ITO(EXEMPTION),WARD-1(3), KOLKATA, KOLKATA V. SURESH AMIYA MEMORIAL TRUST, KOLKATA

ITA 652/KOL/2024

AI Insights

The case revolves around the Suresh Amiya Memorial Trust, which appealed against the intimation under section 143(1) of the Income Tax Act, 1961, which denied them exemption under section 11 for the Assessment Year 2020-21. The Trust had filed Form No. 10B late, which was contested by the Revenue. The Ld. CIT (A) ruled in favor of the Trust, leading to the Revenue's appeal to the Tribunal. The Tribunal dismissed the Revenue's appeal, citing the minor nature of the delay and the procedural acceptance of the late-filed Form No. 10B by the CPC.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473916 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-10-2024
• Assessment Year: 2020-2021
• Appeal Filed On: 29-03-2024
• Other Referred Cases: PCIT vs. Wipro Ltd, Kedar Nath Saraf Charity Trust Vs. DCIT, CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust, Association of Indian Panelboard Manufacturer Vs. DCIT, Bangarh I.T.A. No. 133/Kol/2024, Siro Clinpharma Private Limited v ITA, ITO (Exemption) vs Camellia Educare Trust
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAUSTAV CHAKRABORTY; POOJA SARAF; ARS
• Assessee Lawyers: ARUP CHATTERJEE
• Keywords: Condonation of delay; Revised return; Revenue expenditure; Capital expenditure; Charitable institution; Benefit of exemption
• Section: 250; 154; 143(1); 11; 139(1); 12A; 12; 10B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH KOLKATA BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No. 652/KOL/2024 Assessment Year: 2020-21 ITO (Exemption), Ward-1(3) 10B, Middleton Row, 6th Floor, Kolkata-700071 Vs Suresh Amiya Memorial Trust, Kolkata, P 506A, Keyatala Road, Kolkata-700029 (PAN: AABTS5865N) (Appellant) (Respondent) Present for: Appellant by : Shri Kaustav Chakraborty & Ms. Pooja Saraf, ARs Respondent by : Shri Arup Chatterjee, CIT DR Date of Hearing : 03.10.2024 Date of Pronouncement : 20.11.2024 O R D E R PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the Revenue is against the order of the Ld. Commissioner of Income Tax (hereinafter referred to as “the Ld. CIT (A)”) passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2020-21 dated 30.01.2024, which has been filed against the intimation u/s 143(1) of the Act. 2. The grounds of appeal raised by Revenue are reproduced as under: “1. Whether on the facts and circumstances of the case, the Id. CIT(A) has erred by allowing the assessee's appeal deleting the adjustment made u/s 143(1) on account of denying exemption under section 11 of the Act amounting to Rs. 3,50,17,265/-, despite the facts that statutory requirement of filling the Form No-10B before the specified date referred to in section 44AB of the Act was not fulfilled by the assessee trust. Page | 2 ITA No.652/KOL/2024 Suresh Amiya Memorial, Trust; A.Y. 2020-21 2. Whether on the facts and circumstances of the case, the Id. CITCA) has erred by allowing the assessee's appeal deleting the adjustment made u/s 143(1) wherein the Ld. CIT(A) erred in mentioning that the assessee trust filed form 10B on 13.02.2021 i.e. within the due date, despite the facts that the extended due date for filling Form 10B was 15.01.2021 thereby the statutory requirement was not fulfilled by the assessee trust. 3. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred by allowing the assessee's appeal by allowing benefit of exemption u/s 11 of the Act to the assessee ignoring the fact that in this case, provisions of clause (b) of Section 12A(1) of the Act was violated by the assessee. 4. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred by allowing the assessee's appeal however in this case provision of section 12A(1)(b) was violated. Further it may be stated that two conditions as mentioned in clause (b) and (ba) to be fulfilled for allowing the benefit of exemption u/s 11 of the Act. In this regard reliance is placed on the adjudication in the case of Pr. CIT-III, Bangalore vs M/s Wipro Limited (Arising out of SLP (Civil) No. 7620/2021) wherein the Hon’ble Supreme Court has held that the twin conditions of furnishing a declaration before the assessing officer and that too before the due date are to be satisfied and both are mandatorily to be complied with.” 3. Brief facts of the case are that the assessee is a charitable trust incorporated on 