ALL INDIA SPICES EXPORTERS FORUM,ERNAKULAM V. INCOME TAX OFFICER, EXEMPTION WARD, ERNAKULAM

ITA 1072/COCH/2024

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The case involves the All India Spices Exporters Forum, a public charitable trust, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which had dismissed their appeal against an Assessment Order. The Assessment Order denied the Assessee exemption under Section 11 of the Income Tax Act, 1961 for the Assessment Year 2014-2015, citing reasons such as late filing of the Audit Report in Form 10B, non-compliance with investment modes prescribed under Section 11(5), and failure to make notice of accumulation under Section 11(2) before the due date. The Tribunal found that the requirement to file the return of income within the specified time under Section 139 was not applicable for the Assessment Year 2014-2015, as the relevant amendment came into effect from 2018-2019. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the case for fresh adjudication.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 793033 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 23-12-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE
• Keywords: Set aside; Opportunity of being heard; Charitable institution; Benefit of exemption
• Section: 154; 11; 12AA; 12A; 139; 12; 10B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, COCHIN SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No.1072/COCH/2024 (Assessment Year:2014-2015) All India Spices Exporters Forum 8/121 A, AISEF Centre of excellence, Jayanagar Road, Maradu, Kerala- 682304 [PAN: AAAAA1025G] …………. Appellant Income Tax Officer Exemption Ward Sanjuan Tower, Behind CR Building Kochi- 682018 Vs …………. Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Shri. G Surendranath Rao, CA Smt. Leena Lal, Sr. AR Date Conclusion of hearing Pronouncement of order : : 21.08.2025 22.09.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order, dated 12/11/2024, passed by National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 04/11/2020, passed under Section 154 of the Act for the Assessment Year 2014-2015. 2. The Assessee has raised following grounds of appeal : “1. The Order of the Commissioner of Income Tax (Appeals) is against facts and law. 2. The Commissioner of Income Tax (Appeals) failed in Printed from counselvise.com ITA No.1072/COCH/2024 Assessment Year 2014-2015 2 disallowing the claim for accumulation of income u/s 11(2) and 11(5) on the ground that no evidence is filed as per Income Tax Rule 17 before the expiry of time allowed u/s 139(1). As per Section 11(2), as applicable for AY 2014-15 there was no date specified as to the period within which the form has to be filed for availing exemption. The amendment in section 11(2) that filing of necessary forms before the due date of filing return as a pre-condition to claim the exemption under section 11(2) was substituted by the Finance Act with effect from 01.04.2016 which is not applicable for AY 2014- 15. Hence the Commissioner of Income Tax (Appeals) went wrong in denying the exemption. 3. The Commissioner of Income tax (Appeals) went wrong in upholding the demand as per CPC Intimation and in not considering the application of income while processing of the return of income. Thus the gross income is treated as the taxable income. While processing of return of income u/s 143(1), the assessing officer is allowed only to make adjustments towards arithmetical error in the return or correction of incorrect claim if it is apparent on the records. Hence, the Commissioner of Income Tax (Appeals) failed by dismissing the grounds of appeal when the action of the assessing officer was beyond the powers granted 'under section 143(1). 4. The Commissioner of Income Tax (Appeals) failed to consider the submissions made regarding the claim of investment through the Copy of the resolution for opening a bank account and bank confirmation Appellant had filed bank confirmation in the name of 'WORLD SPICE CONGRESS' instead of 'All India Spices Exporters Forum'. World Spice Congress 2014 is the name of a project under which the project for Sustainable Spice Industry was conducted and funds were collected for the same. Copy of the resolution for opening a bank account shows that the name 'World Spice Congress 2014' is a project under ALL INDIA SPICES EXPORTER'S FORUM. 5. The Commissioner of Income Tax (Appeals) failed to consider that the filing of the return on the due date is a precondition for claiming exemption u/s 11 which was introduced by the Finance Act 2015 effective from 01.04.2016. During the year the return is to be filed within the due date is not a precondition and CIT (A) is not justified in dismissing the appeal on this grounds.” Printed from counselvise.com ITA No.1072/COCH/2024 Assessment Year 2014-2015 3 3. The facts as emerging from the record are that the Assessee is public charitable trust registered under Section 12A of the Act. The return of income for the Assessment Year 2014-2015 was filed by the Assessee on 31/03/2015 disclosing ‘Nil’ income after claiming exemption under Section 11 of the Act. The aforesaid return of income was processed under Section 143(1) of the Act vide Intimation, dated 16/03/2016. The Assessee was denied the exemption under Section 11 of the Act on the ground that (a) the Audit Report in Form 10B of the Act was filed by the Assessee beyond the due date prescribed under Section 139(1) of the Act, (b) the investments were not made in the mode prescribed under Section 11(5) of the Act and (c) notice of accumulation under Section 11(2) of the Act was not made before the due date. Being aggrieved, the Assessee filed application Section 154 of the Act for rectification of the aforesaid Intimation Order which was rejected. Being aggrieved by the Order, dated 04/11/2020, passed under Section 154 of the Act, the Assessee preferred appeal an appeal was filed before the CIT(A) which was also dismissed by way of the impugned Order, dated 12/11/2024 solely on the ground that the return of income was not filed by the Assessee within the due date prescribed under Section 139(1) of the Act. 4. Being aggrieved the Assessee is in appeal before this Tribunal on the grounds reproduced at Paragraph 2 above. 5. We heard both the sides and have perused the material on record. 6. The present appeal pertains to Assessment Year 2014-2015. As per Section 139(4A) of the Act an assessee was required to file return of income for claiming benefit of Section 11 of the Act. We note that Clause (ba) was inserted in Section 12A(1) of the Act by the Finance Act, 2017 to provide clarity as to the time limit within which the aforesaid return was to be filed. The Memorandum to Finance Bill, Printed from counselvise.com ITA No.1072/COCH/2024 Assessment Year 2014-2015 4 2017 dealing with the aforesaid amendment provided as under: “Clarity of procedure in respect of change or modifications of object and filing of return of income in case of entities exempt under sections 11 and 12 The existing provisions of section 12A of the Act provide for conditions for applicability of sections 11 and 12 in relation to the benefit of exemption in respect of income of any trust or institution. xx xx xx xx Further, 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 amendments are clarificatory in nature. These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to assessment year 2018-19 and subsequent years.” 7. Thus, the requirement to file return of income by a charitable institution claiming exemption under Section 11 of the Act within the time specified under Section 139 of the Act was application from the Assessment Year 2018-2019 and therefore, did not apply to the Assessment Year 2014-2015 to which the present appeal pertains to. Accordingly, the impugned order, dated 12/11/2024, passed by the CIT(A) is set aside with the directions to the CIT(A) to adjudicate the Printed from counselvise.com ITA No.1072/COCH/2024 Assessment Year 2014-2015 5 grounds raised by the Assessee in appeal afresh after granting the Assessee a reasonable opportunity of being heard. It is clarified that the CIT(A) shall not reject the contentions of the Assessee merely on account of income tax return having been filed after the expiry of time specified under Section 139(1) of the Act. The Assessee has not placed on record a copy of rectification application filed before the Assessing Officer. Even the date on which Form 10B was filed by the Assessee is not clear from the material on record. The Assessing Officer has recorded that Form 10B was filed on 09/07/2018 whereas the intimation under Section 143(1) of the Act was issued on 16/03/2016. Therefore, the CIT(A) is directed to verify the underlying facts while deciding the appeal preferred by the Assessee afresh. Since we have restored the issues back to the file of the CIT(A), all the rights and contentions of the Assessee (including those related to compliance of the provisions contained in Section 11(5) of the Act) are left open. In terms of the aforesaid, Ground No. 5 raised in the present appeal is allowed, Ground No.2 is partly allowed, while all the other grounds are dismissed as having been rendered infructuous. 8. In terms of the above, the appeal is treated as allowed for statistical purposes. Sd/- (Inturi Rama Rao) Accountant Member Sd/- (Rahul Chaudhary) Judicial Member मुंबई Mumbai; Ǒदनांक Dated : 22.09.2025 Disha Raut, Stenographer Printed from counselvise.com ITA No.1072/COCH/2024 Assessment Year 2014-2015 6 आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. आयकर आयुÈत/ The CIT 4. Ĥधान आयकर आयुÈत / Pr.CIT 5. ͪवभागीय ĤǓतǓनͬध ,आयकर अपीलȣय अͬधकरण ,मुंबई / DR, ITAT, Mumbai 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, स×याͪपत ĤǓत //True Copy// उप/सहायक पंजीकार /(Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, मुंबई / ITAT, Mumbai Printed from counselvise.com "