Saraswati Shishu Mandir, Rudrapur V. The Assistant Director of Income Tax, CPC, Bangalore

ITA 1/DDN/2023

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 1686 (ITAT-DEHRADUN)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-02-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 15-01-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM SHARMA
• Assessee Lawyers: S. K. MATTA
• Keywords: Capital expenditure; Rectification of order; Charitable institution
• Section: 154; 143(1); 11; 12AA; 12A; 10B; 10(23C)

Judgement Text

Page | 1 THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH, NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER, AND SHRI YOGESH KUMAR US, JUDICIAL MEMBER (Through Video Conferencing) ITA No. 01/DDN/2023 (Assessment Year: 2018-19) Saraswati Shishu Mandir, Rudrapur, C/o. Matta Garg & Co, 15, Astley Hall, Dehradun Vs. Assistant Director of Income Tax, CPC (Appellant) (Respondent) PAN: AAIAS5892H Assessee by : Shri S. K. Matta, CA Revenue by: Ms. Poonam Sharma, Sr. DR Date of Hearing 23/02/2024 Date of pronouncement 29/02/2024 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.1/DDN/2023 for AY 2018-19, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. ITBA/NFAC/S/250/2021-22/1041372232(1) dated 23.03.2022 against the order of assessment passed u/s 154 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 12.02.2020 by the Assessing Officer, ITO, Ward-2(1), Rudrapur (hereinafter referred to as „ld. AO‟). 2. At the outset, there is delay in filing of appeal of 238 days by the assessee before us. The assessee has filed a delay condonation petition adducing reason that it being an educational institution running a small school and providing education to the under-privileged children, is not conversant with the deadlines fixed under the taxation laws and that the Treasurer of the institution immediately on receipt of the appeal order of the ld CIT(A) had handed over the same to the Principal of the Institution. The Principal being an academician was also not ITA No. 01/DDN/2023 Saraswati Shishu Mandir Page | 2 conversant with the deadlines prescribed under the Income Tax Act and had practically forgotten to handover the said order to the Chartered Accountant for further course of action. In support of this, an affidavit from Treasurer as well as from the Principal duly confirming the aforesaid facts were placed on record. Considering the same, we hold that the assessee was prevented from sufficient cause in not filing the appeal in time before us and accordingly, we are inclined to condone the delay and admit the appeal of the assessee for adjudication. 3. The assessee has raised the following grounds of appeal:- “1. The learned Assessing Officer as also learned Commissioner of Income Tax, (Appeals) have erred in making and confirming addition of Rs.94,73,763/-. 2. The learned Assessing officer is not empowered to disallow legitimate expenses debited in Income & Expenditure Account u/s 143(1) as these are not covered under prima facie adjustments. 3 The gross receipts of the educational institution are less than Rs.1.00 crore covered u/s 10(23C) (iiiad) and income is exempt from tax u/s 12A too. 4. The order passed is Arbitrary, against the provisions of law and facts of the case. 5. Any other ground arising at the time of or before hearing of appeal.” 4. We have heard the rival submissions and perused the material available on record. The assessee is a Society engaged in the Charitable Activity of Imparting Education through a 10+2 Hindi Medium School Affiliated to Uttarakhand Board run under the aegis of Rashtriya Swayam Sewak Sangh (RSS) existing since 1952. The assessee had electronically filed its return of income u/s 139(4A) of the Act on 20.06.2018 declaring total income at Rs. NIL. The return was processed by CPC u/s 143(1) vide order dated 26.09.2019 assessing the total income at Rs. 94,73,763/- without granting any exemption u/s 11/12 of the Act. The assessee filed a rectification application on 03.01.2020 for rectifying the demand and the same was rejected vide Order u/s 154 dated 12.02.2020. 5. It is not in dispute that the gross receipts of the assessee for the year under consideration was Rs. 94,73,763/-. The assessee had indeed claimed application of income to the tune of Rs. 74,52,506/- on account of revenue expenditure and Rs ITA No. 01/DDN/2023 Saraswati Shishu Mandir Page | 3 14,99,934/- on account of capital expenditure. When these applications of income are taken together, the assessee had spent more than the requisite 85% of the receipts towards charitable purposes. There is absolutely no dispute that the amount expended/ applied by the assessee both on revenue account as well as on capital account were meant for charitable purposes only. Since, the assessee had not furnished the audit report in Form 10B along with return of income, the deduction towards application of income for charitable purposes was denied by the CPC both u/s 143(1) as well as in the rectification order passed u/s 154 of the Act. It is a fact that audit report in Form 10B was digitally signed by the Auditor only on 19.07.2019 though the same was stated to have been completed on 28.05.2018 and the same audit report was uploaded on 19.07.2019 which is much after the filing of income tax return and the due date of filing of income tax return for AY 2018-19. It is not in dispute that the assessee is a society duly registered u/s 12AA of the Act thereby eligible for exemption u/s 11 of the Act. But at the same time there is no dispute that gross receipts of the assessee was less than Rs. 1 crore during the year under consideration and hence, the assessee would be entitled for exemption of its income in terms of section 10(23C)(iiiad) of the Act. This limit of Rs. 1 crore was later enhanced to Rs. 5 crores. Hence, either way, irrespective of the fact that the audit report has been filed belatedly, the assessee‟s income would be eligible for exemption u/s 10(23C)(iiiad) in the instant case. Accordingly, the lower authorities had grossly erred in denying the claim u/s 10(23C)(iiiad) on the ground that the same was not claimed by the assessee in the return of income. Either way, the claim of exemption 10(23C)(iiiad) made by the assessee in the instant case in the manner as provided in the statute. The law is well settled that a belated claim of the assessee should be allowed even if the same is not claimed by the assessee in the original return of income but made during the course of assessment and appellate proceedings. Reliance in this regard is placed on the decision of Hon‟ble Jurisdictional High Court in the case of CIT Vs. Jai Parabolic Springs Ltd reported in 306 ITR 42 (Del). 6. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we hold that the assessee would be entitled ITA No. 01/DDN/2023 Saraswati Shishu Mandir Page | 4 for exemption u/s 10(23C)(iiiad) of the Act in the instant case. Accordingly, ground No. 3 raised by the assessee is allowed. In view of the relief being granted to the assessee vide ground No. 3, the other grounds raised by the assessee need not be adjudicated and they are left upon. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 29/02/2024. -Sd/- -Sd/- (YOGESH KUMAR US) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:29/02/2024 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi