Income Tax Officer, Exemption, Ward-Kolhapur, Kolhapur V. Dr Sukumar J Magdum Foundation, Kolhapur

MA 13/PUN/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1202 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-07-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-06-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 28-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Benefit of exemption
• Section: 11; 80G; 12A; 12AA; 10B; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS ASTHA CHANDRA, JUDICIAL MEMBER MA No.13/PUN/2024 (Arising out of ITA No.320/PUN/2023) Assessment Year : 2018-19 ITO (Exemption), Ward - Kolhapur Vs. Dr. Sukumar J Magdum Foundation 2008/A/6, Magdum Orthopaedic Hospital, Sangli-Kolhapur Road, A & P Nimshirgaon, Tal Shirol, Dist – Kolhapur – 416101 PAN : AAATD9312L (Applicant) (Respondent) Assessee by : None Department by : Shri Ramnath P Murkunde Date of hearing : 28-06-2024 Date of pronouncement : 03-07-2024 O R D E R PER R. K. PANDA, VP : The Revenue through this Miscellaneous Application requests the Tribunal to rectify certain mistakes that have crept in the order of the Tribunal. 2. None appeared on behalf of the assessee at the time of hearing despite service of notice. Therefore, we deem it proper to decide the Miscellaneous Application filed by the Revenue after considering the contents of the Miscellaneous Application and after hearing the Ld. DR. 2 MA No.13/PUN/2024 3. The Ld. DR referring to the contents of the Miscellaneous Application drew the attention of the Bench to the same which reads as under: “3. There is an error in the order of Hon. ITAT, which is being discussed as under: 3.1 The Hon'ble ITAT has allowed the Assessee's appeal for statistical purpose. The assessee had raised additional ground of appeal contending that its total income ought to have been determined on commercial principles and not by charging the gross receipts to tax, which the Tribunal admitted by holding that the additional ground being legal in nature did not require any fresh examination of factual matrix and that the only issue for its consideration was examination of the manner of assessment by the AO considering that it was not having any registration so as to qualify for exemption u/s 11. The Hon'ble Tribunal held that if the benefit of exemption u/s 11 was not available then the total income needed to be computed in accordance with the regular provisions of the Act and that in such circumstances where the AO had charged tax on gross receipts, it could not countenance the same and, therefore, the resultant impugned order deserved to be set aside. Accordingly, the Tribunal set aside the impugned appellate order and remitted the matter to the file of the AO for deducing the total income in accordance with the law after considering the deductibility of various expenses noted in the I & E A/c, after allowing reasonable opportunity of hearing to the assessee. 3.2 It is, however, observed that the observation made by the Hon'ble Tribunal that the assessee was not having registration so as to qualify for exemption u/s 11 of the Act is factually incorrect. On perusal of the ITR-7 filed by the assessee for A.Y. 2018-19 on 25.02.2019, it is observed that the assessee itself has declared in its said return of income at Page No. 1 that it is registered u/s 12A of the Act by the CIT, Kolhapur vide order dated 23.01.2007 and at Page No. 2 that it is approved u/s 80G of the Act vide order dated 09.02.2010. It is further noticed that the assessee, in its Statement of Facts as well as the Grounds of Appeal filed before the Ld. CIT(A) too, has declared that it is registered u/s 12A as well as is approved u/s 80G of the Act. In such a scenario when the assesses is registered u/s 12A of the Act, the provisions of Sections 11 to 13 of the Act would be applicable to the assessee and its total income has to be computed as per the provisions of Section 11 to 13 of the Act. As per the I.T. Act, 1961, the total income of assessees’ that are governed by the provisions of Section 11 to 13 cannot be computed in accordance with the regular provisions of the Income Tax Act after considering the deductibility of various expenses as per the Income & Expenditure Account, In view of the above, the decision/direction of the ITAT of remitting the matter to the file of the AO for deducing the total income in accordance with the law after considering the deductibility of various expenses noted in the I&E A/c is found to 3 MA No.13/PUN/2024 be incorrect being based on wrong facts of the case and, therefore, not acceptable on merit, facts & circumstances of the case as well as, as per law. 3.3 It is further observed that the assessee had not filed its audit report in Form No. 10B as requisite under the provisions of Section 12AA of the Act