SMT. ASHRAFI DEVI SHIKSHA SAMITI,MEERUT V. ITO,WARD EXEMPTION, GHAZIABAD

ITA 3536/DEL/2024

AI Insights

The case involves Smt. Ashrafi Devi Shiksha Samiti, an educational trust, which appealed against the order of the Commissioner of Income Tax (Appeals) that sustained the denial of exemption on income amounting to Rs. 77,43,697. The initial denial was by the Centralized Processing Center (CPC), Bengaluru, during the processing of the trust's income tax return under section 143(1) of the Income Tax Act, 1961. The CPC denied the exemption as the trust was not registered under section 12A of the Act at the time of filing. The trust argued that its income was exempt under section 10(23C)(iiiad) and later under section 10(23C)(i) rws 10(23C)(vi) after obtaining provisional registration. The Tribunal found merit in the trust's claim post the approval under section 10(23C)(i) rws 10(23C)(vi) and directed the AO to allow the exemption accordingly.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474932 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2022-2023
• Other Referred Cases: Joyo Plastics [2024] 162 taxmann.com 836 (Mumbai Trib.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVEEN RAWAL
• Assessee Lawyers: DEVASHISH BHADURIA
• Section: 143(1); 11; 12A; 12; 10B; 10(23C)

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No.3536/Del/2024, A.Y. 2022-23 Smt. Ashrafi Devi Shiksha Samiti VILL-Bajaderpur, Sardhana Road, Meerut, UP PAN: AAITS3698A Vs. Income Tax Officer Ward Exemption, Income Tax Office, Ghaziabad (Appellant) (Respondent) Appellant by Mr Devashish Bhaduria, Advocate Respondent by Mr Praveen Rawal, CIT-DR Date of Hearing 20/02/2025 Date of Pronouncement 19/03/2025 ORDER PER AVDHESH KUMAR MISHRA, AM This appeal filed by the assessee is directed against the order dated 30.05.2024 passed by the Commissioner of Income Tax (Appeal), Addl/JCIT(A)-9, Mumbai [hereinafter, the ‘CIT(A)’]. 2. Following grounds have been raised in this appeal: - “1. That under the facts and circumstances of the case, L.d. CIT (Appeals) has erred in sustaining the denial of exemption of Rs. 7743697/- made by CPC, Bangaluru vide intimation u/s 143(1) of the IT Act, 1961 dt 08.03.2023. ITA No.3536/Del/2024 Smt. Ashrafi Devi Shiksha Samiti 2 2. That under the facts and circumstances of the case, Ld. CIT (Appeals) has erred in not considering the assessee's reply dt. 23.03.2023 filed before the CPC Bangaluru in a right perspective that the income of the assessee's trust is also exempt u/s 10(23C) (iiiad) of the I.T Act, 1961. 3. That under the facts and circumstances of the case, Ld. CIT (Appeals) has also erred in observing that A.O., CPC had no power to entertain a fresh claim or change its stand. In fact, fresh claim or change its stand on the basis of facts of the case is permissible under the law at the stage of A.O/CPC as well as before Ld. CIT (Appeals). 4. That the Hon'ble CBDT extend the due date for filing of Form 10/10AB for A.Yr. 2022-23 for claiming exemption u/s 11 of the 1.T Act, 1961 up to 30.06.2024 vide Circular No. 07/2024 dt. 25.04.2024. Therefore, the appellant has now applied for provisional registration u/s 10AB and got registration u/s 12A of the I.T Act on 29.06.2024. Thus, the appellant is also entitled for exemption u/s 11 of the Act as claimed at Rs. 7743697/-in its return of income. 5. The appellant craves to add, delete or modify any grounds of appeal during the course of appeal proceedings.” 