30 May 1985 and registered under section 12A of the Act. The Trust filed its Form No. 10B for AY 2020-21 on 13 February 2021 and the return of income on 15 February 2021. The return was processed vide intimation under section 143(1) of the Act dated 24 December 2021 wherein the gross receipts earned by the Trust (including voluntary contributions) were considered as taxable income and the applications and accumulation made by the Trust were considered as NIL. However, in Schedule ER (Revenue Expenditure) and Schedule EC (Capital Expenditure) of the intimation, the details of application made by the Trust was duly computed. Aggrieved with the aforesaid intimation, the assessee filed an appeal before the Ld. CIT(A) stating that although the application made by the Trust was computed in Schedule ER and Schedule EC of the intimation, the same was not considered while computing its taxable income. As there was no justification Page | 3 ITA No.652/KOL/2024 Suresh Amiya Memorial, Trust; A.Y. 2020-21 for the above addition, the assessee raised a grievance to the CPC by mail. In response to the grievance, the CPC replied that the demand had been rectified and reduced to nil. But even after the CPC mail, the demand still persisted. Aggrieved with the persistence of demand, the assessee preferred an appeal before the Ld. Addl./JCIT(A) Aurangabad [hereinafter referred as ‘Ld. Addl/JCIT (A)’]. The Ld. Addl/JCIT (A) passed the order dated 30 January 2024, wherein he has mentioned that the Trust had duly filed its Return of Income and Form No. 10B within the extended due dates and accordingly, it was entitled to claim exemption under section 11/12 of the Act. The assessee, in its return of income had claimed revenue expenditure of Rs. 3,03,61,526/- and capital expenditure of Rs. 11,86,082/-. From the return of income, it was seen that the appellant was registered by the CIT West Bengal VII on 02/03/1988 and it is entitled to claim exemption u/s 11/12. In respect of section 11/12 of the Act, the ld. CIT (A) directed the ld. AO to delete the addition of Rs. 3,50,17,265/- if the same still existed. The findings of the ld. CIT (A) are as under:- “8. The appellant filed appeal that even after CPC mail the demand still persists. The records available with this office and submission made by the appellant is verified. The appellant filed its income tax return on 15/02/2021 within the extended due date for filing of return of income. The trust also filed form 10B on 13/02/2021 i.e. within the due date. In its return of income the appellant has claimed revenue expenditure of Rs. 3,03,61,526/- and capital expenditure of Rs. 11,86,082/-. From the return of income, it is seen that the appellant was registered by the CIT West Bengal VII on 02/03/1988 and it is entitled to claim exemption u/s 11/12. 9. In view of the above, the appellant is entitled to get exemption u/s 11/12 of the Act. Hence, the AO is directed to delete the addition of Rs. 3,50,17,265/- if still exists. Hence, these grounds raised by the appellant are allowed.” 4. Aggrieved with the order of the ld. CIT (A), the Revenue has filed its appeal before the Tribunal. Page | 4 ITA No.652/KOL/2024 Suresh Amiya Memorial, Trust; A.Y. 2020-21 5. We have heard the rival contentions and the submissions have been examined. The only grievance of the Revenue is that since the assessee had not filed Form No.10B in time, therefore, it was not eligible for exemption u/s 11 of the Act and the provisions of Section 12(1)(b) of the Act were violated. The Revenue has relied upon the decision of Hon'ble Supreme Court in case of PCIT vs. Wipro Ltd. [arising in SLP (Civil) No. 7620/2021] dated 11th July, 2022. The ld. CIT (A) allowed the relief to the assessee and the relevant extract from the order of the ld. CIT (A) is as under:- “6. I have carefully considered the facts of the case and the submission of the appellant. The appellant in all the grounds had argued that addition of Rs. 3,50,17,265/- made by the CPC is erroneous and against the fact. 7. The appellant is a charitable trust and filed its return of income for year under consideration i.e. for A.Y. 2020-21 on 15/02/2021 declaring total income nil. The extended due date for filing appeal was 15/02/2021. Further, the appellant has also filed form 10B within due date. As there was no reason for the above said disallowance made by the CPC, the appellant