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2023 (1) TMI 816 - AT - Income TaxDeduction claimed u/s 11(1)(a) - audit report was filed belatedly beyond the due date prescribed u/s 139(1) of the Act, the AO rejected the claim for deduction u/s 11 - HELD THAT - Provisions of section 12A(1)(b) requiring the assessee to furnish audit report has been amended w.e.f. 1.4.2020. Prior to the amendment, the audit report has to be filed alongwith the return of income. Requirement of furnishing audit report before the due date prescribed in section 44AB has been made mandatory w.e.f. 1.4.2020 only. In the instant case, we noticed earlier that the assessee has filed audit report in Form No. 10B alongwith the return of income filed on 30.3.2017. We noticed that the requirement of filing audit report before the date prescribed in sec.44AB has been brought into the statute only w.e.f 1.4.2020, i.e., from AY 2020-21. Accordingly, in the assessment year under consideration, viz., AY 2015-16, the requirement under the Act was to file audit report along with the return of income. Accordingly, in our view, the assessee has complied with the conditions prescribed in sec. 12(1)(b) by furnishing audit report along with the return of income. In our view, both the Assessing Officer and Ld CIT(A) were not justified in rejecting the claim for deduction under section 11(1)(a) - Accordingly, we set aside the order passed by learned CIT(A) and direct the Assessing Officer to allow deduction under section 11(1)(a) - Appeal filed by the assessee is allowed.
Issues:
Challenge to rejection of deduction under section 11(1)(a) of the Income Tax Act for A.Y. 2015-16. Analysis: The appeal was filed by the assessee against the order of the CIT(A) confirming the rejection of the deduction claimed under section 11(1)(a) of the Income Tax Act for the assessment year 2015-16. The assessee, a charitable trust, filed its return of income belatedly on 30.3.2017, along with the audit report in Form 10B. The Assessing Officer rejected the deduction claim under section 11 of the Act due to the belated filing of the audit report. The CIT(A) upheld this decision, citing Rule 17B and Rule 12(2) of the IT Rules, which require electronic filing of the audit report along with the return of income. The CIT(A) also referred to Circular No.10/2019 issued by CBDT, stating that the assessee should seek condonation for late filing of Form 10B before the CIT(Exemption). The appeal was dismissed by the CIT(A). The trustees of the assessee trust argued before the Tribunal that the provisions of section 12A(1)(b) of the Act had been amended w.e.f. 1.4.2020, making it mandatory to file the audit report before the due date specified in section 44AB. However, in the relevant assessment year, the audit report was filed along with the return of income. The Tribunal noted that the requirement to file the audit report before the due date specified in section 44AB was introduced only from A.Y. 2020-21, and not applicable for A.Y. 2015-16. Therefore, the assessee had complied with the conditions prescribed in section 12(1)(b) by filing the audit report along with the return of income. Consequently, the Tribunal set aside the CIT(A) order and directed the Assessing Officer to allow the deduction under section 11(1)(a) of the Act. In conclusion, the Tribunal allowed the appeal filed by the assessee, emphasizing that both the Assessing Officer and the CIT(A) were unjustified in rejecting the deduction claim under section 11(1)(a) for the assessment year 2015-16. The Tribunal's decision was based on the correct interpretation of the relevant provisions of the Income Tax Act and the timing requirements for filing the audit report.
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