2.1 Later on, the assessee has modified grounds No. 2 & 4 as under: “GROUND NO. 2 (Modified) That under the facts and circumstances of the case, Ld. CIT (Appeals) has erred in not considering the assessee's reply dt. 20.06.2023 filed before the CPC Bangaluru in a right perspective that the income of the assessee's trust is also exempt u/s 10(23C)(iiiad) of the I.T Act, 1961. GROUND NO. 4 (Modified) \"That the Hon'ble CBDT extended the due date for filing of Form 10 for A.Yr. 2022-23 in respect of claiming exemption u/s 10(23C)(i) or 12A(1)(ac)(i) of the I.T Act, 1961 up to 30.06.2024 vide Circular No. ITA No.3536/Del/2024 Smt. Ashrafi Devi Shiksha Samiti 3 07/2024 dt. 25.04.2024. Therefore, the appellant applied for provisional registration under clause (i) of the first proviso to clause (23C) of section 10 of the I.T Act on Form 10A on 29.06.2024 and got registration vide Order for approval on Form No. 10AC dt. 08.07.2024 w.e.f. A.Y. 2022-23 to 2026-27. Thus, the appellant is entitled for exemption as claimed at Rs. 77,43,697/- in its return of income.\" 3. The relevant facts giving rise to this appeal are that the appellant assessee, a Society registered under the Society Registered Act, 1860, running an educational institution; namely, ‘Niranjan Institute of Education Technology, filed its Income Tax Return (hereinafter, the ‘ITR’) of the relevant year on 20th October, 2022 declaring Nil income. During the course of processing of the said ITR under section 143(1) of the Income Tax Act, 1961 (hereinafter, the ‘Act’), the Assessing officer, (CPC) (hereinafter, the ‘AO’) show caused the assessee proposing adjustment/ addition of Rs.77,43,697/- on the reasoning that the assessee was not registered under section 12A of the Act; therefore, it could not claim any benefit under section 11 & 12 of the Act. In response, the assessee claimed exemption under section 10(23C)(iiiad) of the Act even it was not registered under section 12A of the Act. The AO(CPC) did not entertain the new claim under section 10(23C)(iiiad) of the Act while processing the said ITR. Consequentially, he enhanced the income by Rs.77,43,697/-. Aggrieved, the assessee filed appeal before the Ld. CIT(A), which was dismissed holding as under: - ITA No.3536/Del/2024 Smt. Ashrafi Devi Shiksha Samiti 4 “6.2.2. I have very carefully considered submissions of the appellant vis a vis the denial of exemption. It is an admitted fact that the appellant Trust is not registered under the Income Tax Act. The return of income along with Audit Report in Form 108 was filed by the appellant on 20/02/2022 and exemption u/s 11 of the Act was claimed. Since the details of registration u/s. 12A of the Act was not filed in the return of income, a prior communication was issued to the appellant for making an incorrect claim u/s. 143(1)(a)(ii) of the Act. In response to the communication, the appellant has merely replied that exemption was claimed u/s 11 of the Act due to inadvertence and made a fresh claim of exemption u/s. 10(23C)(iad) of the Act. 6.2.3 Further, from the information available on the ITBA Portal, it is seen that for the A.Y. 2021-23 also, the return of income along with Audit Report in Form 108 was filed by the appellant on 20/02/2022 and exemption u/s 11 of the Act was claimed. The claim made by the appellant for A.Y. 2021-22 has also been disallowed by the AO, CPC. Hence, it is clear that this is not the first year that the return of income along with Audit Report in Form 10B has been filed claiming exemption u/s. 11 of the Act. The contention of the appellant that the claim u/s. 11 of the Act was inadvertently made thus fails. The appellant did not file its option in Form 10AC for opting for exemption u/s 10(230) (iad) of the Act. Form 10AC is essential for claiming exemption under Sections 11 to 12 and 10(23C) of the Act. The appellant thus made a fresh claim before the AO, CPC in response to the prior communication issued. I am of the considered view that the AO, CPC had no power to entertain a fresh claim and was not required to pass a speaking order for said adjustment made since the disallowance was on the basis of Form 10B and appellant's failure to quote the registration number. Thus, the contention made by the appellant that its reply was not considered is without any merit I am further fortified by the recent decision in the case of Joyo Plastics [2024] 162 taxmann.com 836 (Mumbai Trib.) dated 13/05/2024, where the Hon. ITAT has held that where the AO, ITA No.3536/Del/2024 Smt. Ashrafi Devi Shiksha Samiti 5 CPC made disallowance u/s. 143(1) of the Act on the basis of entry made by appellant and the Tax Auditor, there was no infirmity in the action of AO and that AO was not required to pass a speaking order. 