2022 (2) TMI 1310 - AT - Income Tax

Tribunal orders deduction for charitable trust under Income Tax Act section 11, emphasizes procedural compliance

Trinity Education Trust Versus The Income Tax Officer, Exemption Ward, Surat

Trinity Education Trust Versus The Income Tax Officer, Exemption Ward, Surat - TMI Issues involved:1. Rejection of rectification application under section 154 of the Act.2. Disallowance of deduction towards application of income claimed by the assessee.3. Compliance with procedural requirements for claiming exemption under section 11 of the Income Tax Act.Issue 1: Rejection of rectification application under section 154 of the Act:The assessee, a charitable trust, filed a rectification application under section 154 of the Act after the Assessing Officer/CPC disallowed a deduction under section 11 due to the non-furnishing of the audit report in Form 10B. The application was rejected by the Assessing Officer/CPC on the grounds of no prima facie error in the original order. The assessee contended that the audit report was filed electronically before the rectification request, but the rejection was upheld by the ld. CIT(A). The Tribunal noted that the audit report was uploaded before the rectification application, fulfilling the procedural requirement. Citing relevant case laws, the Tribunal directed the Assessing Officer/CPC to verify the claim and grant the necessary deduction under section 11.Issue 2: Disallowance of deduction towards application of income claimed by the assessee:The Assessing Officer/CPC disallowed the exemption under section 11 as the audit report in Form 10B was not furnished by the assessee. The ld. CIT(A) upheld this decision, stating that the required audit report was not filed, justifying the rejection of the rectification application. However, the Tribunal, considering the submissions and legal precedents, found that the assessee had complied with the procedural requirement by uploading the audit report before the rectification application. Therefore, the Tribunal allowed the appeal for statistical purposes, directing the Assessing Officer/CPC to grant the necessary deduction under section 11 of the Income Tax Act.Issue 3: Compliance with procedural requirements for claiming exemption under section 11 of the Income Tax Act:The Tribunal emphasized that the assessee, a charitable trust, had uploaded the audit report in Form 10B before filing the rectification application, fulfilling the procedural requirement for claiming exemption under section 11. By referring to relevant case laws, the Tribunal concluded that the assessee had shown sufficient cause for the delayed filing of the audit report and directed the Assessing Officer/CPC to verify and allow the deduction under section 11. The Tribunal's decision was based on the compliance with procedural requirements and legal precedents, ensuring that the assessee's claim for exemption was considered appropriately.