2001 (3) TMI 62 - HC - Income Tax

Summary

Issues:
- Interpretation of section 139(4A) regarding filing of returns by charitable trusts exempted under section 10(22)
- Requirement of filing returns under section 139(4A) for charitable trusts exempted under section 10(22)
- Applicability of penalty under section 272A(2)(e) for failure to file returns by charitable trusts exempted under section 10(22)

Analysis:
The judgment delivered by the High Court of BOMBAY pertained to the interpretation of section 139(4A) of the Income-tax Act concerning the obligation of filing returns by charitable trusts exempted under section 10(22). The court addressed the question of whether such trusts were required to file returns under section 139(4A) and if penalty under section 272A(2)(e) was justified for non-compliance. The case involved an educational institution trust which failed to file its income tax return within the stipulated timeframe, leading to penalty proceedings initiated by the Assessing Officer.

The court analyzed the provisions of section 139(4A) which mandate that persons receiving income from property held under trust for charitable or religious purposes must file a return if their total income exceeds the maximum amount not chargeable to income tax, disregarding exemptions under sections 11 and 12 of the Act. The tribunal's view, which exempted trusts under section 10(22) from filing returns under section 139(4A), was disagreed upon by the court. It emphasized that even if a trust claims income exemption under section 10(22), it is still required to file a return to enable the department to evaluate the exemption claim based on the relevant material submitted.

Referring to the Supreme Court's judgment in Aditanar Educational Institution v. Addl. CIT [1997] 224 ITR 310, the court highlighted the necessity of evaluating exemption eligibility annually and the importance of filing returns for this purpose. It clarified that while section 10(22) exempts income of educational institutions, the trust's existence solely for educational purposes must be verified by the Assessing Officer, necessitating the filing of returns. Consequently, the court ruled in favor of the department, affirming the requirement for trusts exempted under section 10(22) to file returns under section 139(4A to facilitate the assessment of their exemption eligibility.

In conclusion, the court upheld the imposition of penalties under section 272A(2)(e) for non-compliance with return filing obligations by charitable trusts exempted under section 10(22). Both appeals were disposed of without any costs being awarded.