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2024 (11) TMI 1365 - AT - Income TaxDenial of exemption claimed u/s 11(2) - Assessee had failed to file Form 10 electronically before the due date of filing of return of income as mandated by Rule 17 of the Income Tax Rules 1962 but filled in physically - HELD THAT - It is not the case of the Revenue that there was difference between Form 10 filed by the Appellant physically and electronically. Revenue has placed nothing on record to controvert the finding returned by the CIT(A) that the funds were not accumulated casually by the Assessee and were utilize for the purpose of the Assessee Trust. We note that Assessment Year 2016-2017 was also the first year of applicability of amended Rule 17 of IT Rules requiring electronic filing of Form 10 since the said Rule came into effect from 01/04/2016 relevant to the Assessment Year 2016-17. The Assessee has also placed on record Form 10B for the Assessment Year 2016-17 filed electronically on 21/09/2016 wherein it has been clearly stated that INR 7.34 Crores has been accumulated in terms of Section 11(2). Thus, we hold that the benefit of exemption claimed by the Appellant under Section 11(2) cannot be denied to the Appellant. As decided in Parle Hindu Devalaya Mandal 2020 (3) TMI 1353 - ITAT MUMBAI and Navodaya Education Trust 2021 (7) TMI 769 - ITAT BANGALORE Tribunal has taken a view that in case where the Form 10 has been filed physically before the due date the benefit of Section 11(2) of the Act cannot be denied merely for non-filing of Form 10 electronically. Decided against revenue.
Issues:
Denial of exemption under Section 11(2) of the Income Tax Act due to failure to file Form 10 electronically within the prescribed time. Analysis: The Revenue challenged an order by the National Faceless Appeal Centre (NFAC) regarding the Assessee's appeal against the Assessment Order under Section 143(3) read with Section 263 of the Income Tax Act, 1961. The appeal focused on the denial of exemption claimed by the Appellant-Trust under Section 11(2) of the Act amounting to INR 7.34 Crores. The Assessee, a charitable trust running a school, filed the return of income and Form 10 physically before the due date but filed Form 10 electronically during the assessment proceedings. The Assessing Officer disallowed the exemption, leading to a fresh assessment under Section 263, which also denied the exemption based on the failure to file Form 10B electronically. The CIT(A) allowed the appeal, accepting the Assessee's claim for exemption. The key contention was whether the Assessee's failure to file Form 10 electronically before the due date justified the denial of the exemption. The Assessee argued that the funds were not accumulated casually and were utilized for the Trust's purposes. The Tribunal noted that the Assessee filed Form 10 physically within the prescribed time and electronically during the assessment proceedings. The Tribunal found no difference between the physical and electronic filings of Form 10. Additionally, it was the first year of the amended Rule 17 requiring electronic filing, and the Assessee had filed Form 10B electronically. Relying on precedents, including the Mumbai and Bangalore Tribunal decisions, the Tribunal held that the benefit of exemption under Section 11(2) could not be denied solely for non-electronic filing of Form 10. The Tribunal dismissed all grounds raised by the Revenue, upholding the CIT(A)'s decision to allow the Assessee's claim for exemption of INR 7.34 Crores under Section 11(2) of the Act. The Tribunal's decision was based on the factual matrix and legal position, emphasizing that the Assessee's compliance with filing requirements and the utilization of funds for the Trust's purposes justified granting the exemption. In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the Assessee's entitlement to the exemption under Section 11(2) of the Income Tax Act. The decision was based on the Assessee's timely filing of Form 10, both physically and electronically, and the proper utilization of funds for the Trust's objectives.
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