Sri Ramalingeswara Swamy Temple, Hyderabad V. Assistant Director of Income Tax, Exemption Ward-1(4), Hyderabad

ITA 492/Hyd/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 4313 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 09-01-2024
• Assessment Year: 2020-2021
• Appeal Filed On: 17-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Competent authority; Condonation of delay
• Section: 12; 11; 10B; 143(1); 250; 10(23C)

Judgement Text

ITA 491 and 492 Sri Tamalingeswara Swamy Temple Page 1 of 7 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B‘ Bench, Hyderabad Before Shri R.K. Panda, Vice-President AND Shri Laliet Kumar, Judicial Member आ.अपी.सं /ITA Nos.491 & 492/Hyd/2023 (िनधाŊरण वषŊ / Assessment Years: 2019-20 & 2020-21) Sri Ramalingeswara Swamy Temple, Keesara Gutta Hyderabad PAN:AAEAS2164C Vs. Asstt. Director of Income Tax, Exemption Ward-1(4) Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: Shri S. Srikanth, CA राज̾ व Ȫारा/Revenue by: : Smt. Sheetal Sarin, DR सुनवाई की तारीख/Date of hearing: 10/01/2024 घोषणा की तारीख/Pronouncement: 12/01/2024 ORDER Per Laliet Kumar, J.M These two appeals filed by the assessee are directed against the separate orders dated 20/07/2023 of the learned CIT (A)-, NFAC, Delhi relating to A.Ys. 2019-20 & 2020-21 respectively. Since common issues are involved in both these appeals, for the sake of convenience, these were heard together and are being disposed of by this common order. 2. At the outset it is seen that there is a delay of 30 days in filing of the above appeals for which the assessee has filed a condonation petition along with an affidavit explaining the reasons for such delay. The learned DR has not opposed the ITA 491 and 492 Sri Tamalingeswara Swamy Temple Page 2 of 7 condonation petition. Considering the facts and circumstances and the reasons given by the assessee, the delay in filing of the appeal is hereby condoned. ITA No.491/Hyd/2023 – A.Y 2019-20 3. The assessee raised the following grounds for the A.Y 2019-20: “I) On the facts of the case and on the principles of natural justice the learned CIT(A) is not correct in disposing the appeal without giving opportunity of being heard. 2) On the facts of the case and as per law, the learned CIT(A), was not justified in disposing the appeal without considering the grounds of appeal raised by the appellant. 3) On the above and other grounds that may arise during the course of appeal, appellant requests an order deleting the additions made in the Intimation under section 143(1) and sustained by the learned CIT(A).” 4. Facts of the case, in brief, are that the assessee is a Trust and had filed its return of income as Artificial Juridical Person for the AY 2019-20 declaring net loss at Rs.15,68,371/- after claiming exemption of administrative expenditure to the tune of Rs.3,33,08,863/- u/s 10(23C) of the Act. The return was processed and intimation order u/s 143(1) of the Act was passed by the CPC on 26-03-2021 disallowing the exemption claimed to the tune of Rs.3,33,08,863/- u/s 10(23C) of the Act. The relevant para of the intimation order is reproduced below: “As per the details furnished in Schedule Personal information under “Details of registration or approval under the Income-tax Act”, the trust or institution is approved u/s 10(23C)(iv) OR 10(23)(v) OR 10(23)(vi) OR 10(23)(via) and has not E-filed the Audit Report in Form 10BB on or before filing of the Return of Income. Hence the exemption claimed in Sr.no. 4i to 4viii of Part B-TI is not allowed in accordance with the tenth proviso to section 10(23C) of the Income tax Act.” ITA 491 and 492 Sri Tamalingeswara Swamy Temple Page 3 of 7 5. Since, the audit report in Form 10BB as mandated under section 10(23C) has not been filed on or before filing of the Return of Income, the exemption claimed u/s 10(23C) has not been granted by the Assessing Officer, CPC while processing the Return u/s 143(1)(a). 6. Aggrieved with such order of the AO, CPC the assessee filed an appeal before the learned CIT (A) NFAC who on the basis of the CBDT Circular No. CIRCULAR NO. 15/2022 [F.NO.197/89/2022-ITA-I], dated 19-7-2022 dismissed the appeal filed by the assessee. 7. Feeling aggrieved, the assessee is in appeal before the Tribunal. 8. The learned Counsel for the assessee submitted that the learned CIT (A) has dismissed the appeal of the assessee vide the impugned order dated 20.07.2023 whereby the learned CIT (A) has dismissed the appeal of the assessee on the ground that one of the mandatory condition prescribed was the audit of the books of account and filing of such report before the specified date as contemplated u/s 10(23) of the Act has not been fulfilled and the assessee has not sought the condonation of delay for filing the audit report from the competent authority. For that purpose, the learned CIT (A) NFAC relied on the circular of the Board dated 19.07.22 and also the decision of the Coordinate Bench of the Tribunal at Ahmedabad vide para 4.5 & 4.6 of his order to the following effect: 4.5 In the case of Association of Indian Panelboard Manufacturer reported in [2022] 143 taxmann.com 418 (Ahmedabad - ITAT), the Hon’ble ITAT held that wherever there was delay in filing Form No.10B, assessee was required to approach jurisdictional Commissioner/Director ITA 491 and 492 Sri Tamalingeswara Swamy Temple Page 4 of 7 of Income-tax to condone delay in filing Form 10B and the Commissioner (Appeals) had no power to condone such delay as per section 119(2)(b). The relevant portion of the said judgment is quoted hereunder: “Considering the hardship faced by the assessee, the CBDT issued Circular No.7/2018, authorizing Commissioner of Income-tax, to admit belated application in Form No. 10 in respect of Assessment Year 2016-17 which were filed belatedly. Thus, the finding of the ld. CIT(A) that, he has no power in condoning the delay in filing Form 10B is legally correct in law. As rightly argued by the Ld. D.R., the assessee seems to be consistently filing the above Form 10B belatedly, for which proper remedy left to the assessee is approaching the Administrative CIT, who is to condone the delay but not with filing appeal u/s. 250 of the Act. We do not find any infirmity in the order passed by the Ld. CIT(A) and it has open to the assessee to avail the appropriate legal remedy in accordance with Income-tax Act. We also further found that the case laws relied upon by the Ld. Senior Counsel will not be applicable to the present case, since in the case of Mayur Foundation cited (supra) wherein the Assessment year involved is 1980-81 and in the case of Xavier Kelavani Mandal (P.) Ltd. cited (supra) wherein the Assessment Year involved is 2006-07. In our considered view, filing of Form 10B is being mandatory because of the amendment made in Finance Act, 2015 with effect from 1-4-2016 applicable for the Assessment Year 2016-17. Therefore, the above case laws are clearly distinguishable to the facts of the present case. Thus, the grounds raised by the assessee are hereby rejected and the appeal filed by the Assessee is dismissed.” 4.6 In the above circumstances, when the power to condone the delay has been vested with the Commissioners of Income Tax and the appellant has chosen not to approach the said authority, the appeal before the undersigned has no merit. Hence, all these grounds of appeal are dismissed.” 9. Before us, the learned AR submitted that the assessee had submitted before the lower authorities that the assessee is an AOP, therefore, the net income of the assessee is required to be taxed in the hands of the assessee. For the above said purposes, the assessee relied upon the decision of the Jaipur Bench of the Tribunal in the case of Kund Kund Kahan Digamber Jain versus Mumokshu Ashram Bajaj Palace vs. Income Tax Officer (Exemption) in ITA Nos.165 to 168/Hyd/2019 for the A.Ys 2013- 14 to 2016-17 and our attention was drawn to Para 8 of the order which is to the following effect: ITA 491 and 492 Sri Tamalingeswara Swamy Temple Page 5 of 7 “8. We have heard the rival contentions and perused the material available on record. We find that where the exemption claimed under section 11 and 12 has been denied by the Assessing officer, what can be brought to tax is the net income in the hands of the assessee trust and not the gross receipts. In all these years, we find that while denying the exemption under section 11 and 12 for want of registration under section 12AA, the Assessing officer has brought gross receipts to tax which is against the basic tenets of law where only the real income which is determined after deducting expenses from gross receipts can be brought to tax. We therefore agree with the alternate contention so advanced by the learned AR and without going into merit of the other contention which is left open, the matter is set-aside to the file of the Assessing officer to examine the claim of the expenditure so claimed by the assessee trust against the gross receipts for each of the relevant years and where the Assessing officer determines the net receipts as not exceeding the maximum amount not chargeable to tax, allow the necessary relief to the assessee trust”. 