has raised the grievance to the CPC by mail. In response to that mail the CPC had replied that the demand has been rectified and reduced to nil. The relevant part of mail is reproduced as under- Resolution of Grievance 3582974 ….. Dear SURESH AMIYA MEMORIAL TRUST, Greetings from Income Tax Department Helpdesk. Issue Description: Your assessee had received the intimation u/sec. 143(1) of the Act and observed that the application of income as per filed ITR as well as Form 10B were totally ignored in page 14 of the intimation although in the subsequent pages of the Intimation the same were accepted i.e. the returned figure of application of income of Rs. 3,03,61,526 as per Annexure Schedule ER (Revenue Expenditure) (page 23) and in page 24 of the intimation Rs. 11,86,082 as per Annexure Schedule EC) Capital Expenditure) were accepted in the intimation under the heading \"As Computed u/s 143(1). DETAILED STATEMENT IS ATTACHED BY WAY OF SIGNED PETITION. That your assessee had also e-filed the Audit Report in 10B vide Ack No 256116071130221 dt. 13/02/2021 and a copy of system generated ACKNOWLEDGEMENT OF RECEIPT OF FORM (Other Than ITR) is attached for ready reference and marked as-Annexure A] 4. That in view of the aforesaid facts it is requested that the Application of Income accepted in the Intimation in Page | 5 ITA No.652/KOL/2024 Suresh Amiya Memorial, Trust; A.Y. 2020-21 pages 23 and 24 be incorporated in the corresponding Row of page 14 and thereby the mistake apparent from the record be rectified. The income applied to charitable or religious purposes as per Farm 10B being Rs. 3,15,47,608 and statutory accumulation at Rs. 4877589, the total returned income would be NIL and in place of demand the assessee would be entitled to refund. 5. Your assessee humbly requests for an early action on the part of your goodself in rectifying u/s 154 the aforesaid intimation u/sec. 143(1) of the Act and deleting this demand and for such kind action on your part your assessee shall ever pray. 6. THE DEMAND BE KEPT IN ABEYANCE TILL DISPOSAL OF THIS RECTIFICATION PETITION. Resolution: Dear Taxpayer, processing of your return filed for the said AY 2020-21 has been completed determining No Demand No Refund, Intimation has been sent to your registered e-mail id. Request you to verify your registered email id for the intimation. You can also download a copy of the intimation order by logging on to www.incometax.gov.in. Then Go to e-file -> View Income Tax Returns -> view filed returns -> view details-> download Intimation order. Further. If you are not satisfied with the outcome of processing of your return, you are requested to file online rectification by logging in to www.incometax.gov.in. -> Go to services -> Rectification. For further assistance. kindly contact us on 1800 103 0025, 1800 419 0025, 8046122000 of 8061454700. Helpdesk Team, Income Tax Department ….. 8. The appellant filed appeal that even after CPC mail the demand still persists. The records available with this office and submission made by the appellant is verified. The appellant filed its income tax return on 15/02/2021 within the extended due date for filing of return of income. The trust also filed form 10B on 13/02/2021 i.e. within the due date. In its return of income the appellant has claimed revenue expenditure of Rs. 3,03,61,526/- and capital expenditure of Rs. 11,86,082/-. From the return of income, it is seen that the appellant was registered by the CIT West Bengal VII on 02/03/1988 and it is entitled to claim exemption u/s 11/12. 9. In view of the above, the appellant is entitled to get exemption u/s 11/12 of the Act. Hence, the AO is directed to delete the addition of Rs. 3,50,17,265/- if still exists. Hence, these grounds raised by the appellant are allowed. 10. As a result, the appeal of the assessee is treated as allowed.” 