TaxTMI 
TaxTMI 
2025 (7) TMI 1965
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....5 declaring total income at Nil after claiming the exemption u/s 11 of the Act to the tune of Rs.2,31,46,662/-. The due date for filing of the return of income for the impugned assessment year u/s 139(1) of the Act was 30.09.2014. The CPC disallowed the claim of exemption u/s 11 of the Act on the ground that (a) there was a delay in filing of the return of income and (b) the audit report in Form 10B was furnished belatedly. 3. In appeal the Ld. Addl. / JCIT(A) upheld the action of the Assessing Officer by observing as under: "6. Decision 6.1 The present appeal has been filed by the appellant, Indian Medical Association, a public charitable trust registered under the Bombay Public Trust Act, 1950, bearing registration No. F-166 (Pune). The trust has been filing its income tax returns under the category of Association of Persons (AOP-Trust) in compliance with the provisions of the Income Tax Act, 1961. For the Assessment Year 2014-15, the appellant filed its Income Tax Return (ITR) belatedly on 06.07.2015, declaring a total income of Nil after claiming an exemption under sections 11 and 12 of the Act amounting to Rs.2,31,46,662/. The appellant submitted ....
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....uction form time-to-time for streamlining the delay in filing of audit report in Form 10B by the trust and examining the reason for non-filing of Form No.10B in time wherein the CBDT delegated the power for accepting the belated audit report to the Income Tax Officer after recording reasons for accepting a belated audit report vide CBDT Instruction F. NO. 267/482/77-IT(PART), Dated 9-2-1978, which is reproduced as Under 1. The Board have considered whether the requirement under section 12A(b) of filing audit report 'along with the return of income' is mandatory so as to disentitle the trust from claiming exemption under sections 11 and 12 in case of omission to furnish such report in the prescribed form along with the return. 2. Normally, it should be possible for a charitable or religious trust or institution to file the auditor's report along with the return of total income, where such trust or institution claims exemption under sections 11 and 12. However, in cases where for reasons beyond the control of the assessee some delay has occurred in filing the said report the exemption as available to such trust under sections 11 and 12 may not b....
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....d under section 119(2) of the Act, the Central Board of Direct Taxes hereby directs that:- (i) The delay in filing of Form no. 10B for AY 2016-17 and AY 2017-18, in all such cases where the Audit Report for the previous year has been obtained before the filing of return of income and has been furnished subsequent to the filing of the return of income but before the date specified under section 139 of the Act is condoned (ii) In all other cases of belated applications in filing Form no. 10B for years prior to AY 2018-19, the Commissioners of Income tax arc authorized to admit such applications for condonation of delay u/s 119(2)(b) of the Act. The Commissioners will while entertaining such belated applications in filing Form no.10B shall satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time. Further, all such applications shall be disposed off by 30.09.2019. It is pertinent to mention here that after the decisions of various Hon'ble Courts on the issue, the CBDT once again issued a circular no. 2/2020 dated 03.01.2020 which empowers the CIT to condone the delay in filing Form Form....
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....er, 2019 both issued vide F. No. 197/55/2018-ITA-I has directed that:- (i) The delay in filing of Form No. 10B for A. Y. 2016-17 and A.Y. 2017-18, in all such cases where the Audit Report for the previous year has been obtained before the filing of return of income and has been furnished subsequent to the filing of the return of income but before the date specified under section 139 of the Act is condoned. (ii) In all other cases of belated applications in filing Form No. 10B for years prior to AY. 2018-19, The commissioner of Income-tax are authorized to admit and dispose off by 31-3-2020 such applications for condonation of delay u/s 119(2)(b)of the Act The Commissioner will while entertaining such belated applications in filing Form No. 108 shall satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time. 5. In addition to the above, it has also been decided by the CBDT that where there is delay of upto 365 days in filing Form No. 10B for Assessment Year 2018-19 or for any subsequent Assessment Years, the Commissioners of Income-tax are hereby authorized to admit such belated applicati....
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....he return within the prescribed time limit. 3] The learned Addl. CIT(A) failed to appreciate that ultimately, the assessee had filed the audit report in Form No. 10B and therefore, there was no reason to deny the exemption claimed u/s 11 of the Act. 4] The learned Addl. CIT(A) failed to appreciate that even if, there was a delay in filing the return of income and the audit report in Form 10B, since the assessee has ultimately filed the same, the claim of exemption u/s 11 ought to have been granted. 5] Without prejudice to the above grounds, assuming without admitting that the exemption u/s 11 is not allowable to the assessee trust, the learned CPC erred in taxing the gross receipts as an income of the assessee without appreciating that only the net surplus after deducting the expenditure incurred could be taxed as an income of the assessee. 6] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. Grounds in ITA No.762/PUN/2025 (A.Y. 2017-18) 1] The learned Addl. CIT(A) erred in holding that the assessee trust was not entitled to claim exemption u/s 11 on the ground that there was delay in ....
