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2017 (12) TMI 113 - AT - Income TaxBelated return filed u/s 139(4) - limitation for exercising option u/s 11(2) - Held that - In the facts of the present case and as observed from the assessment records assessee had furnished the details under Form 10 before the assessment proceedings had been initiated. Therefore the assessing officer had the benefit of verifying claim of exemption during the pendency of assessment. On a careful reading of section 139 of the Act we are of the opinion that subsection (1) and (4) of section 139 have to be read together and on such a reading it is very clear that return is filed within the specified period under subsection (4) has to be considered as having been made within the time prescribed in subsection (1) or subsection (2) of section 139 of the Act. In other words if a return is filed within the time specified under subsection (4) of 139 of the Act and the action contemplated by Explanation to section 11 (1) of the Act exercised in writing along with such a return filed under subsection (4) of section 139 the requirements of Explanation to section 11 (1) would stand satisfied. Appeal filed by the revenue stands dismissed.
Issues:
1. Interpretation of Explanation 2(b) of section 11(1) of the Income Tax Act. 2. Validity of exercising option under section 11(1) Explanation 2. 3. Filing of return within the prescribed time under section 139. Analysis: 1. Interpretation of Explanation 2(b) of section 11(1): The appeal was filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals) concerning the Assessment Year 2011-12. The main contention revolved around the interpretation of Explanation 2(b) of section 11(1) of the Income Tax Act. The Ld. CIT (A) had allowed the claim of the assessee by relying on the decision of the Hon'ble Supreme Court in the case of CIT vs. Nagpur Hotel Owners Association. The Ld. CIT (A) emphasized that the time limit prescribed under section 11(2) was declaratory, and as long as the requisite form was furnished before the completion of the assessment, the assessee would be entitled to accumulation under section 11(2). This interpretation was extended to the provisions of section 11(1), Explanation 2 as well. 2. Validity of exercising option under section 11(1) Explanation 2: The assessee, a trust registered under section 12A of the Income Tax Act, had availed the option of accumulation under section 11(1) Explanation 2. The Ld. AO disallowed the claim, leading to an appeal by the assessee before the Ld. CIT (A). The Ld. CIT (A) upheld the claim by referring to various legal precedents and emphasized that the requirements of the law were met as the necessary information was furnished before the completion of the assessment. The Ld. CIT (A) also clarified that the return filed by the assessee, though beyond the time specified, was within the time prescribed under section 139(4) of the Act. 3. Filing of return within the prescribed time under section 139: The issue of filing the return within the prescribed time under section 139 was crucial in determining the validity of the option exercised by the assessee under section 11(1) Explanation 2. The Ld. AR argued that the return was filed within the allowed time under section 139(4) and, therefore, should be considered as having been made within the period specified in section 139(1) or (2). The Tribunal, after considering the submissions and legal provisions, upheld the findings of the Ld. CIT (A) and dismissed the grounds raised by the Revenue. It was concluded that the return filed within the specified period under section 139(4) would satisfy the requirements of Explanation to section 11(1) of the Act. In conclusion, the Tribunal upheld the decision of the Ld. CIT (A) and dismissed the appeal filed by the Revenue, emphasizing the importance of fulfilling the requirements of the law before the completion of assessment proceedings. The interpretation of legal provisions and the timely filing of returns were crucial factors in determining the validity of the option exercised by the assessee under section 11(1) Explanation 2.
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