2021 (8) TMI 753 - AT - Income Tax

Exemption u/s 11 - application of capital expenditure out of the fund accumulated u/s. 11(2) - HELD THAT - Assessee furnished a chart first time before this Bench of the Tribunal and claimed that the figures taken in this chart are from the record which is available with the department and that the wrong figures were considered by the A.O. which were wrongly mentioned in form No. 10 due to oversight. Since the chart furnished by the assessee has the direct bearing on the issue under consideration and the then counsel for the assessee had also furnished an affidavit stating therein that the figures were wrongly mentioned. We therefore deem it appropriate to set aside this issue back to the file of the A.O. to be adjudicated afresh after considering the aforesaid chart furnished by the assessee and claim of the assessee to be considered after proper verification of the figures mentioned in the chart vis-a-vis. the record already available with the department. Submissions of the Form No. 10 during the course of assessment proceedings which was not considered by the A.O . - HELD THAT - In the present case it is not in dispute that as per section 11(2) of the Act read with Rule 17 of the Income Tax Rules, as mandated with effect from A.Y. 2016-17 the assessee was required to e-file Form No. 10 by due date mentioned under section 139 of the Act. However, in the present case the assessee filed Form No. 10 on 17/11/2018 i.e. during the course of assessment proceedings. The A.O. denied the claim of the assessee since the Form No. 10 was not furnished before filing the return of income under section 139 of the Act. Form No. 10 furnished by the assessee during the course of assessment proceedings before completion of the assessment should have been considered by the A.O. while considering the claim for benefit under section 11(2) of the Act. We order accordingly.

Summary

Issues Involved:
1. Confirmation of the Assessing Officer's order by the CIT(A).
2. Application of accumulated funds for earlier years and alleged double deduction.
3. Non-consideration of Form No. 10 filed during assessment proceedings.

Detailed Analysis:

Issue 1: Confirmation of the Assessing Officer's order by the CIT(A)
The appellant contended that the CIT(A) erred in confirming the Assessing Officer's (AO) order, which was against the facts and circumstances of the case. The CIT(A)'s findings were challenged as factually incorrect, particularly regarding the application of accumulated funds from earlier years.

Issue 2: Application of Accumulated Funds and Alleged Double Deduction
The primary grievance related to the application of capital expenditure out of funds accumulated under section 11(2) of the Income Tax Act, 1961, for earlier years. The AO noticed that the assessee mentioned new assets acquired during the year amounting to ?73,47,393/- out of accumulated funds from AY 2012-13 and AY 2013-14. The AO disallowed this claim, stating it would amount to double deduction as the benefit had already been claimed in earlier years. The CIT(A) upheld this disallowance, stating that the application out of accumulated funds is separate from the application of current year's funds and cannot be allowed as a deduction.

The assessee argued that the figures were wrongly considered due to oversight and clerical mistakes. They submitted a chart to correct the figures, which was not previously available to the AO or CIT(A). The Tribunal found this chart relevant and set aside the issue back to the AO for fresh adjudication after verification of the correct figures.

Issue 3: Non-Consideration of Form No. 10 Filed During Assessment Proceedings
The AO observed that the assessee filed Form No. 10 on 17/11/2018, during the assessment proceedings, instead of by the due date specified under section 139 of the Act. Consequently, the AO denied the benefit under section 11(2) of the Act. The CIT(A) upheld this decision, noting that the power to condone the delay in filing Form No. 10 lies with the Commissioner of Income Tax, not the AO, and the assessee had not obtained such permission.

The Tribunal considered the CBDT Circular No. 7/2018 and Circular No. 6/2020, which allowed for the condonation of delay in filing Form No. 10 in genuine cases. It noted that the Form No. 10 was filed before the completion of the assessment and should have been considered by the AO. The Tribunal referred to the Supreme Court's decision in CIT Vs. Nagpur Hotel Owners' Association, which held that Form No. 10 should be furnished before the completion of assessment proceedings for the benefit under section 11 to be considered. The Tribunal directed the AO to consider the Form No. 10 filed during the assessment proceedings.

Conclusion:
The appeal was partly allowed for statistical purposes. The Tribunal remanded the issue of the application of accumulated funds back to the AO for fresh adjudication after verifying the correct figures. It also directed the AO to consider the Form No. 10 filed during the assessment proceedings for the benefit under section 11(2) of the Act.