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....taxed as an income of the assessee. 6] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. Grounds in ITA No.765/PUN/2025 (A.Y. 2019-20) 1] The learned Addl. CIT(A) erred in holding that the assessee trust was not entitled to claim exemption u/s 11 on the ground that there was delay in filing in Form 10B and return of income on the part of the assesse. 2] The learned Addl. CIT(A) erred in not appreciating that there was a small delay on the part of the assessee in filing its return of income and the same was filed before the intimation order was passed and hence, there was no reason to deny the exemption u/s 11 for not filing the return within the prescribed time limit. 3] The learned Addl. CIT(A) failed to appreciate that ultimately, the assessee had filed the audit report in Form No. 10B and therefore, there was no reason to deny the exemption claimed u/s 11 of the Act. 4] The learned Addl. CIT(A) failed to appreciate that even if, there was a delay in filing the return of income and the audit report in Form 10B, since the assessee has ultimately filed the same, the claim of exemption ....
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....ch of the Tribunal in the case of ITO vs. Debendra and Rohini Memorial Trust (2023) 153 taxmann.com 687 (Kolkata - Trib.), he submitted that the Tribunal in the said decision has held that where assesse trust filed return after time allowed under section 139(4A) but before last day of filing of belated return under section 139(5), same should be treated as due compliance with clause (ba) in sub-section (1) of section 12A and thus, the assessee was entitled for exemption under section 11 of the Act. 7. So far as denial of exemption u/s 11 on account of belated filing of audit report in Form 10B is concerned, the Ld. Counsel for the assessee submitted that the audit report in Form 10B was filed on 27.04.2021, copy of which is placed at pages 42 to 44 of the paper book. He submitted that since the assessee has filed the audit report during the appellate proceedings and the return of income was furnished before the intimation order was passed by the CPC, therefore, the claim of exemption u/s 11 should not be denied. For the above proposition, he relied on the decision of Hon'ble Gujarat High Court in the case of CIT v. Laxmanarayan Dev Shrishan Seva Khendra (2024) 167 taxmann.co....
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....r considering the expenditure incurred on the objects of the trust can be disallowed. 11. The Ld. DR on the other hand heavily relied on the order of the Ld. Addl. / JCIT(A). 12. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. Addl. / JCIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case has filed the return of income on 06.07.2015 as against the due date for filing the return u/s 139(1) of the Act on 30.09.2014. The claim of exemption u/s 11 of the Act was denied by the CPC on the ground that (a) there was a delay in filing of the return of income and (b) the audit report in Form 10B was furnished belatedly. We find the Ld. Addl. / JCIT(A) upheld the action of the CPC, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that in view of the decision of the Kolkata Bench of the Tribunal in the case of ITO vs. Debendra and Rohini Memorial Trust (supra) and various other decisions, filing of the return u/s 139(4A) but before la....
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....cribed u/s 139(4) of the Act and secondly audit report on Form 10B not uploaded before due date prescribed under the Act. Now, undisputedly in the case of assessee, the return of income is filed on 15.11.2018 and audit report on form 10B e-filed on 30.03.2019. Now, before adverting to the grounds, we would first like to go through the relevant provisions which have a direct bearing on the issue of requirement of filing of audit report and income tax return by the trust or institutions registered u/s 12A of the Act. Section 12A(1)(b) and 12(1)(ba) of the Act reads as follows: "Conditions for applicability of sections 11 and 12. 12A. (1) The provisions of section-11 and section-12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:- *** *** *** (b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section11 and section-12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Ex....
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....2018, it is a belated return. Thus, there remains no dispute to the fact that the return of income filed by the assessee is a belated return which as per section 139(5) of the Act could have been filed latest by 31.03.2019. Now, at this stage, we would like to refer to Circular issued by CBDT on 23.04.2019 giving clarification with regard to time allowed for filing of return of income subsequent to insertion of clause (ba) in sub-section 1 of section 12A of the Act and the same is reproduced below: F.No. 173/193/2019-ITA-I Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, Dated: 23 April, 2019 To, The Pr. DGIT (Systems), New Delhi. Subject: Clarification with regard to the time allowed for filing of return of income subsequent to the insertion of Clause (ba) in subsection 1 of section 12A of the income-tax Act, 1961. Sir, Undersigned is directed to refer to the representation (s) received on above mentioned subject stating that while processing of ITR-7 for the A.Y. 2018- 19, in respect of the belated returns filed u/s 139(4) of the Income Tax Act, 1961 (Act)....
