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2023 (3) TMI 765 - AT - Income TaxExemption u/s. 11 - denied the claim of deduction on the ground that the assessee failed to furnish form 10B along with the return of income u/s. 139 as required under the Act - assessee contended that it is a charitable trust and cannot be taxed on gross basis simply on account of delay in filing of return of income since section 143 does not encompass within its scope to deny all expenses claimed by the assessee and tax income on gross basis only on account of delay in filing of return of income - HELD THAT - As in SARVODAYA CHARITABLE TRUST case 2021 (1) TMI 214 - GUJARAT HIGH COURT held that since assessee was a public charitable trust for past 30 years who substantially satisfied condition for availing benefit of exemption, assessee could not be denied exemption merely on bar of limitation to submit Form no. 10, especially, when legislature had conferred wide discretionary powers to condone such delay on authorities concerned. In the case of Jaya Educational Trust 2021 (7) TMI 773 - ITAT CHENNAI ITAT held that where assessee had filed return of income within due date specified under section 139(4) and also filed Form No. 10 electronically before completion of assessment, assessee could not be denied exemption under section 11. Accordingly, in view of the above discussion, delay in filing Form 10-B would not have any impact on the assessee s claim of deduction u/s 11 and 12 of the Act. Whether delay in filing the return of income beyond the due prescribed date would impact the claim of exemption to the assessee under section 11 and 12 of the Act? - In the instant facts, the due date of filing of return of income u/s 139(1) of the Act was 15- 02-2021, while the assessee filed return of income on 18-03-2021. Accordingly, admittedly there is a delay in filing return of income on part of the assessee. However, the CBDT vide Circular CBDT F. No.173/193/2019 ITA I dated 23.04.2019 has clarified with regard to the time allowed for filing of the return of income subsequent to the insertion of clause (ba) in sub section (1) of section 12A of the IT Act which includes the IT return filed within the time allowed u/s. 139 of the Act. Notably, in the case of Conference of Religious India 2022 (10) TMI 1158 - ITAT DELHI has held that benefit of exemption u/s. 11 of the Income Tax Act was available to the assessee as the income tax return was filed within the specified time limit of sub-section 139. Thus we are of the view that once return of income has been filed within the time prescribed u/s 139(4) of the Act, benefit of section 11 and 12 cannot be denied to the assessee by invoking the provisions of clause (ba) to sub section (1) of section 12A. Whether delay in filing return of income beyond time prescribed u/s 139(1) of the Act or delay on filing of Form 10-B, would disentitle the assessee to benefit of exemption u/s 11 of the Act in view of the language of section 13(9) - The impact of section 13(9) of the Act is restricted to sub-section (2) of section 11 of the Act, relating to amounts set aside for accumulation and scope of section 13(9) of the Act does not extend to whole of section 11 of the Act. Since, during the year under consideration, the assessee did not claim any benefit sub-section (2) of section 11 of the Act, in our considered view, section 13(9) of the Act would have no applicability to the facts of the instant case. Assessee appeal allowed.
Issues Involved:
1. Confirmation of assessment of returned income. 2. Denial of deductions and expenditures. 3. Jurisdiction of adjustments under section 143(1) of the Income Tax Act. Summary: Issue 1: Confirmation of Assessment of Returned Income The assessee, a public charitable trust, e-filed its return of income for A.Y. 2020-21 declaring a net total income of Rs. 1,32,610. The Centralized Processing Center (CPC) assessed the income at Rs. 14,05,398, denying the deduction under section 11 of the Income Tax Act due to the failure to furnish Form 10B within the prescribed time. The CIT(A) upheld this assessment, noting that the return of income was filed beyond the due date prescribed under section 139(1) and that the delay in filing Form 10B had been condoned by CIT(Exemption), Ahmedabad. Issue 2: Denial of Deductions and Expenditures The assessee argued that as a charitable trust, it should not be taxed on a gross basis due to the delay in filing the return of income. The CIT(A) dismissed this argument, stating that processing under section 143(1) does not allow for the examination of such claims unless they are validly made in the return. Since the return was filed beyond the due date and without condonation, the claim for exemption under section 11 was rightly denied. Issue 3: Jurisdiction of Adjustments under Section 143(1) The assessee contended that the denial of exemption under section 11 was beyond the scope of section 143(1). The CIT(A) noted that the amended provisions of section 143(1) allow for the denial of claims if required information is not furnished. The delay in filing the return of income was considered an incorrect claim under section 143(1)(a)(m). Tribunal's Analysis and Conclusion: The Tribunal noted that the delay in filing Form 10B was condoned by CIT(Exemption), Ahmedabad, and thus should not impact the claim under sections 11 and 12. It referenced the Gujarat High Court's decision in Sarvodaya Charitable Trust v. ITO, which held that a public charitable trust should not be denied exemption merely due to a delay in submitting Form 10. The Tribunal also cited the Delhi ITAT's decision in Conference of Religious India, which allowed the benefit of exemption under section 11 if the return was filed within the time allowed under section 139(4). The Tribunal concluded that the delay in filing the return of income did not impact the exemption claim under sections 11 and 12, as the return was filed within the time prescribed under section 139(4). It also clarified that section 13(9) applies only to sub-section (2) of section 11 and does not extend to the entire section 11. Since the assessee did not claim any benefit under section 11(2), section 13(9) was not applicable. Decision: The Tribunal allowed the appeal, ruling in favor of the assessee, and did not adjudicate on other grounds of appeal. The order was pronounced on 13-03-2023.
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