6.2.4. From the facts discussed above, it is clear that the appellant changed its stand while responding to the prior communication issued by the AO, CPC proposing disallowance. Even during appellate proceedings, appellant has not explained reasons for filing Form 108 when It was not required to do so. The appellant has not divulged full facts. The case laws relied on also do not advance its case. Also, the appellant's plea of inadvertent error is unacceptable in view of exemption claimed by it in A.Y. 2021-22 and Form 10B filed. This ground of appeal is dismissed.” 4. At the outset, the Ld. Counsel submitted that the assessee got approval under section 10(23C)(i) of the Act for the relevant year vide order dated 08.07.2024. Accordingly, he prayed that the entire income of the relevant year, being derived from educational institution, was exempted as the approval under section 10(23C)(i) rws 10(23C)(vi) of the Act granted vide order dated 08.07.2024 was with effect from AY 2022- 23 to 2026-27. Therefore, it was contended that the entire income of the relevant year having derived from the educational institution was fully exempted even after the said adjustment of Rs.77,43,697/- as the tax could not be levied on the exempted income. 5. The Ld. Commissioner of Income Tax-Departmental Representative (hereinafter, the ‘CIT-DR’), placing reliance on the above ITA No.3536/Del/2024 Smt. Ashrafi Devi Shiksha Samiti 6 extracted para of the impugned appellate order submitted that the said appeal deserved dismissal. In principle, the AO had rightly did not entertain the new claim under section 10(23C)(iiiad) of the Act as the same would not be allowed in processing of the said ITR under section 143(1) of the Act. Further, the approval under section 10(23C)(i) rws 10(23C)(vi) of the Act for the relevant year was not sanctioned not only on or before the processing of the said ITR under section 143(1) of the Act but also on or before the impugned order dated 30.05.2024. Thus, he prayed for dismissal of the appeal. 6. We have heard both parties at length and have perused the material available on the record. The issue before us is only that whether the adjustment of Rs.77,43,697/-, in absence of approval under section 12A and 10(23C)(i) rws 10(23C)(vi) of the Act can be done in the processing of ITR under section 143(1) of the Act. In principle, we are in agreement of the finding of the Ld. Addl/JCIT(A)-9, Mumbai as the impugned order is well reasoned. But the anomaly has arisen after the approval vide order dated 08.07.2024 under section 10(23C)(i) rws 10(23C)(vi) of the Act for the relevant year as the assessee’s entire income having derived from the educational institution is fully exempted even after the said adjustment of Rs.77,43,697/- as the tax cannot be levied on the exempted income. In such facts and ITA No.3536/Del/2024 Smt. Ashrafi Devi Shiksha Samiti 7 circumstances, we have no option except to restore the matter back to the AO to give effect to the order passed under section 10(23C)(i) rws 10(23C)(vi) of the Act for relevant year as the assessee is entitled for claiming exemption under section 10(23C) of the Act. We, therefore, direct the AO to allow the benefit of section 10(23C) of the Act and allow consequential relief to the assessee. 7. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in open Court on 19th March, 2025. Sd/- Sd/- (VIKAS AWASTHY) (AVDHESH KUMAR MISHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:19/03/2025 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(E) 4. CIT(Appeals) 5. CIT-DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "