BILQUIS EDUCATION SOCIETY, KORBA,KORBA V. INCOME TAX OFFICER, EXEMPTION WARD WARD, , BILASPUR

ITA 391/RPR/2024

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M/s. Bilquis Education Society, a trust registered under sections 12A/12AA/12AB of the Income Tax Act, appealed against the order of the ADDL/JCIT(A)-2, Bengaluru, which confirmed the disallowance of revenue and capital expenditures amounting to Rs.1,65,61,324. The expenditures were initially disallowed by the Centralized Processing Center (CPC)/A.O due to the late filing of the audit report in Form 10B, which is a requirement under Section 12A(1)(b) of the Act. The trust argued that the expenditures were necessary for its charitable activities and should be deducted from its income, which was accepted by the Tribunal in a similar case. The Tribunal's decision to allow the appeal for statistical purposes means that while the exemption under Section 11 was denied, the trust's claim for deduction of expenses will be re-evaluated by the Assessing Officer.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469803 (ITAT-RAIPUR)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-10-2024
• Assessment Year: 2022-2023
• Appeal Filed On: 23-08-2024
• Other Referred Cases: Shree Banke Bihari Charitable Trust Vs. ACIT, Circle-1(1), Raipur, Shri Jain Shwetamber Murtipujak Sangh Vs. ITO (Exemption), Ward-1, Raipur
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: G.S. AGRAWAL
• Keywords: Condonation of delay; Opportunity of being heard; Revenue expenditure; Capital expenditure; Charitable institution
• Section: 143(1); 139(1); 12A; 44AB; 10B

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ रायपुर मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 391/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2022-23 M/s. Bilquis Education Society Part-D, Second Floor, Commercial Complex, Korba (C.G.)-495 678 PAN: AABTB2029E .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer (Exemption) Ward-Bilaspur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri G.S. Agrawal, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 25.10.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 18.11.2024 2 M/s. Bilquis Education Society, Korba Vs. ITO (Exemption), Bilaspur ITA No. 391/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee trust is directed against the order passed by the ADDL/JCIT(A)-2, Bengaluru, dated 26.06.2024, which in turn arises from the intimation issued by the Centralized Processing Center (CPC)/A.O under Sec.143(1) of the Income- tax Act, 1961 (in short ‘the Act’) dated 29.12.2023 for the assessment year 2022-23. The assessee trust has assailed the impugned order on the following grounds of appeal before us: “1. That under the facts & the law, the Ld. Assessing Officer erred, and the Ld. CIT (Appeals) erred in confirming in not allowing the expenditure of Rs.1,65,61,324/- which is revenue expense and is spent on the object of the Trust. Prayed that Rs.1,65,61,324/- which is revenue expenses and incurred for the purpose of doing the activity be deducted from the income and the taxable income be assessed at Rs.6,17,425/-. 2. That under the facts & the law, the Ld. Assessing Officer and Ld. CIT (Appeals) erred in not appreciating the facts that Appellant has filed the Return of Income which is updated Return u/s.139(8A) on 27.03.2023 whereas Form No. 10 was filed on 01.01.2023 and as such when the Return of Income has been accepted because of Sec. 139(8A), form 10B be also accepted as filed within time. Therefore, prayed that disallowance of Rs.1,65,61.324/- is unjustified and be deleted. 3. That under facts & law, without prejudice to above, the expenses of Rs. 1,65,61,324/- are as per the books of accounts kept and audited, which was filed before the Ld. Assessing officer, is revenue expenditure i.e., (Rs.1,60,77,987/- revenue expenditure and Rs. 4,83,337/- on capital account) is spent for earning the income, therefore, 3 M/s. Bilquis Education Society, Korba Vs. ITO (Exemption), Bilaspur ITA No. 391/RPR/2024 the same should be deducted from income. Prayed to deduct Rs.1,65,61,324/-from the income. 4. That under facts & law, expenses of Rs. 1,65,61,324/- is also allowable as per Sec. 13(10) which was inserted w.e.f AY 2023-24 by Finance Act, 2022 which is in explanatory nature, to remove difficulty in such cases. The Ld. CIT (A) did not consider the explanation. Prayed to deduct Rs.1,65,61,324/- from income.” 2. Succinctly stated, the assessee trust which is stated to be registered u/s. 12A/12AA/12AB of the Act, had filed “Form 10B” for A.Y. 2022-23 on 01.01.2023 and the return of income u/s 139(8A) for the subject year on 27.03.2023, declaring an income of Rs.6,17,425/- (after claiming exemption u/s. 11 of the Act). The assessee trust during the year had gross receipts of Ra.1,71,78,749/-, incurred revenue expenditure of Rs.1,60,77,987/- and capital expenditure of Rs.4,83,337/-. 3. The CPC/A.O, Bengaluru vide its initiation issued u/s.143(1)(a) of the Act, dated 29.12.2023 proposed to disallow both the revenue and capital expenditure, for the reason that the assessee trust had failed to filed the audit report in “Form 10B” within the prescribed period of one month prior to the date for furnishing of its return u/s 139(1) of the Act. Thereafter, the CPC/A.O, Bengaluru vide its intimation issued u/s.143(1) of the Act, dated 29.12.2023 disallowed the expenditure of Rs.1,65,61,324/-. 