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....pt of the income chargeable to income-tax shall furnish the return of income within the time allowed under section 139 of the Income-tax Act." 3. Thus, for a trust registered U/s 12AA of the Act to avail the benefit of exemption u/s 11 shall inter-alia file its return of income within the time allowed u/s 139 of the Act. Accordingly, orders u/s 143(1)(a) in those cases in which demand has been raised on this issue may please be rectified. This issues with the approval of Chairman (CBDT). (Vinay Sheel Gautam) JCIT (OSD) (ITA-I) Telefax: 011-23093070 E-mail: [email protected] 11. From perusal of the above referred circular, we find that in Para 3 of the said circular specifically states that a trust registered u/s 12AA of the Act, benefit of section 11 shall be available if the return of income is filed within the time allowed u/s 139 of the Act. It further states that orders u/s 143(1)(a) of the Act in those cases in which demand has been raised on this issue may please be rectified. From the circular, we note that an amendment was brought in by insertion of clause (ba) of section 12A(1) of the Act from 2018-19 on....
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....orm No. 10B. 13. Now, on perusal of the Form 10B, we notice that the same is required to be submitted electronically, one month prior to the due date of the filing of return of income. Admittedly, in the case in hand, the audit report on form 10B has been uploaded on 30.03.2019 which is even after the date of filing the return of income on 15.11.2018. Now, before us, it has been contended by the ld. counsel for the assessee that filing of audit report is directory in nature and even if report is submitted in time before the conclusion of the assessment proceedings, the same needs to be considered. Though the assessee referred to the various decisions, we find it pertinent to refer to the judgment of the Hon'ble Gujarat High Court in the case of Sarvodaya Charitable Trust us. ITO(Exemption) (supra) wherein Para 32 of the said judgment reads as follows: "32. We may also refer to the decision of this Court in CIT v. Gujarat Oil and Allied Industries Ltd. (1993) 201 ITR 325 (Guj), wherein it is held that the provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compli....
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....n u/s 143(1)(a) of the Act, but the ld. CIT(A) was well within its power to have entertained the said report and examined the same as could have been done by the A.O. 16. We, therefore, in the given facts and circumstances and respectfully following the judgment of Hon'ble Gujarat High Court in the case Sarvodaya Charitable Trust us. ITO(Exemption) (supra), we are of the considered view that since the case of assessee is for A.Y 2018-19 and CBDT came up with a circular dated 23.04.2019 specially for A.Y 2018-19 providing that return of income to be filed within the time allowed u/s 139 of the Act, the assessee has complied with the conditions provided in sub-clause (b) and (ba) to section 12 and there is no dispute at the end of the revenue authorities that the assessee is carrying on charitable activities, for which it has been granted registration u/s 12A of the Act, the benefit of section 11 and 12 should be given to the assessee and deductions claimed by the assessee are, therefore, allowed. Thus, Ground Nos. 1 to 4 of the assessee are allowed. 17. So far as alternate plea praying that only the net income should have been subjected to tax rather than gross....
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....jecting the claim of exemption u/s 11 of the Act on account of delay in filing of the return of income as well as delay in uploading the audit report in Form 10B. We, therefore, set aside the order of the Ld. CIT(A) / NFAC and direct the Assessing Officer / CPC to allow the claim of exemption u/s 11 of the IT Act, 1961. The grounds raised by the assessee are accordingly allowed. Since the assessee succeeds on the issue of claim of exemption u/s 11, therefore, the alternate claim of the assessee for taxing the net income rather than gross receipt does not require any adjudication being academic in nature. The appeal of the assessee is accordingly allowed. 18. Identical grounds have been raised by the assessee for assessment years 2017-18, 2018-19 and 2019-20 where in all the cases, the returns of income were filed belatedly and the audit reports were also uploaded subsequent to the intimation order passed by the CPC but before the appellate authorities. We have already decided the issue in the preceding paragraphs and allowed the claim of exemption u/s 11 of the Act. Following similar reasonings, we allow the grounds raised by the assessee for the above years also. 19. So far ....
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.... assessee, the return of income is filed on 15.11.2018 and audit report on form 10B efiled on 30.03.2019. Now, before adverting to the grounds, we would first like to go through the relevant provisions which have a direct bearing on the issue of requirement of filing of audit report and income tax return by the trust or institutions registered u/s 12A of the Act. Section 12A(1)(b) and 12(1)(ba) of the Act reads as follows: "Conditions for applicability of sections 11 and 12. 12A. (1) The provisions of section-11 and section-12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:- (b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section-11 and section-12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below subsection (2) of section-288 48/before the specified date referred to in section-44AB and the person in receipt of the income furnishes by that date)....
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....e Act could have been filed latest by 31.03.2019. Now, at this stage, we would like to refer to Circular issued by CBDT on 23.04.2019 giving clarification with regard to time allowed for filing of return of income subsequent to insertion of clause (ba) in sub-section 1 of section 12A of the Act and the same is reproduced below: F.No. 173/193/2019-ITA-I Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, Dated: 23 April, 2019 To, The Pr. DGIT (Systems), New Delhi. Subject: Clarification with regard to the time allowed for filing of return of income subsequent to the insertion of Clause (ba) in subsection 1 of section 12A of the income-tax Act, 1961. Sir, Undersigned is directed to refer to the representation (s) received on above mentioned subject stating that while processing of ITR-7 for the A.Y. 2018-19, in respect of the belated returns filed u/s 139(4) of the Income Tax Act, 1961 (Act), the following is being communicated u/s 143(1)(a) of the Act:- "As per section 12A(1)(ba) of the Income tax Act, 1961 the person in receipt of the income has furnis....
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....gistered U/s 12AA of the Act to avail the benefit of exemption u/s 11 shall inter-alia file its return of income within the time allowed u/s 139 of the Act. Accordingly, orders u/s 143(1)(a) in those cases in which demand has been raised on this issue may please be rectified. This issues with the approval of Chairman (CBDT). (Vinay Sheel Gautam) JCIT (OSD) (ITA-I) Telefax: 011-23093070 E-mail: [email protected] 11. From perusal of the above referred circular, we find that in Para 3 of the said circular specifically states that a trust registered u/s 12AA of the Act, benefit of section 11 shall be available if the return of income is filed within the time allowed u/s 139 of the Act. It further states that orders u/s 143(1)(a) of the Act in those cases in which demand has been raised on this issue may please be rectified. From the circular, we note that an amendment was brought in by insertion of clause (ba) of section 12A(1) of the Act from 2018-19 onwards through which one of the requirements for claiming the benefit u/s 11 and 12 of the Act was to file the return of income within time allowed u/s 139(4A) of the Ac....
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....ling of return of income. Admittedly, in the case in hand, the audit report on form 10B has been uploaded on 30.03.2019 which is even after the date of filing the return of income on 15.11.2018. Now, before us, it has been contended by the ld. counsel for the assessee that filing of audit report is directory in nature and even if report is submitted in time before the conclusion of the assessment proceedings, the same needs to be considered. Though the assessee referred to the various decisions, we find it pertinent to refer to the judgment of the Hon'ble Gujarat High Court in the case of Sarvodaya Charitable Trust us. ITO(Exemption) (supra) wherein Para 32 of the said judgment reads as follows: "32. We may also refer to the decision of this Court in CIT v. Gujarat Oil and Allied Industries Ltd. (1993) 201 ITR 325 (Guj), wherein it is held that the provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the asse....
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.... 16. We, therefore, in the given facts and circumstances and respectfully following the judgment of Hon'ble Gujarat High Court in the case Sarvodaya Charitable Trust us. ITO(Exemption) (supra), we are of the considered view that since the case of assessee is for A.Y 2018-19 and CBDT came up with a circular dated 23.04.2019 specially for A.Y 2018-19 providing that return of income to be filed within the time allowed u/s 139 of the Act, the assessee has complied with the conditions provided in subclause (b) and (ba) to section 12 and there is no dispute at the end of the revenue authorities that the assessee is carrying on charitable activities, for which it has been granted registration u/s 12A of the Act, the benefit of section 11 and 12 should be given to the assessee and deductions claimed by the assessee are, therefore, allowed. Thus, Ground Nos. 1 to 4 of the assessee are allowed. 17. So far as alternate plea praying that only the net income should have been subjected to tax rather than gross receipts, since we have already allowed the deduction u/s 11 and 12 of the Act to the assessee, this alternate plea becomes academic in nature. Other grounds are genera....