)(iiiab), a notice u/s.250 was issued on 08/12/2023 which was responded on 16/12/2023. The evidence brought on record in the form of financials, ITR etc., were carefully examined. 4.3 The appellant had filed the ITR on 23/10/2019 which is beyond the time limit specified u/s.139(1) which for the year under consideration falls on 30/09/2019. Further, the proof of having filed the audit report in form no.10B before the time limit u/s.139(1) was not established. Therefore, the appellant has grossly erred in failing to comply to the conditions laid down u/s.12A(1)(b) & 12A(1)(ba). Hence, the disentitlement of claim of exemption u/s.11 that was undertaken by the CPC is upheld and thus the corresponding grounds of the appellant is dismissed. 4.4 Therefore, it remains to be examined as to whether the appellant is eligible for the alternate claim of exemption u/s.10(23C)(iiiab). On verification of the I & E a/c and the entry in Col. No.9 of Schedule AI: Aggregate of Income of the ITR, it is seen that the appellant has reported the receipt of government grants of Rs.4.26 crores comprised in the total gross receipt of Rs.8.20 crores. When the Government grants exceeds the limit as prescribed u/r.2BBB, the appellant is found to be eligible for the alternate claim of exemption u/s.10(23C)(iiiad). 4.5 The prohibition u/s.11(7) to reject alternate claims of exemption u/s.10 does not apply to clause (1) & clause (23C) and therefore the is impediment under the statute to entertain this alternate claim of exemption u/s.10(23C)(iiiad) when the conditions laid down under that section are fully complied with. Even the bar introduced through the first proviso to S.11(7) introduced by Finance Act, 2020 is w.e.f 01/06/2020 applies to Institutions approved u/s.10(23C) by a competent authority only, being 10(23C)(iv), 10(23C)(v), 10(23C)(vi) & 10(23C)(via) and does not therefore apply to Institutions covered under 10(23C)(iiiab), 10(23C)(iiiac), 10(23C)(iiiad) & 10(23C)(iiiae) as these 4 types of institutions are not approved, but are automatically eligible by virtue of their activity. Therefore, under the circumstances, the JAO is directed to delete the adjustment of Rs.8,20,35,646/- and grant relief to the appellant. Therefore, the alternate ground of the appellant is allowed.
C.O. No.27/PUN/2024 5. Conclusion: In the result, the appeal of the Appellant is PARTLY ALLOWED.” 4. It is this order against which the Revenue is in appeal before the Tribunal and the assessee has also filed cross objection bearing C.O. No.27/PUN/2024. C.O. No.27/PUN/2024 – By Assessee : 5. First, we shall take up the cross objection of the assessee, wherein, the assessee has raised the following grounds of cross objection :- “1. The Ld. CIT(A) erred in holding that the appellant trust had filed the Income Tax Return (ITR) on 23.10.2019, which was beyond the time limit specified under section 139(1). The due date for filing the ITR for the assessment year 2019-20 was extended to 31.10.2019, and the appellant filed the ITR within this extended deadline. Thus, the ITR should be considered as filed within the due date, and the CIT(A) has erred in concluding otherwise.
2. The CIT(A) erred in holding that the appellant failed to establish proof of having filed the audit report in Form No. 10B before the time limit under section 139(1). The appellant had filed the audit report within the stipulated time, and sufficient evidence was provided. The CIT(A)'s finding contradicts the facts and should be set aside.
3. The CIT(A) erred in upholding the denial of exemption under section 11 by the CPC on the grounds of non-compliance with the conditions laid down under sections 12A(1)(b) and 12A(1)(ba). The appellant has fully complied with these conditions, and the exemption under section 11 should not have been denied. The corresponding grounds of the appellant should be allowed, and the denial of exemption should be reversed.
4. The appellant contends that the CPC's intimation under section 143(1) dated 09.06.2020, which determined the total income at Rs.8,20,35,646 and raised a demand of Rs. 3,56,30,312, is incorrect C.O. No.27/PUN/2024 and bad in law. The appellant's income is fully exempt under section 10(23C)(iiiab) and section 11, and the intimation by CPC should be quashed.
The CIT(A) erred in overlooking that the Assessing Officer (AO) had incorrectly mentioned that the appellant did not provide details of the registration under section 12A. The appellant is registered under section 12A with registration number 90 10 2003 04 dated 30.03.2004, and this was clearly mentioned in the return under the heading of registration under section 12A/12AA. The AO's conclusion is factually incorrect and should be rectified.”
