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2024 (7) TMI 404 - AT - Income Tax


Issues:
1. Disallowance of exemption claimed by a trust under section 11(2) of the Income Tax Act due to failure to file Form 10 before the due date prescribed under section 139(1).

Analysis:
The judgment revolves around the disallowance of exemption claimed by a trust under section 11(2) of the Income Tax Act due to the failure to file Form 10 before the due date prescribed under section 139(1). The assessee, a trust, inadvertently failed to file Form 10 while filing the return of income for the assessment year 2021-22. Consequently, the CPC issued an intimation disallowing the exemption claimed by the trust under section 11(2) of the Act. The Ld. CIT(A) upheld the disallowance, citing the absence of an audit report filed after the due date prescribed under section 139(1) of the Act as the reason. The assessee contended that the requirement of filing Form 10 is directory in nature and its belated filing should not be fatal to denying the exemption claim under section 11(2) of the Act. The assessee relied on various decisions to support this argument, including the case of ITO vs. Ramji Mandir Religious and Charitable Trust.

The Ld. DR argued that as per CBDT Circular No. 2/2020, the assessee must file a condonation application under section 119(2) of the Act before the concerned CIT with reasons for the belated filing of the audit report. Failure to follow this procedure would result in the disallowance of the exemption claimed by the trust under section 11(2) of the Act. However, the tribunal noted that the issue had been settled by a coordinate Bench of the Ahmadabad Tribunal in the case of Ramji Mandir Religious and Charitable Trust. The tribunal held that the requirement of filing Form 10 before the due date prescribed under section 139(1) is directory in nature and should not lead to the denial of the exemption claim under section 11(2) of the Act, especially when the form was available when the intimation was passed by the CPC under section 143(1) of the Act. The tribunal considered binding precedents from various high courts and the Supreme Court before concluding that the disallowance of the claim under section 11(2) was not proper in this case. Consequently, the tribunal directed the Assessing Officer to consider Form 10, which was available on record, and pass appropriate orders.

In conclusion, the tribunal allowed the appeal of the assessee, emphasizing that the disallowance of the exemption claim under section 11(2) of the Act was not justified in the presence of Form 10 on record at the time of the intimation passed by the CPC. The judgment highlights the importance of procedural compliance and the interpretation of statutory requirements in tax matters.

 

 

 

 

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