2024 (3) TMI 99 - AT - Income Tax

Condonation of delay - delay in filing of appeal of 238 days - assessee has filed a delay condonation petition adducing reason that it being an educational institution running a small school and providing education to the under-privileged children, is not conversant with the deadlines fixed under the taxation laws and that the Treasurer of the institution immediately on receipt of the appeal order of the CIT(A) had handed over the same to the Principal of the Institution - HELD THAT - As assessee was prevented from sufficient cause in not filing the appeal in time before us and accordingly, we are inclined to condone the delay and admit the appeal of the assessee for adjudication. Eligibility for exemption u/s 10(23C)(iiiad) - claim not made in return of income - assessee had not furnished the audit report in Form 10B along with return of income, the deduction towards application of income for charitable purposes was denied by the CPC both u/s 143(1) as well as in the rectification order passed u/s 154 - - assessee is a Society engaged in the Charitable Activity of Imparting Education through a 10 2 Hindi Medium School Affiliated to Uttarakhand Board - HELD THAT - It is not in dispute that the assessee is a society duly registered u/s 12AA of the Act thereby eligible for exemption u/s 11 of the Act. But at the same time there is no dispute that gross receipts of the assessee was less than Rs. 1 crore during the year under consideration and hence, the assessee would be entitled for exemption of its income in terms of section 10(23C)(iiiad) of the Act. This limit of Rs. 1 crore was later enhanced to Rs. 5 crores. Hence, either way, irrespective of the fact that the audit report has been filed belatedly, the assessee s income would be eligible for exemption u/s 10(23C)(iiiad) in the instant case. Accordingly, the lower authorities had grossly erred in denying the claim u/s 10(23C)(iiiad) on the ground that the same was not claimed by the assessee in the return of income. Either way, the claim of exemption 10(23C)(iiiad) made by the assessee in the instant case in the manner as provided in the statute. The law is well settled that a belated claim of the assessee should be allowed even if the same is not claimed by the assessee in the original return of income but made during the course of assessment and appellate proceedings. Reliance in this regard is placed on the decision of Hon ble Jurisdictional High Court in the case of CIT Vs. Jai Parabolic Springs Ltd 2008 (4) TMI 3 - DELHI HIGH COURT . Thus we hold that the assessee would be entitled for exemption u/s 10(23C)(iiiad) of the Act in the instant case. Accordingly, ground raised by the assessee is allowed

Summary

Issues involved:
The appeal involves delay in filing, addition of income, disallowance of expenses, exemption under sections 10(23C)(iiiad) and 12A, and arbitrariness in the order.

Delay in filing appeal:
The appeal was delayed by 238 days, but the assessee, an educational institution, provided valid reasons for the delay. The institution, not familiar with tax deadlines, failed to promptly hand over the appeal order to their Chartered Accountant. Affidavits from the Treasurer and Principal confirmed this. The delay was condoned, and the appeal was admitted for adjudication.

Addition of income and disallowance of expenses:
The assessee, a Society running a school, had filed its return declaring total income as NIL. The CPC assessed the income at Rs. 94,73,763 without granting exemptions under sections 11/12 of the Act. The CPC denied the deduction towards application of income for charitable purposes as the audit report in Form 10B was not furnished with the return. However, the expenses claimed by the assessee were for charitable purposes, and the gross receipts were spent more than 85% towards charitable purposes. The assessee was eligible for exemption under section 10(23C)(iiiad) as its gross receipts were less than Rs. 1 crore. The belated filing of the audit report did not affect the eligibility for exemption under section 10(23C)(iiiad). The claim of exemption was allowed based on judicial precedents.

Arbitrariness in the order:
The order passed by the Assessing Officer was deemed arbitrary and against the provisions of law and facts of the case. However, since the assessee was entitled to exemption under section 10(23C)(iiiad), the other grounds raised by the assessee were not adjudicated upon.

Conclusion:
The appeal of the assessee was allowed based on the entitlement for exemption under section 10(23C)(iiiad). The relief granted under this ground rendered the other grounds raised moot. The decision was pronounced in the open court on 29/02/2024.