SOCIETY OF INDIAN AUTOMOBILE MANUFACTURES SUPERNNUATION SCHEME TRUST,NEW DELHI vs. DCIT CPC, BANGLORE

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ITA 1871/DEL/2019Status: DisposedITAT Delhi09 August 2023AY 2014-155 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee is indeed a superannuation trust recognized under the relevant rules and that the exemption claim under Section 10(25)(iii) was valid. The error was in the filing of the return form, not in the entitlement to exemption.

What were the facts?

The assessee, a superannuation trust, claimed exemption under Section 10(25)(iii) of the Income Tax Act. However, it mistakenly filed its return in ITR-7, mentioning Section 11 and not providing details of application for charitable purposes. The CPC processed the return under Section 143(1), denying the exemption based on the information in the return.

What were the issues?

Whether the denial of exemption under Section 10(25)(iii) was justified due to the filing of the return in the wrong form and incorrect mention of Section 11. Whether the CPC's adjustment under Section 143(1) was appropriate given the facts.

Which sections of the Income-tax Act were involved?

Section 10(25)(iii),Section 11,Section 143(1),Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI

Before: Sh. C. M. GargDr. B. R. R. Kumar

Hearing: 27.06.2023Pronounced: 09.08.2023

Heard together (2 matters)

ITA No. 1871/Del/2019
ITA No. 1870/Del/2019

Read from the judgment's own cause title. This page is filed under one of them.

ORDER

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeals have been filed by assessee against the orders of ld. CIT(A)-40, New Delhi dated 31.12.2018.

2.

Since, the issue involved in both the appeals are similar, they were heard together and being adjudicated by a common order.

3.

In following grounds have been raised by the assessee:

“1. That the Commissioner of Income tax (Appeals) ['CIT(A)'] erred on facts and in law in upholding denial of exemption of Rs.20,39,524 made by DCIT, CPC Bangalore in order passed under section 143(1) of the Income Tax Act, 1961 (the Act).

2 & 1871/Del/2019 Society of Indian Automobile Manufactures Superannuation Scheme Trust 1.1 That the CIT(A) erred on facts and in law in upholding denial of exemption on the ground that exemption was allegedly claimed by the appellant under section 11 and in absence of any details of application for charitable purposes, exemption was rightly disallowed under section 143(1)(a) of the Act. 1.2 That the CIT(A) erred on facts and in law in not appreciating that only wrong return form (TTR-7) was erroneously filed by the appellant but the exemption was rightly claimed under section 10(25)(iii) of the Act. 1.3 That on the facts and circumstances of the case, the CIT(A) erred in not appreciating that the contribution received by the appellant trust was exempt under section 10(25)(i) read with Rule 2 of Part B of Fourth Schedule of the Act, as claimed by the appellant.

2. That the CIT(A) erred on facts and in law in not appreciating that the aforesaid adjustment made by the assessing officer/CPC with respect to aforesaid exempt income(s) is without jurisdiction, bad in law and beyond the scope of adjustments specified under section 143(1) of the Act.

3. Without prejudice, that on the facts and circumstances of the case, no income was assessable in the hands of the appellant trust as the appellant is merely a pass-through entity established for holding contribution of employer (Society of Indian Automobile Manufacturers) towards the social security schemes of its employees.

4. That the CIT(A) erred on facts and in law in not deleting interest charged under section 234B/234C of the Act.”

4.

Brief facts of the case are that the return of income was filed on 20.02.2015. The assessee is a superannuation trust which is recognized under Rule 2 of Part B of the Fourth Schedule to the Income Tax Act, 1961 vide order dated 3 & 1871/Del/2019 Society of Indian Automobile Manufactures Superannuation Scheme Trust 07.06.1999. As per the claim of the assessee, the income is exempt u/s 10(25)(iii) which exempts any income received by the trustees on behalf of and approved superannuation fund. The return of income was filed in ITR-7 and in column pertaining to section under which exemption claimed, Section 11 was mentioned. It was also mentioned in the relevant columns that the institution is registered under section 12A and gross income was shown at Rs. 17,75,437/- and no amount was shown to have been applied for charitable purposes in India either on revenue account or capital account in the relevant columns in the return of income. In column 16 of the return under part B-TI, the amount of gross receipts was shown to be exempt under section 10 under clauses other than the ones mentioned that columns 14 and 15.

5.

The CPC processed the return u/s 143(1) and vide intimation dated 02.02.2016, total income was computed at Rs.17,75,437/- which was also the amount of income returned. An application under section 154 was filed with the CPC which was rejected by noting as under: "Please refer to the rectification request filed by you for the Assessment Year: 2014-15 in respect of above mentioned order and received at a Centralized Processing Centre on 03/11/2016. On Verification, it is seen that there is no prima facie error in the order which you have sought to be rectified. Therefore, your application for Rectification under Sec. 154 is rejected, for the following reasons (if any)"

4 & 1871/Del/2019 Society of Indian Automobile Manufactures Superannuation Scheme Trust Your rectification request could not be considered at CPC for technical reasons. The rectification rights in your case are being transferred to your assessing officer. Kindly contact your assessing officer for the same.”

6.

Aggrieved by the rejection of the rectification request as above, this appeal has been filed before the ld. CIT(A), who rejected the application of the assessee on the grounds that the assessee had submitted that its income is exempt u/s 10(25)(iii) but the said exemption has not been claimed and exemption has been claimed u/s 11 and information given in the columns pertaining to income from other sources and voluntary contributions. As noted above processing u/s 143(1)(a) is done on the basis of information available in the return of income and adjustments have to be made in the said processing on account of incorrect claim, if such incorrect claim is apparent from any information in the return. Since income in the case of a trust which is claiming exemption u/s 11 has to be computed in accordance with the various provisions of Sections 11, 12 and 13, 85% of the receipts have to be applied for charitable purposes which has not been done in the case under consideration since no amount has been claimed as applied for charitable and religious purposes in the relevant columns in the return of income.

7.

We find that the CPC processed the return solely and truly by the details filed by the assessee themselves. However, before the ld. CIT(A), it was submitted that instead of Form ITR-5, the Form ITR-7 was used.

8.

The fact that the assessee is not a charitable trust but a superannuation trust recognized under Rule 2 of Part-B of the 5 ITA No. 1870 & 1871/Del/2019 Society of Indian Automobile Manufactures Superannuation Scheme Trust fourth schedule of the Income Tax eligible to claim exemption u/s 10(25)(iii) is not in dispute. We have also gone through the copy of the trust deed dated 07.06.1999 and also the copy of the order dated 21.09.1999 of the DIT(E), New Delhi according the approval to the superannuation scheme. The revised return has been filed within the due date allowed. Hence, we direct the Jurisdictional Assessing Officer (JAO) to accord the benefit due for the assessee by passing the rectification order u/s 154.

9.

In the result, both the appeals of the assessee are allowed for statistical purpose. Order Pronounced in the Open Court on 09/08/2023.

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