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2023 (7) TMI 1145 - AT - Income TaxClaim exemptions u/s 11 and 12 disallowed - delay in filing Form 10/10B - HELD THAT - CIT(A) held that the AO erred in not allowing deduction to the /assessee for the amount accumulated under the provisions of section 11 - CIT(A) further observed that it was merely a procedural lapse on part of assessee to not file Form 10 alongwith return of income. CIT(A) thus observed that the assessee submitted the audit report at a later stage after filing the return of income and thus the benefit of exemption u/s 11 cannot be denied merely on account of delay in furnishing audit report. We found that the observation of the ld. CIT(A) does not suffer from any infirmity and we find no reason to interfere in the order of the ld. CIT(A). Non-indicating specific purpose/ purpose for which the fund was accumulated - Hon'ble Gujarat High Court, in the case of CIT(Exemptions) v. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust 2018 (10) TMI 995 - GUJARAT HIGH COURT held that lack of declaration in Form No. 10 regarding specific purpose for which funds were being accumulated by assessee-trust, would not be fatal to exemption claimed under section 11(2). Similar view was taken in the case of CIT v. Hotel Restaurant Association 2003 (3) TMI 92 - DELHI HIGH COURT CIT(A) respectfully following the above judgments, deleted the addition correctly - Decided against revenue.
Issues Involved:
1. Delay in filing Form 10/10B. 2. Not indicating specific purpose/purposes for which the fund was accumulated. Summary: Issue 1: Delay in filing Form 10/10B The appellant filed its return of income on 28.11.2014, within the due date as per section 139(1), but submitted the audit report in Form 10 on 20.09.2016, during the assessment proceedings. The assessing officer disallowed the deduction for the accumulated amount under section 11 due to this delay. According to section 12A, the audit report must be filed before the specified date mentioned in section 44AB. Various courts, including the Calcutta High Court in CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust and the Supreme Court in CIT vs. Nagpur Hotel Owners Association, have held that the benefit of exemption should not be denied merely due to a delay in submitting the audit report if it is available before the completion of the assessment. The Tribunal upheld the CIT(A)'s decision that the procedural lapse of late filing should not deny the exemption under section 11. Issue 2: Not indicating specific purpose/purposes for which the fund was accumulated The assessing officer remarked that the trust must indicate specific purposes for fund accumulation, and a general decision listing all objects is insufficient. The resolution for fund accumulation was passed on 15.12.2015, and Form 10 was furnished on 04.01.2016. According to section 11(2)(a), the statement must specify the purpose for which the income is being accumulated. However, courts, including the Gujarat High Court in CIT(Exemptions) v. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust and the Delhi High Court in CIT v. Hotel & Restaurant Association, have held that lack of specific purpose declaration in Form 10 is not fatal to the exemption claim under section 11(2). The Tribunal agreed with CIT(A) that the exemption should not be denied on this ground and upheld the deletion of the addition made by the AO. Conclusion: The Tribunal dismissed the Department's appeal, affirming that the procedural delays and general declarations in fund accumulation should not deny the assessee's exemption claims under section 11. The order was pronounced in the open court on 12/07/2023.
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