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2023 (12) TMI 1295 - AT - Income TaxEntitlement of claim of exemption u/s 11 - not filing of Form No.10 and / or 10B within due date as prescribed under the Act - procedural or mandatory lapses - assessee filed revised return of income with the higher claim of deduction under Section 11(2) - HELD THAT - As in the instant facts, it is not a case where the assessee had not filed Form 10 in the original return of income, before the due date prescribed of filing return of income. It is only a case where the assessee observed that a certain error had crept in the original return of income, wherein the quantum of deduction claimed under Section 11(2) of the Act required correction and accordingly, the assessee filed revised return of income with the higher claim of deduction under Section 11(2) of the Act. It has been held by various Courts that the requirement of filing Form 10 / 10B is merely directory in nature and failure to furnish Form 10 / 10B before due-date prescribed u/s 139(1) of the Act cannot be so fatal so as to deny they very claim of exemption u/s 11(2) of the Act especially when Form 10 / 10B was available on record when the intimation was passed by CPC u/s 143(1) of the Act - Decided in favour of assessee.
Issues Involved:
1. Filing of Form No. 10 and/or 10B within the prescribed due date. 2. Direction to the Assessing Officer to allow the claim under Section 11 of the Income Tax Act. 3. Contradiction in the CIT(A)'s findings regarding the CPC's power to make adjustments. Summary of Judgment: Issue 1: Filing of Form No. 10 and/or 10B within the prescribed due date The Revenue contended that the Ld. CIT(A) erred in treating the non-filing of Form No. 10 and/or 10B within the due date as a procedural lapse, arguing that the Hon'ble Supreme Court in M/s. Wipro Ltd. held that exemption provisions must be strictly and literally complied with. The Tribunal observed that the assessee had filed the original return within the due date, and the revised return, which corrected an error in the quantum of deduction under Section 11(2), was filed later. The Tribunal cited various judicial precedents, including CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust and CIT vs. Nagpur Hotel Owners Association, which held that the requirement of filing the audit report is procedural and should not deny the exemption if submitted during assessment proceedings. Issue 2: Direction to the Assessing Officer to allow the claim under Section 11 of the Income Tax Act The Tribunal upheld the Ld. CIT(A)'s direction to the Assessing Officer to allow the claim under Section 11 after due verification. The Tribunal noted that the assessee had filed the original return and Form 10 within the due date, and the revised return was filed to correct an error. The Tribunal emphasized that the procedural lapse of delayed filing should not result in the denial of exemption, referencing the case of Sarvodaya Charitable Trust v. Income Tax Officer (Exemption) and other precedents. Issue 3: Contradiction in the CIT(A)'s findings regarding the CPC's power to make adjustments The Tribunal found no contradiction in the Ld. CIT(A)'s findings. It clarified that the CPC's adjustment was based on the belated filing of Form 10B, which was corrected by the Ld. CIT(A) by treating it as a procedural lapse. The Tribunal concurred with the Ld. CIT(A)'s view that the exemption under Section 11 should not be denied merely due to the delayed filing of Form 10B, provided it was available before the completion of assessment. Conclusion: The Tribunal dismissed the Department's appeal, affirming the Ld. CIT(A)'s order to allow the assessee's claim under Section 11 after due verification and treating the delayed filing of Form 10B as a procedural lapse. The Tribunal reiterated that procedural requirements should not obstruct the substantive right to exemption, aligning with various judicial precedents.
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