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TMI Blog2025 (1) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... t along with the return of income since the registration was granted belatedly with retrospective effect at the behest of the directions from this forum. As excruciating to note that a demand has been created on flimsy grounds as aginst the assessee which is in existence since 1965. For the sake of clarity it is clarified that the assessee trust is successful in assailing the order on twin grounds of submission of return of income as well as submissions of the audit report in tandem with the provisions for the impugned assessment year. As surprising that the CIT(A) had traversed in an altogether different route to sustain the addition which is also perverse and has been noted cryptically by this forum. We are in concurrence with the averments raised before us by the A.R. and hold that the entire addition merits full relief and hence the returned income be accepted. Appeal of assessee allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ner, Nagpur vide Registration No. F-742(N) dated 11/05/1965. The said Registration is placed on record. The assessee is also registered under the Societies Registration Act vide registration dated 11/05/1965 and a copy of which is placed on record. The assessee approached the Charity Commissioner of Nagpur for framing of Scheme under section 50A of the Maharashtra Public Trust Act, as in the old bye-laws there was no provision regarding the mode of succession of trustees, tenure of trustees, etc. The Assistant Charity Commissioner, Nagpur, by an order dated 30/09/2014 approved the said Scheme, a copy of which is placed on record. The said Scheme contains the object of the trust which are all educational in nature. The assessee was running the following educational institution under its aegis which is affiliated to SSC Board of Education:- i) Mount Everest Primary School ii) Pandit Nehru High School The said schools receive grant from Government of Maharashtra and is fully aided school. The school is regularly inspected by the Department of Education, Government of Maharashtra, and it continuing to receive grant till date. The said Schools are engaged in imparting secular educa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls) to Jt. Commissioner of Income Tax (Appeals), who, vide order dated 15/07/2024, dismissed the assessee's appeal on the ground that the assessee had filed its return of income for the assessment year 2017-18 belatedly on 30/03/2018. Hence, the assessee is not eligible to avail exemption under section 11 & 12 of the Act, a copy of which is also placed on record. Being aggrieved, the assessee is in further appeal before the Tribunal. 5. The learned A.R. opened her arguments by inviting the attention of the Bench to the details of incorrect claim under section 143(1(a)(ii) of the Act which is reproduced below, as contained in the intimation dated 24/03/2019, under section 143(1) of the Act:- Schedule Error Description Amount in Income Tax Return Amount as computed Variance As per Section-12A(1)(b) of Income tax Act read with 1st Proviso to Rule 12(2) of the Income Tax Rules, where the total income of the trust or institution without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income tax, the audit report in Form-10B has to be E-filed along with the return of income. Since assessee has not E-filed the Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The name of the trust has been entered at Sr.No.1684/580/2016-17 in the register of Trusts/Institutions maintained in this office." 8. It is crystal clear that registration has been granted retrospectively from the assessment year 2017-18. The requirement of audit for the assessment year 2017-18 cannot be thrust upon the trust because the same was unregistered at that time. So, abiding by the concept of supervening impossibility, as the requirement of audit was not binding while seeking registration, she prayed that the adjustments made in the intimation may be set aside. 9. Per-contra, the learned Departmental Representative ("the learned D.R.") submitted that concurrent findings of the lower authorities need be left undisturbed as non-submission of return of income in time and audit report goes to the root of the matter to deny application of section 11 and 12 of the Act. 10. Upon thoughtful consideration of the matter and granting a dispassionate hearing of the arguments, it is apparent that till the date of registration on 23/11/2022, the requirement of compulsory audit did not apply to the assessee appellant, because the status of the trust was unregistered. So the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ratio of the judgment is exactly applicable to the dispute raised before us. We are in complete agreement that the trust has substantially complied with the audit requirement. Hence, the assessee succeeds vide ground no.5. 12. She further invited our attention to Page-169 of the Paper Book Vol.I, containing the order of the JCIT (Appeals) which is reproduced below:- "Ground 2 to 4 Under these grounds the appellant contends that the appellant trust has fulfilled the objects of the trust and have also complied with all the conditions and is carrying out the objects of imparting secular education hence its income is exempt u/s. 10(230) and also u/s. 11 to 13 of the Income Tax Act, 1961. However, the CPC had computed total income of the appellant at Rs. 11,26,85,825/- due to addition of Rs. 11,26,85,825/- made owing to denial of deductions to the appellant. The submissions made by the appellant, have been carefully considered. The appellant claims that the said additions to the total income have been made as the appellant did not possess registration u/s 12A of the act at the time of filing of return. In this case, the registration u/s. 12A of the Act was initially denied by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner that its activities are not genuine or are not being carried out in accordance with its objects subsequent to grant of registration. However, before amendment by the Act, there was no explicit provision in the Income-tax Act which mandates said trust or institution to approach for fresh registration in the event of adoption or undertaking modifications of the objects after the registration has been granted. 15.3 Therefore, section 12A of the Income-tax Act has been amended to provide that where a trust or an institution has been granted registration under section 12AA or has obtained registration at any time under section 12A [as it stood before its Amendment by the Finance (No. 2) Act, 1996) and, subsequently, it has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, it shall be required to obtain fresh registration by making an application within a period of thirty days from the date of such adoption or modifications of the objects in the prescribed form and manner. Consequential amendments to Section 12AA of the Income-tax Act have also been made. 15.4 Further, as per the provisions of said section, the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance with the provisions of sub-section (4A) of section 139, within the time allowed under that section. Otherwise the exemption u/s-11 i.e. sr. no 4(i) and 4 viii in schedule Part BTI is not allowed." Based on this, exemption u/s 11 of the Act has been denied to otherwise eligible trust, thereby creating huge demand. 2. In the matter, the memorandum explaining the relevant provisions of the Finance Bill, 2017 reads as under: "as per the existing provisions of said section, the entities registered under section 12AA are required to file return of income under sub- section (4A) of section 139, if the total income without giving effect to the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable to income-tax. However, there is no clarity as to whether the said return of income is to be filed within time allowed u/s 139 of the Act or otherwise. In order to provide clarity in this regard, it is proposed to further amend section 12A so as to provide for further condition that the person in receipt of the income chargeable to income- tax shall furnish the return of income within the time allowed under section 139 of the Act. These amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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