The ld. AR submitted before us that though the appeal of the assessee has been allowed on alternative grounds but it should have been allowed on the main ground. In support of its contention, ld. AR submitted before us that CBDT has extended the last date for filing of income tax return and various reports of audit pertaining to assessment year 2019-20 which is under consideration. In this regard, an order u/s 119 was referred which was issued by CBDT on 27.09.2019. Vide this order, the last date of filing of income tax return and various reports of audit was extended from 30.09.2019 to 31.10.2019. In the light of this order, ld. AR stated before us that the ld. Addl./JCIT(A)-5, Chennai was not correct in holding that the appellant had filed the ITR and audit report in Form 10B on 23.10.2019 which is beyond time limit specified u/s 139(1) of the IT Act which for the assessment year C.O. No.27/PUN/2024 2019-20 falls on 30.09.2019. It was submitted by ld. AR that the income tax return and audit report in Form 10B both were filed by the assessee within extended time period allowed by the CBDT. It was submitted that the assessee society is registered u/s 12AA and is eligible for exemption u/s 11 of the IT Act. It has also complied the conditions laid down u/s 12 of the IT Act and the assessee, being an educational institution, had returned an income of Rs.Nil after claiming exemption u/s 11 of the IT Act. The assessee has already mentioned the details of grant of registration u/s 12 of the IT Act in the return of income. The certificate in this regard was also produced before the bench. Ld. AR also submitted that an alternative ground regarding the deduction u/s 10(23C)(iiiab) was also made before the ld. Addl./JCIT(A)-5, Chennai and it was prayed before the ld. Addl./JCIT(A)-5, Chennai that both the exemptions are available to the assessee. But, the ld. Addl./JCIT(A)-5, Chennai by relying on wrong fact of belated filing of ITR and audit report, disallowed the exemption claimed u/s 11 of the IT Act & instead allowed the alternative claim of the assessee. It was accordingly submitted that the ld. Addl./JCIT(A)- 5, Chennai erred in dismissing the main ground of appeal, on the C.O. No.27/PUN/2024 basis of belated filing of ITR & audit report. Whereas the same was not the case since ITR and audit report was filed in time. In the light of above facts, it was prayed before us to allow the exemption as claimed by the assessee u/s 11 of the IT Act.
The ld. DR supported the order passed by the CPC and opposed the order passed by the ld. Addl./JCIT(A)-5, Chennai and further requested to cancel the order passed by the ld. Addl./JCIT(A)-5, Chennai on the basis of belated filing of audit report and income tax return.
We have heard the ld. Counsels from both the sides and perused the material available on record. We find that in para 4.3 of its order, the ld. Addl./JCIT(A)-5, Chennai has mentioned that filing of return and audit report within the time limit prescribed u/s 139(1) was not established. Therefore, the condition mentioned u/s 12A(1)(b) and section 12A(1)(ba) was not complied by the assessee which results in disentitlement of claim of exemption u/s 11 of the IT Act and, therefore, the exemption was rightly denied by CPC. We find that in the light of CBDT order dated 27.09.2019, the above observation of the ld. Addl./JCIT(A)-5, Chennai is not correct since the last date for filing of the return and C.O. No.27/PUN/2024 audit report for asstt. year 2019-20, which was 30.09.2019, was extended up to 30.10.2019 & admittedly the same were filed on 23.10.2019, therefore, the return of income as well as audit report in Form 10B was filed within the prescribed time allowed by the CBDT and, therefore, the delay which was not there, cannot be the basis of denial of exemption u/s 11 as mentioned by the ld. Addl./JCIT(A)-5, Chennai. The acknowledgement of income tax return and Form 10B audit report dated 23.10.2019 was produced before us. We therefore find force in the argument of the ld. Counsel for the assessee that the ld. Addl./JCIT(A)-5, Chennai has erred in holding that the return of income and audit report was filed belatedly. Since the income tax return and audit report in Form 10B was filed within the prescribed time, ld. Addl./JCIT(A)-5, Chennai ought not to have disallowed this ground of appeal. We therefore deem it fit to allow the cross objection of the assessee and direct the JAO to delete the adjustment of Rs.8,20,35,646/- and grant relief to the appellant in the light of above observation. Hence, the grounds of cross objection filed by the assessee are allowed.
C.O. No.27/PUN/2024 9. In the result, the Cross Objection filed by the assessee in C.O. No.27/PUN/2024 stands allowed.
– By Revenue : 10. Now, we shall take up the Revenue’s appeal for adjudication. The ld. DR submitted before us that neither exemption u/s 11 was allowable to the assessee nor the exemption u/s 10(23C)(iiiab) can be allowed to the assessee in the light of the fact that the return of income as well as audit report in Form 10B was filed belatedly. In this regard, ld. DR also relied upon the judgement passed by the Hon’ble High Court of Bombay in the case of Little Angels Education Society vs. UOI & Others, wherein, the Hon’ble High Court has denied any relief to the assessee as regards the plea to condone the delay.
As we have already allowed the cross objection filed by the assessee, wherein, it was found that the return of income as well as audit report in Form 10B was filed within the extended time limit prescribed by CBDT, we therefore do not find any merit in the appeal of the Revenue and the same is dismissed.