2024 (7) TMI 827 - AT - Income Tax

Exemption u/s 11 - claim denied as Assessee had filed Form 10 beyond the due date and had sought accumulation of income u/s 11(2) which was in contravention of section 13(9) of the Act - HELD THAT - From 10 and Form 10B have been filed belatedly by the assessee. However, the delay in filing Form 10 and Form 10B has been condoned by the CIT(E). There is a delay in filing the return of income and assessee has filed application for condonation, which is pending consideration. The limited prayer of the AR is to remand this matter to the AO and direct him to take a decision in matter after PCCIT(E), Delhi, had disposed off the assessee s application for condonation of delay in filing the return of income. On identical situation, the Chennai Bench of the Tribunal in the case of Ms/. Papathiyammal Pitchai Education Trust 2023 (10) TMI 1404 - ITAT CHENNAI had restored the matter to AO and directed the AO to take a decision after the outcome of the condonation petition filed by the assessee. Appeal filed by the assessee is allowed for statistical purposes.

Issues:
1. Disallowance of accumulation of income under section 11(2) of the Income Tax Act.
2. Condonation of delay in filing Form 10 and Form 10B.
3. Justification for not allowing accumulation of income.
4. Benefit of accumulation of income under section 11(2) of the Act.
5. Appeal against the order of the CIT(A).
6. Restoration of the matter to the AO for fresh adjudication.
7. Compliance with mandatory requirements for laying claim on deduction.

Detailed Analysis:

1. The appeal was against the CIT(A)'s order disallowing the accumulation of income under section 11(2) of the Act, amounting to Rs. 4,00,00,000. The appellant contested that the disallowance was unjustified and opposed to law, facts, and circumstances of the case. The appellant, a charitable trust, had filed for accumulation of income beyond the due date, leading to the disallowance by the assessing officer.

2. The appellant sought condonation of delay in filing Form 10 and Form 10B, crucial for claiming the benefit of accumulation of income under section 11(2) of the Act. Despite the CIT(E) accepting the condonation of delay in filing Form 10 and Form 10B, the First Appellate Authority did not grant the benefit of accumulation due to the absence of evidence for condonation of delay in filing the return of income.

3. The key contention revolved around the requirement to file the return of income within the due date specified under section 139(1) of the Act to be eligible for accumulation of income under section 11(2). The appellant had filed an application for condonation of delay in filing the return, which was pending consideration. The matter was proposed to be remanded to the AO for a decision post the resolution of the condonation application.

4. The Tribunal, considering the precedent set by the Chennai Bench in a similar case, restored the matter to the AO for fresh adjudication. The AO was directed to decide on the accumulation of income after the resolution of the condonation application for delay in filing the return of income. The appeal by the assessee was allowed for statistical purposes, following the principles of natural justice and compliance with mandatory requirements for claiming deductions.

5. The judgment highlighted the importance of complying with statutory requirements for claiming deductions under the Income Tax Act and the significance of condonation of delays in filing necessary forms for availing benefits. The decision emphasized the need for a liberal view in interpreting beneficial provisions for charitable institutions, ensuring fair treatment and adherence to legal procedures in tax assessments.

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