Belated return filing doesn't bar section 11 exemption if Form 10B submitted timely

The ITAT Surat dismissed the Revenue's appeal regarding exemption under section 11. The assessee filed its return after the due date under section 139(1) but submitted Form 10B within the prescribed time for audit reports. The ITAT upheld the CIT(A)'s decision allowing the deduction, relying on the Bombay HC ruling in Tulsidas Gopalji Charitable Trust that returns filed under section 139(4) are considered timely filed. CBDT circulars clarified that section 139 includes belated returns for section 11 benefits, and demands raised on this issue should be rectified.

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Issues:
The issues involved in this case are:
1. Allowance of deduction u/s 11(2) of the Income Tax Act.
2. Eligibility for exemption u/s 11 of the Act despite filing return belatedly u/s 139(4).
3. Interpretation of Circular No.173/193/2019-ITA-1 by the CBDT.

Issue 1: Allowance of deduction u/s 11(2) of the Income Tax Act:
The Revenue appealed against the order of the National Faceless Appeal Centre, Delhi regarding the deduction of Rs. 46,00,000 under section 11(2) of the Act. The appeal was based on the grounds that the deduction was denied due to the late filing of the return of income by the assessee-trust. The Assessing Officer disallowed the deduction under section 11, stating that it is mandatory to file the return of income within the stipulated period under Section 139. However, the assessee argued that the deduction was legitimate as Rs. 46.00 lakh had been accumulated and set apart for the specified purpose u/s 11(2) of the Act. The assessee relied on Circular No.173/193/2019-ITA-1 by the CBDT, which clarified the conditions for availing the benefit of Section 11.

Issue 2: Eligibility for exemption u/s 11 despite filing return belatedly u/s 139(4):
The assessee, a trust registered under section 12AA, filed its return of income for the assessment year 2018-19 after the due date under section 139(1) of the Act. The Assessing Officer raised a demand of Rs. 17,71,120/- and denied the deduction under section 11. The assessee contended that the return was filed belatedly within the extended time allowed u/s 139(4) and that Rs. 46.00 lakh was accumulated for the specified purpose u/s 11(2) of the Act. The assessee's case was supported by Circular No.173/193/2019-ITA-I by the CBDT, which clarified the conditions for availing the exemption under section 11.

Issue 3: Interpretation of Circular No.173/193/2019-ITA-1 by the CBDT:
The NFAC/Ld.CIT(A) considered the submissions of the assessee and the CBDT's Circular No.173/193/2019-ITA-I dated 23.04.2019. The Circular clarified that for availing the benefit of Section 11, a trust registered under section 12A must file its return of income within the time allowed under section 139. The NFAC/Ld.CIT(A) held that the assessee's case was covered by the Circular, and therefore, allowed the appeal. The Revenue challenged this decision before the Tribunal, arguing on the constitutional validity of Section 11(2) and relying on previous decisions.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the order of the NFAC/Ld.CIT(A) based on the interpretation of the relevant provisions of the Income Tax Act and the Circular issued by the CBDT. The Tribunal found no infirmity in the order of the Ld.CIT(A) and upheld the relief granted to the assessee.

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