4. Aggrieved, the assessee trust carried the matter in appeal before the ADDL/JCIT(A)-2, Bengaluru but without success. The ADDL/JCIT(A), 4 M/s. Bilquis Education Society, Korba Vs. ITO (Exemption), Bilaspur ITA No. 391/RPR/2024 Bengaluru observed that the claim of the assessee trust for exemption u/s.11 of the Act was declined by the CPC/A.O, Bengaluru vide its intimation u/s. 143(1) of the Act, dated 29.12.2023, for the reason that it had as per the mandate of Sec. 12A(1)(b) of the Act failed to submit its audit report in “Form-10B” within the prescribed time period, i.e one month prior to the “due date” for furnishing return of income u/s 139(1) of the Act. For the sake of clarity, the observations of the ADDL/JCIT(A)-2, Bengaluru are culled out as under: “5. Appellate Order: I have carefully considered the facts of the case, contention of the appellant mentioned in Form No.35, submissions and order passed by the LAO against which the appeal has been preferred. 5.2 Ground No.1 & 2 are against the revenue expenditure incurred during the year for charitable or religious purposes. The appellant filed its return of income u/s. 139(8A) of the Act due to previously return not filed and filed updated income tax return within the 12 months from the end of relevant assessment year on 27.03.2023 for A.Y.2022-23 by declaring total income of Rs.6,17,425/- and also filed Form no.10B on 01.01.2023 for A.Y.2022-23. Thereafter, the Ld.AO, CPC, Bengaluru has passed order u/s.143(1) of the Act and disallowed the revenue expenditure made on charitable purpose due to following reasons., \"The Trust or Institution registered u/s 12A/12AA /12AB has not e-filed the Audit Report in Form 10B at least one month prior to the due date for furnishing return u/s 139(1) of the Act. Hence the exemption claimed in Sr. no. 6i to 6vii of Part B1 - Part B-This, not allowable in accordance with the provisions of Section-12A(1)(b) of the Income.\" 5.2.1 As per CBDT vide circular No.19/2022/ITA-11 dated 30- Sep-2022 has extended the last date of filling of various Audit Reports for the A.Y.2022-23 under the Income Tax Act,1961 to 5 M/s. Bilquis Education Society, Korba Vs. ITO (Exemption), Bilaspur ITA No. 391/RPR/2024 7th October 2022 which was earlier 30th September 2022. The same extension is also applicable for charitable organization with respect to Audit Report in Form 10B. However, the appellant has filed Form 10B on 01.01.2023 vide Acknowledgement Number -965962640240223 for A.Y.2022- 23. As per section 12A(1)(b) of the Income tax Act, the appellant should file Form 10B within the stipulated time. However, the appellant has not filed Form 10B within the stipulated time mentioned in section 12A(1)(b) of the Income tax Act. Reference is made as under: \"Section 12A Conditions for applicability of sections 11 and 12. 12A. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:— (b) Where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable income-tax in any previous year], the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section(2) of section 288 (before the specified date referred to in section 44AB and the person in receipt of the income furnishes by that date) the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed)….” Considering the condition mentioned in Section 12A(1)(b) of the Income tax Act and Form 10B of the Act, the appellant has not satisfied the condition mentioned in section 12A(1)(b) of the Income tax Act. During appellate proceedings, it is found the appellant The assessee has filed for AY 2022-23 Form. 10B vide Ack no. 965962640240223 on dated 01.01.2023 and return of income u/s 139(8A) vide Ack. No. 995629110270323 on dated 27.03.2023 by declaring total income of Rs.6,17,425/- and paid tax of Rs.6,125/-. Provisions of section 12A (1) (b) requiring assessee to furnish audit report has been amended wef 01.04.2020. Requirement of furnishing audit report before the due date prescribed in section. 44AB is made mandatory wef 01.04.2020 i.e. from AY 2020-21. The assessment year under consideration being AY:2022-23, amended provisions of section 12A(1)(b) are applicable. If there is delay in filing Form 10B, delay can be regularised by making an application to CIT concerned for condonation of delay in filing Form 10B as 6 M/s. Bilquis Education Society, Korba Vs. ITO (Exemption), Bilaspur ITA No. 391/RPR/2024 prescribed by CBDT circular no 19/2020 dated 03.11.2020. In the present case the appellant has not e-filed the Audit Report in Form 10B at least one month prior to the due date for furnishing return u/s 139(1) of the Act. Also it appears that appellant trust has not made any application for the condonation of delay in filing Form 10B belatedly. Even during the appellate proceedings, the appellant was failed to provide any details regarding condonation of delay granted to the appellant allowing it to file Form 10B belatedly for the year under consideration. The appellant could not even provide evidence to show that an application for condonation has been made. It means appellant clearly failed to satisfy provisions of section 12A (1)(b) making it ineligible for exemption u/s11 of the Act. But for the year under consideration since the appellant failed to satisfy provisions of section 12A(1)(b) of the Act, denial of exemption vide Section.143(1) by AO, CPC is upheld. Therefore, these grounds are dismissed. 