10. Per contra, the learned DR submitted that the matter may kindly be remanded to the file of the CIT (A) for adjudication of the ground. 11. We have heard the rival arguments made by both the sides and perused the available material on record. In the present case, the assessee being the temple had filed the return of income in the CPC in ITR No.7 within the due date, however, the return of the assessee was not processed. Thereafter the assessee has filed return of income in ITR-5 which was also rejected on account of some mistake committed in the return of income whereby the assessee has wrongly mentioned that the assessee was registered u/s 10(23) of the Act. Since the assessee was not registered u/s 10(23) of the Act, therefore, books of account contemplated under the Act has not been audited, therefore, the return of income u/s ITR-5 was rejected by the CPC on the pretext that the books of account of the assessee have not been audited. The assessee feeling aggrieved by the order had filed an appeal before the learned CIT (A) vide Ground No.2 wherein it was submitted that the real income of the assessee after reducing the expenditure or ITA 491 and 492 Sri Tamalingeswara Swamy Temple Page 6 of 7 application of income be taxed. However, the learned CIT (A) in Para 4 had recorded that the exemption claimed by the assessee was rejected by the CPC vide intimation dated 26.03.2021 as the assessee has not filed the details of registration or approval and has also not filed the Audit Report in Form 10BB before the date of filing the return of income. It was submitted by the assessee during the course of appellate proceedings that the assessee does not enjoy the registration u/s 10(23) of the Act, therefore, the assessee is not entitled to claim exemption u/s 10(23) of the Act. However, it was submitted instead of taxing the gross receipts, the net income was required to be taxed after allowing the allowable expenditure. In our view, the assessee is required to be assessed as AOP and the assessee is entitled to the deduction of expenses from the gross receipts as available to any other AOP. In the light of the above, we deem it proper to remand back the matter to the file of the Assessing Officer with a direction to tax only the net income after giving deduction of expenditure claimed by the assessee in the form of regular expenditure, salary, puja expenditure and all other expenditure which are admissible in law. We further find that the learned CIT (A) without adjudicating ground No.1 raised by the assessee before him has decided the issue of eligibility of the assessee to claim section 10(23) of the I.T. Act. In our view, once the assessee has no registration u/s 10(23) of the Act, then the income of the assessee is required to be computed by applying the normal provisions of the I.T. Act as AOP and therefore, in our considered opinion, the net income only was required to be taxed. Since the learned CIT (A) had not adjudicated the above ground, therefore, we deem it proper to remand back this issue to the file of the learned CIT (A) to decide the issue afresh after granting due opportunity of being heard to the assessee to furnish the evidence and making its submission. ITA 491 and 492 Sri Tamalingeswara Swamy Temple Page 7 of 7 Considering the totality of the facts of the case and in the interest of justice, we remand the issue to the file of the learned CIT (A) for fresh adjudication. We hold and direct accordingly. ITA 492/Hyd/2023 – 2020-2021 12. After hearing both the sides, we find the grounds raised by the assessee in this appeal are identical to the grounds raised by the assessee in ITA No.491/Hyd/2023 for the A.Y 2019- 20. We have already decided the issue and the ground raised by the assessee has been remanded to the file of the learned CIT (A) for fresh adjudication. Following similar reasonings, this ground raised by the assessee is also remanded to the file of the learned CIT (A) for fresh adjudication. 13. In the result, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the Open Court on 12 th January, 2024. Sd/- Sd/- (R.K. PANDA) VICE-PRESIDENT (LALIET KUMAR) JUDICIAL MEMBER Hyderabad, dated 12 th January, 2024 Vinodan/SPS Copy to: S.No Addresses 1 Sri Ramalingeswara Swamy Temple, 61, Keesara, Hyderabad 501301 2 Asstt.Director of Income Tax (Exemption) Ward 1(4) 2 nd Floor, Aayakar Bhavan, Basheerbagh, Hyderabad 500004 3 Pr. CIT - Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order