ESWARI EDUCATION TRUST,VELLORE V. ITO, WARD 2, VELLORE

ITA 347/CHNY/2024

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The case involves M/s. Eswari Education Trust, a charitable trust, appealing against the order of the Learned Commissioner of Income Tax (Appeals) which dismissed their appeal against an intimation from the Centralized Processing Center (CPC), Bangalore. The CPC had disallowed the exemption claimed under section 11 of the Income Tax Act, 1961, for the Assessment Year 2021-22, assessing the income at Rs.1,60,31,093/- instead of allowing the claimed exemption of Rs.89,31,093/-. The main contention was the incorrect application of the law regarding the registration under section 12AB and the requirements of filing an audit report in Form 10BB, which was not applicable for AY 2021-22 but came into effect from AY 2022-23.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 106945 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-08-2024
• Assessment Year: 2021-2022
• Appeal Filed On: 09-02-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMUEL PITTA
• Assessee Lawyers: P. RANGA RAMANUJAM
• Keywords: Condonation of delay; Set aside; Competent authority; Charitable institution
• Section: 12A; 10B; 10(23C)

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ \u0001यायपीठ, चे\tई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0001ी एबी टी. वक , \u000bाियक सद\u0011 एवं एवं एवं एवं \u0001ी अिमताभ शु\u0018ा, लेखा सद\t क े सम\u001b BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.347/Chny/2024 िनधा\u000eरण वष\u000e/Assessment Year: 2021-22 M/s. Eswari Education Trust, Old No.1/2, New No.23, Koviloor Road, Tirupattur, Vellore-635 601. v. The ITO, Ward-2, Barracks Cross Street, Officer Line, Vellore-632 001. [PAN: AAATE 2327 G] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) अपीलाथ\u0016 क\u001a ओर से/ Appellant by : Mr.P. Ranga Ramanujam, CA \u0017\u0018यथ\u0016 क\u001a ओर से /Respondent by : Dr. Samuel Pitta, JCIT सुनवाईक\u001aतारीख/Date of Hearing : 12.08.2024 घोषणाक\u001aतारीख /Date of Pronouncement : 09.10.2024 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee Educational Trust against the order of the Learned Commissioner of Income Tax (Appeals)/Addl./JCIT (A), (hereinafter in short \"the Ld.CIT(A)”), Mumbai, dated 13.12.2023 for the Assessment Year (hereinafter in short \"AY”) 2021-22. 2. The main grievance of the assessee is against the action of the First Appellate Authority dismissing the grounds of appeal raised by the ITA No.347/Chny/2024 (AY 2021-22) M/s. Eswari Education Trust :: 2 :: assessee against the intimation passed by the CPC, Bangalore, u/s.143(1) of the Income Tax Act, 1961 (hereinafter in short \"the Act”) dated 23.08.2022 for AY 2021-22. 3. Brief facts are that the assessee noted to be a Charitable Trust established on 16th September, 1988, with the sole objective of providing medical and educational relief to the poor, and registered under section 12A of the Act on 22nd February 2007; and the assessee filed for AY 2021-22, its original return of income (RoI) on 30.03.2022 claiming exemption u/s.11 of the Act to the extent of Rs.89,31,093/- and consequently admitted ‘Nil’ income. Later, the RoI was processed by the CPC and by intimation dated 23.08.2022, assessed income at Rs.1,60,31,093/- by disallowing exemption and consequently treated the entire application of income of Rs.89,31,093/- and the balance in the corpus fund of Rs.71 lakhs as income of the assessee (according to the assessee, the corpus fund of Rs.71 lakhs was inadvertently disclosed by it as opening balance of the corpus fund as on 31.03.2021 [in Sl.No.A(i) of Schedule-VC (corpus fund definition) instead of Schedule-J (balance of the corpus fund as on the last day of the previous year)] as there was no clarity in disclosing the balance of the corpus fund. However, pursuant to a rectification petition filed by assessee, the CPC deleted the corpus donation of Rs.71 lakhs [vide order No.CPC/2122/U7/325010452,] but sustained addition of Rs.89,31,093/- ITA No.347/Chny/2024 (AY 2021-22) M/s. Eswari Education Trust :: 3 :: 4. Aggrieved by the aforesaid action of the CPC, i.e. the action of the CPC making addition of Rs.89,31,093/-, the assessee preferred an appeal before the Ld.CIT(A), who dismissed it on the ground that assessee didn’t file Audit Report within due date in Form 10BB which requirement of Law according to Ld AR came into force from AY 2022-23 and not in this year. Therefore, according to Ld AR, the impugned action of Ld CIT(A) is per-se erroneous. Hence, the assessee is in appeal before this Tribunal. 5. We have heard both the parties and perused the material available on record. We note that the CPC had disallowed exemption on the ground that the assessee didn’t give the details of registration u/s.12AB of the Act for claiming exemption [i.e., as per the amendment brought in from 01.06.2020] and disallowed the exemption by noting as under:- \"In Schedule Part A General -\"Details of registration or approval under Income Tax Act\" details of Section 12AB or 10(23C)(iv)/ 10(23C)(v)/ 10(23C)(vi)/ 10(23C)(via) is not provided in the column \"Section under which the registration is applied\". The Act has been amended from 01/06/2020, and all the entities have to get new registration/approval u/s 12AB or 10(23C) (iv)/ 10(23C)(v)/ 10(23C)(vi)/ 10(23C)(via) to be eligible for exemption. Since in your case, new registration/approval details are not available, exemption claimed in S.No.4i to 4viii in Schedule Part B-Tl is not allowable. 6. On appeal, the First Appellate Authority is noted to have found out another reason i.e. the assessee didn’t furnish the Audit Report within the due date as required in Form 10BB. However, it has been brought to our notice that Form 10BB has to be filed only from AY 2023-24 onwards; and not for the relevant AY 2021-22, and as per the Law in force for AY 2021- 22, the assessee had to file Audit Report in Form 10B, which assessee ITA No.347/Chny/2024 (AY 2021-22) M/s. Eswari Education Trust :: 4 :: had filed albeit belatedly on 30.03.2022 (‘43’ days delay); and moreover, it was brought to our notice that the assessee had already filed application before the competent authority for condonation of delay in filing of Form 10B. Be that as it may, it was brought to our notice that the assessee had in fact filed Form 10B along with Return of Income and the CPC had processed and passed the intimation order only on 23.08.2022 meaning the Audit Report in Form 10B was already before the CPC when the return was processed. 7. Further, we find that the CPC erred in disallowing exemption u/s.11 of the Act for AY 2020-21, only on the ground that assessee didn’t give the details of registration under the new regime which came w.e.f.01.06.2020 because, assessee was having valid 12A registration from 22.02.2007 onwards, which fact is discernable from Page No.12 of the Paper Book. It is further noted that after the amendment has come into effect from 01.06.2020, the assessee had applied for new registration u/s.12A(1)(ac)(i) of the Act and has been granted registration u/s.12AB(i)(a) for five (5) years from AYs 2022-23 to 2026-27, which fact is discernable from perusal of Page No.11 of the Paper Book. Since the assessee has been enjoying 12A registration up to 2021-22 ( i.e. before the new regime came into force), the CPC erred in denying the exemption u/s.11 of the Act for the relevant AY 2021-22; and the First Appellate Authority is noted to have misdirected itself from the grounds raised by ITA No.347/Chny/2024 (AY 2021-22) M/s. Eswari Education Trust :: 5 :: the assessee and has found out a new issue i.e., non-filing of Form 10BB which is erroneous because such a requirement of law came in subsequent AY i.e. AY 2022-23 onwards; and the Ld.CIT(A) has also not rightly appreciated the fact that the assessee was having valid registration for the relevant assessment year under consideration as noted (supra). Therefore, the impugned action of the Ld.CIT(A) can’t be countenanced. 8. Having said so, we note that the assessee has filed for condoning the delay in filing of the Audit Report in Form 10B (delay of ‘43’ days) on 24.02.2024 i.e. after the impugned order of the Ld.CIT(A). Be that as it may, since we find that the foundation of the action of the CPC in denying exemption to the assessee was that it was not having valid registration u/s.12A of the Act, which we find to be erroneous as noted (supra) and the Ld.CIT(A) also misdirected itself on an erroneous ground to decline exemption u/s.11 of the Act, which is legally un-sustainable and that too, without giving proper opportunity to assessee is found to be legally fragile, therefore, we set aside the impugned order of the Ld.CIT(A) and taking judicial notice of the fact that assessee did enjoy registration as per old regime u/s.12A of the Act up to AY 2021-22 & under the new regime for five years from AY 2022-23 to AY 2026-27, which was the reason given by CPC for declining exemption u/s.11 of the Act, which foundation is not existing as noted supra, therefore, the assessee is ITA No.347/Chny/2024 (AY 2021-22) M/s. Eswari Education Trust :: 6 :: entitled to exemption u/s.11 of the Act and direct deletion of Rs.89,31,093/-. And since the CPC has already deleted Rs.71 lakhs vide order No.CPC/2122/U7/325010452, the appeal of the assessee is allowed. 9. In the result, appeal filed by the assessee is allowed. Order pronounced on the 09th day of October, 2024, in Chennai. Sd/- (अिमताभ शु\u0018ा) (AMITABH SHUKLA) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे\tई/Chennai, \u001fदनांक/Dated: 09th October, 2024. TLN, Sr.PS आदेश क\u001a \u0017ितिलिप अ\"ेिषत/Copy to: 1. अपीलाथ\r/Appellant 2. \u000e\u000fथ\r/Respondent 3. आयकरआयु\u0015/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u000eितिनिध/DR 5. गाड\u001eफाईल/GF "