6. Apparently, the CPC allowed the rectification application filed by the assessee and condoned the delay in filing Form No. 10B of the Act. Since the demand had not been deleted, therefore, the assessee had filed an appeal before the ld. CIT (A). The deletion of Page | 6 ITA No.652/KOL/2024 Suresh Amiya Memorial, Trust; A.Y. 2020-21 demand is a technical matter and since the CPC had allowed the rectification application and treated the assessee as eligible for exemption u/s 11 of the Act, there was no justification for the Revenue to file the appeal. Further, in the course of the appeal, the assessee relied upon the decision of Hon'ble Kolkata Tribunal in case of Kedar Nath Saraf Charity Trust Vs. DCIT (2024) 161 Taxmann.com 671 (Kolkata- Trib.) in which it has been held as under:- “ 4.1. It is an admitted fact that from March, 2020 to March, 2022, country was passing through Covid Pandemic and there were various restriction on the movements of the citizens and carrying out of the normal official works was hindered. It is also an accepted fact that many changes have been brought into the Act regarding procedure of filing of income-tax return as well as audit reports and certain technical glitches have been faced time and again. Also on account of change of the utility of furnishing the reports, the forms and change in the due dates have given rise to delay in furnishing of details and documents with the revenue authorities. Considering these aspects, CBDT firstly came up with a Notification dt. 03/01/2020 authorising the Commissioners to admit applications of condonation of delay in filing Form No. 10B for Assessment Year 2018-19 and subsequent Assessment Years, where there is a delay of up to 365 days. Subsequently on 19/07/2022 i.e., after the end of the Covid Pandemic restrictions again a Circular 16/2022 was issued where the delays in filing of Form 10B beyond 365 days but upto three years were also directed to be considered for admitting the application for condonation of delay. This Circular in itself shows that the Income-tax Department was aware about the technical glitches and the problems faced by the tax-payers in furnishing various types of Forms including Form No. 10B is with regard to the furnishing of audit report in case of Trusts and Societies. In the instant case since, delay is merely 28 days, we find that the said delay deserves to be ignored in larger interest of justice. The assessee is thus entitled to claim exemption u/s 11 of the Act made in the Income-tax return e-filed by it. We further fund support from the decisions of this Tribunal in the case of Bangarh I.T.A. No. 133/Kol/2024 Assessment Year: 2020-21 Kedar Nath Saraf Charity Trust Educational Welfare Trust vs. ITO (Exemptions) in ITA No. 496/Kol/2021; Assessment Year 2018-19, order dt. 02/01/2022, wherein also similar issue was raised for Assessment Year 2018-19 and the return was filed within time limit prescribed u/s 139(1) of the Act but there was a delay in furnishing of the audit report on Form 10B and this Tribunal after considering the facts of the case as well as judicial precedents allowed the benefit of Section 11 & 12 of the Act to the assessee. 5. In view of the discussion (supra) and consistent with the view taken by this Tribunal in the case Bangarh Educational Welfare Trust vs. ITO (Exemptions), we allow the benefit of Section 11 of the Act to the assessee Page | 7 ITA No.652/KOL/2024 Suresh Amiya Memorial, Trust; A.Y. 2020-21 as claimed in the income tax return. Accordingly, the effective grounds raised by the assessee are allowed.” 7. Further, in the case of CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust (1992) 65 Taxman 273 (CAL) it has been held as under: “7. Admittedly, the assessee is a charitable trust and is registered with the Commissioner. It was not disputed that the assessee, for the past several years, was treated as a charitable institution and granted exemption under 11. The assessee had been denied the benefit of exemption undersection 11 as the audit report in No. 10B was not filed along with the return and the filing of the said report later on 6-3-1987, did not satisfy the condition stated in section 12A. The denial of exemption is supported on the ground that the provisions of section 12A are mandatory..... ....9. Having regard to the other provisions of the Act regarding filing of the return or revised return or rectifying the defects in the return, we are of the opinion that the provisions of section 12A are directory in the sense that the Assessing Officer is not powerless to allow an assessee to file the audit report, if not filed along with the return, any time before the completion of the assessment. One has to look at the purpose of the provisions. One has to construe the provision to ensure coherence and consistency to avoid undesirable consequences. Where the audit report was made ready after the return was filed, there was no reason why such audit report should not be allowed to be filed before the completion of the assessment...... No mala fides have been alleged. No case has been made out that the delay in getting the accounts audited and in filing of the report in Form No. 108 defeated any object of the Act or the assessee's action was in substance not in conformity with the intent and purpose of the Act. 10. In our view, the income-tax authorities fell into error in denying the claim of exemption under section 11. It was not disputed, as we have already indicated, that the assessee, for the past several years, was treated as a charitable institution and granted exemption under section 11.\" 8. Further reliance is also placed by the assessee on the decision of Hon'ble Gujarat High Court in the case of Association of Indian Panelboard Manufacturer Vs. DCIT (2023) 157 taxmann.com 550 (Gujarat) order dated 21st march, 2023. 9. As regards the delay in filing Form No.10B, the same was filed on 13th February, 2001, i.e. after 29 days from the due date i.e. on 15th January, 2001 and the delay was primarily attributable to Covid 19 pandemic due to which normal activity Page | 8 ITA No.652/KOL/2024 Suresh Amiya Memorial, Trust; A.Y. 2020-21 was restricted and the office of the trust was not fully functional. The delay was not on account of any mala fide intention and the request for delay to be condoned has been made. 10. The assessee further relied on the jurisdictional High Court decisions (supra) in support of the claim that the Form No.10B filed at the time of the assessment proceedings should be accepted and considered while completing the assessment and granting exemption u/s 11 of the Act. 11. As regards the decision of the Hon'ble Supreme Court in the case of Wipro Ltd. (supra), the same is distinguishable and is not applicable on the instant case as the same related to carry forward of loss which are made for the first time in the revised return and the claim was made post due date prescribed u/s 139(1) of the Act. The submission of the assessee in this regard is as under:- “8. Further, the Ld. DR in the grounds of appeal, has relied on the decision of the Hon'ble Supreme court in the case of Wipro Ltd (arising out of SLP (Civil) No. 7620/2021). In the said ruling, the issue involved did not pertain to delay in filing of Form 10B or any other statutory Forms. It was a case of making a fresh claim of carry-forward of losses in the revised return, which the Hon'ble Apex Court denied on interpretation of the provisions of section 10B of the Act. In this regard, attention of the Hon'ble Members is invited to the decision of the Bangalore Tribunal in the case of M/s. Arham Mitra Mandal vs ITO (ITA No. 1110/Bang/2023), In this case, the assessee had filed its original return of income declaring 'NIL' income after claiming exemption under section 11 of the Act. Subsequently, the assessee filed a revised return of income presuming that it had not given the details of registration under section 12A in the original return filed. The revised return of income filed by the Trust was processed vide intimation under section 143(1) of the Act, wherein exemption under section 11 of the Act was denied on certain grounds, including non-filing of audit report before the filing of return. In this regard, the Hon'ble Bangalore Tribunal held as under, duly distinguishing the ruling of the Hon'ble Supreme Court in the case of Wipro Ltd (arising out of SLP (Civil) No. 7620/2021): \"26. The judgment of the Hon'ble Supreme Court in the case Wipro Ltd., (Supra) is not applicable in the instant case for the following reasons: Page | 9 ITA No.652/KOL/2024 Suresh Amiya Memorial, Trust; A.Y. 2020-21 • In case of Wipro (supra), claim of carry forward of loss was made for the first time in the revised return and such claim was made post due date prescribed under section 139(1). • Revised return was completely contrary to stand taken in the original return and the SC held that beyond the ambit of section 139(5). • The option to opt out of section 10B exemption was made for the first time in the revised return and such claim was made post due date prescribed under section 139(1). • The decision did not deal with the issue of delay in filing of audit report. In fact, the revised return was contrary to audit report 27. Even otherwise, various non-jurisdictional Hon'ble High Courts have held that filing of Audit report Form 10B is procedural in nature and delay in filing of Audit Report is not fatal to claim of exemption under section 11 of the Act. The judgment of non-jurisdictional High Court is binding on the The Tribunal. In this regard we rely on the decision of Siro Clinpharma Private Limited v ITA in ITA No. 847/Mum/2016 28. In view of the aforesaid reasoning and judicial pronouncements cites supra, we hold that filling of audit report along with return of income is directory in nature and not mandatory and exemption under rection 11 of the Act, cannot be denied when the audit report is available before the AO while passing the intimation de section 143(1)(a) of the Act.\" (Emphasis supplied) Further, there are numerous other rulings wherein the delay in filing of Form 10B has been condoned and the charitable trusts have been granted exemption under section 11 of the Act. Relevant extract of the said rulings have been discussed in Annexure-1 for the kind consideration of the Hon'ble Bench. In view of the said rulings the Respondent humbly requests the Hon'ble Bench to condone the minor delay in filing of F0rm 10B and grant exemption under section 11 of the Act to the Trust. 9. Without prejudice to the aforesaid argument, the Respondent humbly submits that even if exemption under section 11/12 is denied, its net income shall be considered as taxable, instead of the gross receipts earned by the Trust during the captioned assessment year. Reliance in this regard is placed on the judgement of the Hon'ble Jurisdictional Kolkata Tribunal in the case of ITO (Exemption) vs Camellia Educare Trust (2023) 152 taxmann.com 304 (Kolkata-Trib.), wherein the Hon'ble Tribunal held as under. \"8.1 Further, without prejudice to our above finding, we are in agreement with the submission made by the ld. Counsel that income should be understood in its commercial sense and computing the total income of the assessee equal to the total receipts for the year is not in accordance with the commercial prudence and commercial sense, despite the fact that in the intimation itself, both revenue and capital expenditure have been accepted by CPC in the processing of Page | 10 ITA No.652/KOL/2024 Suresh Amiya Memorial, Trust; A.Y. 2020-21 the return. It is important to note that intimation format contains tabulated columns which runs into several pages. There are two main columns, one column description shows 'as provided by tax payers' and another column shows 'as computed u/s. 143/1) Thus, on pages 21 and 24, in both the columns, the figures claimed by the assessee towards revenue and capital expenditure have been stated which evidently demonstrates that the same have been accepted in the processing of the return. (Emphasis supplied) Therefore, in view of the aforesaid judgement, the Trust humbly requests that the expenses incurred by it may kindly be adjusted with the gross receipts while computing the taxable income of the Trust.” 12. Thus, in view of the fact that the CPC had condoned the delay and had accepted Form No.10B uploaded on the portal and had rectified the intimation, there is no justification for the Revenue to file the appeal against the order of the CPC, which the ld. CIT (A) had only confirmed. Moreover, in view of the above cited decisions, since Form No.10B was filed, the assessee is entitled for the claim of exemption u/s 11 of the Act. As no other discrepancy has been pointed out and the claim was denied merely on the ground of not furnishing the audit report in Form No.10B within time, hence, all the four grounds of appeal are dismissed and the appeal of the revenue is dismissed. 13. In the result, the appeal of the Revenue in ITA No. 652/KOL/2024 is dismissed. Order pronounced in the Court on 20th November, 2024. Sd/- Sd/- (SHRI RAJPAL YADAV) (RAKESH MISHRA) (VICE PRESIDENT) (ACCOUNTANT MEMBER) Kolkata, Dated 20.11.2024 *SS, Sr.Ps आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : Page | 11 ITA No.652/KOL/2024 Suresh Amiya Memorial, Trust; A.Y. 2020-21 1. अिीिार्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. संबंतिि आयकर आयुक्त / Concerned Pr. CIT 4. आयकर आयुक्त ( अिीि ) / The CIT(A)- 5. तिभागीय प्रतितिति , अतिकरण अिीिीय आयकर , कोिकािा/DR,ITAT, Kolkata, 6. गार्ड फाईि / Guard file. आदेशािुसार/ BY ORDER, TRUE COPY Sr. PS/ Assistant Registrar आयकर अिीिीय अतिकरण ITAT, Kolkata "