and, therefore, the AO had rightly held the assessee to be ineligible to claim exemption u/s 11 of the Act and, accordingly, had rightly computed its total income as per the provisions of Section 11 to 13 of the Act. Further, the Ld. CIT(A) had also rightly held that as per CBDT Circular No.02/2020 dated 03.01.2020 the Competent Authority to condone the delay in filing of Form 10B of within 365 days is the jurisdictional PCIT/CIT, who in this case is the CIT(E), Pune. However, since the assessee had obtained its audit report only on 27.08.2021 [i.e. after 30 months of filing of its return of income and a day prior to filing of appeal before the Ld.CIT(A)] as reflected in the Form No. 10B for A.Y, 2018-19 filed on 05.03.2022 (i.e. after 36 months of filing its return of income), as per Circular No. 02/2020 dated 03,01.2020, the CIT(E) too is not authorized to condone such delay of more than 365 days. In view of the above, since the assessee does not satisfy either of the preconditions as per Section 12A(1)(b) of the I.T, Act, 1961 and as per Rule 17B of the I.T. Rules, 1962, the Ld. CIT(A) had rightly held that the AO had correctly rejected the assessee's claim for exemption u/s 11 of the Act and computed its total income correctly. 3.4 Further, on going through the tribunal order under consideration, it appears that the assessee has apparently misled the Hon'ble ITAT by not seriously pressing the contentions about late filing of Audit Report in Form No. 10B and grant of exemption and raising the additional ground of appeal to the effect that its total income ought to have been determined on commercial principles and not by charging the gross receipts to tax, since it would not have succeeded in its appeal before the ITAT in view of the detailed speaking impugned order of the Ld. CIT(A). The statement of the Tribunal at Para 3 of Page No. 3 of the order under consideration that, "As such, the only issue which survives for our consideration is the examination of the manner of assessment by the AO considering that it was not having any registration so as to qualify tor exemption u/s 11", further reinforces that the assessee has apparently misled the Tribunal by impressing upon the ITAT that it did not have registration u/s 11 of the Act. 3.5 Furthermore, the Hon’ble ITAT may kindly clarify the deductibility of various expenses noted in Income & Expenditure Account. 4. The Hon ITAT is humbly requested to kindly consider the above facts and pass an order accordingly.” 4 MA No.13/PUN/2024 4. He accordingly submitted that the same being self explanatory, the order of the Tribunal be rectified / recalled and the Miscellaneous Application filed by the Revenue be allowed. 5. We have heard the arguments advanced by the Ld. DR and perused the contents of the Miscellaneous Application. After going through the same, we find there is an inadvertent typographical error in para 3 of the order of the Tribunal where the foundation‟s registration u/s 12A of the Income Tax Act, 1961 was mentioned wrongly as “it was not having any registration so as to qualify for exemption u/s 11”. 6. We, therefore, rectify this typographical error and the para 3 of the order of the Tribunal is directed to be read as under: “3. We have heard the rival submissions and gone through the relevant material on record. The contentions about the late filing of Audit report in Form No.10B and the need for still granting exemption, were not seriously pressed. The ld. AR has raised an additional ground to the effect that total income of the assessee ought to have been determined on commercial principles and not by charging the gross receipts to tax. The additional ground, being legal in nature and not requiring any fresh examination of the factual matrix, is hereby admitted. As such, the only issue which survives for our consideration is the examination of the manner of assessment by the AO considering that it was having registration so as to qualify for exemption u/s 11.” 7. Apart from this, there is no other apparent mistake crept in the order of the Tribunal which requires rectification / recall. We, therefore, do not find any 5 MA No.13/PUN/2024 substance in the Miscellaneous Application filed by the Revenue and accordingly, the same is liable to be dismissed. 8. In the result, the Miscellaneous Application filed by the Revenue is dismissed. Order pronounced in the open Court on 3 rd July, 2024. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT प ु णे Pune; दिन ांक Dated : 3 rd July, 2024 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, „B‟ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune 6 MA No.13/PUN/2024 S.No. Details Date Initials Designation 1 Draft dictated on 28.06.2024 Sr. PS/PS 2 Draft placed before author 01.07.2024 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order