2019 (1) TMI 1083 - HC - Income Tax

Exemption u/s 11 - addition made on the pretext that Form No.10 was filed belatedly - Held that - The judgment rendered in case of Nagpur Hotel Owners Association 2000 (12) TMI 99 - SUPREME COURT squarely applies to the facts of present case, wherein Hon ble the Supreme Court has held that Form No.10 should be submitted before framing of the assessment order. That apart, as long as the entitlement of the assessee regarding setting apart of the accumulated profit is not doubted, no addition can be made on the pretext that Form No.10 was filed belatedly. This view of ours is fully fortified by a Division Bench of this Court rendered in case of ANJUMAN MOINIA FAKHARIA 1993 (10) TMI 51 - RAJASTHAN HIGH COURT the provisions of Rule 17 which are framed under Section 11(2) before April 1, 1971, did not prescribe any time-limit for filing Form No.10 and without there being any amendment in the provisions of the Act, the rule was substituted with effect from April 1, 1971, prescribing the time-limit from the assessment year 1971- 72. Prior to the assessment year 1971-72, the form could have been submitted upto the stage of assessment.

Summary

Issues:
- Challenge to the order of the Income Tax Appellate Tribunal
- Interpretation of Section 11(2) of the Income Tax Act, 1961
- Requirement of filing Form No.10 along with the return
- Applicability of the judgment in the case of Nagpur Hotel Owners Association
- Timing of submission of Form No.10 for claiming exemption

Challenge to the order of the Income Tax Appellate Tribunal:
The appellant challenged the order of the Income Tax Appellate Tribunal, Jodhpur Bench, which had allowed the assessee's appeal based on the judgment of the Supreme Court in the case of Nagpur Hotel Owners Association. The appellant contended that the Tribunal erred in applying the said judgment, as the language of Rule 17 mandates the filing of Form 10 along with the return. The Tribunal's decision was questioned on the grounds of the timing of filing Form No.10 and the justification for the assessing officer's addition of the unutilized amount to the assessee's income.

Interpretation of Section 11(2) of the Income Tax Act, 1961:
The High Court examined the provisions of Section 11(2) of the Income Tax Act, 1961, which require the person claiming benefits under Section 11 to provide necessary particulars to the assessing authority in Form No.10. The Court emphasized the mandatory nature of this requirement, stating that the assessing authority must have the information before completing the assessment to exclude specific income from taxation.

Requirement of filing Form No.10 along with the return:
The Court noted that the appellant had submitted the requisite details, including the resolution and notice to the Assessing Officer, as required under Section 11(2) of the Act in Form 10, after filing the return but before the completion of the assessment. The assessing officer's addition of the amount in question was solely due to the delayed submission of Form No.10, which was deemed essential for claiming the benefit of setting apart the accumulated profit.

Applicability of the judgment in the case of Nagpur Hotel Owners Association:
The High Court found that the judgment in the case of Nagpur Hotel Owners Association, cited by the Tribunal, was directly relevant to the present case. The Court quoted the Supreme Court's ruling from the Nagpur Hotel Owners Association case, emphasizing the importance of submitting Form No.10 before the completion of the assessment to avail the benefit of income exclusion under Section 11. The Court aligned its decision with the principles outlined in the Nagpur Hotel Owners Association judgment.

Timing of submission of Form No.10 for claiming exemption:
The Court further supported its decision by referencing a Division Bench ruling in the case of Commissioner of Income Tax Vs. Anjuman Moinia Fakharia, which highlighted that non-compliance with the time limit for filing Form No.10 should not disentitle an assessee from the exemption entitled under Section 11(2). The Court reiterated that as long as the entitlement of the assessee regarding setting apart of the accumulated profit is established, no addition can be made merely on the grounds of delayed submission of Form No.10.

In conclusion, the High Court dismissed the appeal, stating that there was no substantial question of law requiring adjudication. The judgment reaffirmed the importance of timely submission of Form No.10 for claiming exemptions under Section 11(2) of the Income Tax Act, in line with the precedents set by relevant legal decisions.