2024 (10) TMI 664 - HC - Income Tax

Trust's entire income including corpus donations exempt under Section 11 despite missing Form 10B filing

Commissioner Of Income Tax (Exemption) Versus Anjana Foundation

The Gujarat HC upheld the Tribunal's decision allowing exemption under Section 11 to a trust's entire income, including corpus donations, voluntary ... Denial of exemption u/s 11 - adjustments were made on entire income of the assessee trust including the corpus donation, voluntary donation and other income on the ground that the assessee did not filed the requisite form 10B along with the return of income HELD THAT:- Tribunal correctly held that the claim of the assessee for exemption to its entire income under Section 11 of the Act is required to be allowed and AO/CPC was directed accordingly to delete the adjustment made in the intimation under Section 143 (1) - No substantial question of law arises. Issues:1. Interpretation of provisions regarding filing of audit report in Form 10B under Section 12A of the Income Tax Act, 1961.2. Justification of setting aside the order of CIT(A) and admitting the audit report in Form 10B after the due date.Detailed Analysis:Issue 1:The Tax Appeal under Section 260A of the Income Tax Act, 1961 raised questions on the interpretation of the requirement to file an audit report in Form 10B under Section 12A. The Tribunal held that filing Form 10B is a procedural provision and not a mandatory requirement for claiming exemptions under Sections 11 and 12 of the Act. The Tribunal referred to the decision in the case of Association of Indian Panel Board Manufacturer vs. DCIT and emphasized that even if Form 10B is filed at a later stage, the assessee is entitled to the exemption claimed. The Tribunal also cited the decision of ITAT Mumbai Bench in a similar case to support this interpretation.Issue 2:The respondent, a Public Charitable Trust, filed its income tax return for the relevant year but did not submit Form 10B along with it. Consequently, the CPC assessed the total taxable income of the trust, disallowing the exemptions claimed under Sections 11 and 12, resulting in a substantial tax demand. The CIT(A) dismissed the appeal, but the Tribunal overturned this decision based on the precedent set by the High Court and allowed the appeal. The Tribunal held that since the Form 10B was prepared before the due date and was filed before the CIT(A), the assessee should be allowed the exemption claimed. The Tribunal directed the AO/CPC to delete the adjustments made in the intimation under Section 143 (1) of the Act, thereby granting the exemption to the entire income of the assessee under Section 11.In conclusion, the High Court upheld the Tribunal's decision, finding no substantial question of law arising from the judgment. The appeal was dismissed as devoid of merit, affirming the interpretation that filing Form 10B is a procedural requirement and not a mandatory condition for claiming exemptions under the Income Tax Act.