5.3. Ground no. 3 is general in nature. Hence, there is no separate adjudication on this ground. 6. In the sum, the appeal is dismissed.” 5. The assessee trust being aggrieved with the order of the Addl/JCIT(A)- 2, Bengaluru has carried the matter in appeal before us. 6. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 7. Shri G.S. Agrawal, Ld. Authorized Representative (for short ‘AR’) for the assessee trust, at the threshold submitted that the A.O/CPC, Bengaluru after declining the claim of the assessee trust for exemption u/s.11 of the Act ought to have allowed its claim for deduction of expenses for deducing its true income in a commercial manner. The Ld. AR in support of his 7 M/s. Bilquis Education Society, Korba Vs. ITO (Exemption), Bilaspur ITA No. 391/RPR/2024 aforesaid contention had drawn our attention to the “Consolidated income and expenditure account”, Page 15 of APB of the assessee trust. For the sake of clarity, the “Consolidated income and expenditure account” of the assessee trust is culled out as under: 8. Per contra, Dr. Priyanka Patel, Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. 8 M/s. Bilquis Education Society, Korba Vs. ITO (Exemption), Bilaspur ITA No. 391/RPR/2024 9. Apropos the Ld. AR’s contention, that after declining of the assessee’s claim for exemption u/s.11 of the Act, the A.O/CPC, Bengalaru ought to have allowed its claim for deduction of expenses, we find substance in the same. We find that a similar issue had been dealt with by the ITAT, Raipur in the case of Shree Banke Bihari Charitable Trust Vs. ACIT, Circle-1(1), Raipur, ITA No.374/RPR/2024, dated 24.10.2024, wherein the Tribunal after relying on its earlier order in the case of Shri Jain Shwetamber Murtipujak Sangh Vs. ITO (Exemption), Ward-1, Raipur, ITA Nos. 15 & 16/RPR/2022, dated 22.05.2023, had held as under: “12. Apropos the Ld. AR’s contention that after declining of the assessee’s claim of exemption u/s.11 of the Act, the AO ought to have allowed its claim for deduction of expenses, I find substance in the same. I find that a similar issue had been dealt with by the ITAT, Raipur in the case of Shri Jain Shwetamber Murtipujak Sangh Vs. ITO (Exemption), Ward-1, Raipur, ITA Nos. 15 & 16/RPR/2022, dated 22.05.2023, wherein the Tribunal after necessary deliberations had held as under: “15. Be that as it may, as the assessee-trust does not cumulatively satisfy the set of conditions specified in Para 4(i) of the CBDT Circular No.10 (supra), and also had not filed any application for condonation of delay u/s.119(2)(b) of the Act as provided in Para 4(ii) of the said circular, therefore, there remains no occasion for condoning the delay involved in filing of Form 10B by the assessee beyond the stipulated time period. I, thus, on the basis of my aforesaid observations, find no infirmity in the view taken by the lower authorities who had rightly declined the assessee's claim for exemption u/s.11 of the Act. However, I may herein observe that the A.O after declining the assessee's claim for exemption u/s.11 of the Act could not have summarily held its gross receipts of Rs.24,83,562/- as its income. In sum and substance, the A.O after treating the assessee as an unregistered trust was obligated to have considered its claim for deduction of expenses as were raised in the income and expenditure account. Accordingly, on the basis of my aforesaid deliberations, I though uphold the declining of 9 M/s. Bilquis Education Society, Korba Vs. ITO (Exemption), Bilaspur ITA No. 391/RPR/2024 the assessee's claim for exemption u/s.11 of the Act, but at the same time, restore the matter to the file of the A.O with a direction to consider the assessee's claim for deduction of expenses as debited in the income and expenditure account, i.e. to the extent the same are allowable under the Act. Needless to say, the A.O shall grant a reasonable opportunity of being heard to the assessee in the course of set-aside proceedings.” As the facts and the issue involved in the present appeal remain the same as was there before the Tribunal in the aforesaid case (supra), therefore, I respectfully follow the same. Accordingly, on similar terms, I restore the aforesaid issue to the file of the A.O with a direction to verify the maintainability of the assessee’s claim for deduction of the aforesaid expenses aggregating to Rs. 3,22,267/- (supra).” 10. As the facts and the issue involved in the present appeal remain the same as were there before the Tribunal in the aforesaid cases (supra), therefore, we respectfully follow the same. Accordingly, on similar terms, we restore the aforesaid issue to the file of the A.O with a direction to verify as per the extant law the allowability of the assessee trust claim for deduction of revenue expenditure in order to deduce its true income in a commercial manner. Thus, the Grounds of appeal Nos. 1 to 4 raised by the assessee trust are allowed for statistical purposes in terms of our aforesaid observations. 11. In the result, the appeal of the assessee trust is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in open court on 18th day of November, 2024. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) 10 M/s. Bilquis Education Society, Korba Vs. ITO (Exemption), Bilaspur ITA No. 391/RPR/2024 रायपुर/ RAIPUR ; Ǒदनांक / Dated : 18th November, 2024. **SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. The Pr. CIT, Raipur-1 (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "