SOCIETY FOR THE BETTERMENT OF EDUCATION, MIDNAPRE,PASCHIM MEDINIPUR V. I.T.O., WARD - 38(4), MIDNAPUR, MIDNAPUR

ITA 1174/KOL/2024

AI Insights

The case involves the Society for the Betterment of Education, an educational institution in Midnapur, which appealed against the orders of the Commissioner of Income Tax (Appeals) for the assessment years 2016-17 and 2017-18. The primary issue was the denial of exemption on income amounting to Rs. 81,26,484, which was claimed under section 11 of the Income Tax Act. The initial denial by the Assessing Officer was based on the non-submission of the audit report in Form 10B within the prescribed due date. The CIT(A) partly allowed the appeal by recognizing the 12AA registration but upheld the denial of exemption due to the late submission of the audit report. The Tribunal, referencing a decision by the Calcutta High Court, found that the late submission of the audit report should not automatically disqualify the trust from exemption under sections 11 and 12A of the Act.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469697 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 27-11-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 22-05-2024
• Other Referred Cases: CIT vs Rai Bahadur Bissesswarlal Motilal Malwasie Trust
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 11; 12AA; 12A; 10B

Judgement Text

"आयकर अपीलȣय अͬधकरण, कोलकाता पीठ “ए’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA Įी राजेश क ुमार, लेखा सटèय एवं Įी Ĥदȣप क ुमार चौबे, ÛयाǓयक सदèय क े सम¢ [Before Shri Rajesh Kumar, Accountant Member &Shri Pradip Kumar Choubey, Judicial Member] I.T.A. Nos. 1174 & 1175/Kol/2024 Assessment Years: 2016-17 & 2017-18 Society for the Betterment of Education (PAN: AAHAS 9354 D) Vs. ITO, Ward- 38(4), Midnapur ITO, Ward-1(3), Exemption, Kolkata Appellant / ) अपीलाथȸ ( Respondent / Ĥ×यथȸ Date of Hearing / सुनवाई कȧ Ǔतͬथ 27.11.2024 Date of Pronouncement/ आदेश उɮघोषणा कȧ Ǔतͬथ 05.12.2024 For the assessee / Ǔनधा[ǐरती कȧ ओर से Smt. Saswati Mitra Dutta, Advocate Smt. Rajashree Dutta, Advocate For the revenue / राजèव कȧ ओर से Shri Pradip Biswas, Addl. CIT ORDER / आदेश Per Pradip Kumar Choubey, JM: These are the appeals preferred by the assessee against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the “Ld. CIT(A)”] for the AY 2016-17 & 2017-18 respectively. 2 I.T.A. Nos. 1174 & 1175/Kol/2024 Assessment Years: 2016-17 & 2017-18 Society for the Betterment of Education 2. As it appears from the record that the present appeal has been filed by the delay for this the assessee has filed condonation petition and according to assessee being an educational institution and school is affiliated, the governing body and members are all government officials. It has further submitted by the Counsel that the assessee stays at Midnapur which is much away from Kolkata where the office of the assigned advocate is situated. The ld. Counsel further submits that the A.R who has been handed over the file was in fact only on account of illness of her father and in this way the considerable time has been elapsed. The prayer of the counsel is to condone the delay. 3. The Ld. D.R did not raise in condoning the delay. Accordingly the delay is hereby condoned. 4. Brief facts of the case of the assessee is a school which is registered under Society Registration Act, 1961. The assessee is solely engaged in running school in Midnapur filed its return of income for AY 2016-17 declaring total income at Rs. Nil. The case was selected for scrutiny and after issuance of notice which respect to the claim of exemption of income of Rs. 81,26,484/-. Nothing has been submitted by the assessee before the AO, hence the claim of exemption of Rs. 81,26,484/- has been denied by the AO. 5. The said order has been challenged by the assessee before the Ld. CIT(A) wherein the appeal of the assessee has been partly allowed by holding that the assessee was granted 12AA registration on 18.12.2018 for AY 2017-18 and for AY 2016-17 on 20.12.2018 and therefore as per Circular 1/15 dated 21.01.2015 registration claimed u/s 12AA is also applicable for this year. But the Ld. CIT(A) dismissed the claim of exemption of Rs. 81,26,482/- on the ground that audit report in Form 10B is not filed. Being aggrieved and dissatisfied the present appeal has been filed. 6. The Ld. Counsel challenges the impugned order that there was submitting that the Ld. CIT(A) was not justified in disallowing the claim of deduction u/s 11 of the Act. Despite the fact that audited report of the said order was filed before the AO during the 3 I.T.A. Nos. 1174 & 1175/Kol/2024 Assessment Years: 2016-17 & 2017-18 Society for the Betterment of Education proceedings and according to him claim of exemption merely on the occasion of furnishing audited report in Form 10B cannot be said to be justifiable. In view of catena of decision of ITAT as well as Hon’ble High Court at Calcutta. According to him, furnishing of audit report along with return is a procedural requirement only. He has cited a decision passed by the Hon’ble Calcutta High Court in the case of CIT vs Rai Bahadur Bissesswarlal Motilal Malwasie Trust. 7. Contrary to that the ld. D.R supports the impugned order. 8. We have gone through the order of Ld. CIT(A) and find that the assessee was granted 12AA registration on 17.12.2018 and as per the Ld. CIT(A) registration u/s 12AA was also applicable for this year. The Ld. CIT(A) in its order has held that as per provision of section 12A(1)(d) read with Rule 17B to claim the benefits of 12A and deduction u/s 11 of the act, the audit report in form 10B mandatorily needs to be filed along with return of income which is not filed by the assessee within the due date prescribed. In this context, we have perused such decision and find that Hon’ble High Court has held thus: “Charitable Trust -Exemption-condition precedent-submission of audit report along with return- not a mandatory condition- submission of audit report before completion of assessment- trust entitled to exemption u/s 11, 12A.” Keeping in view the above principles as decided by the Hon’ble Calcutta High Court and several benches of ITAT, we are in this view that merely filed Form 10B benefit of exemption should not be denied. Accordingly, the case of the assessee restored in the file of Ld. CIT(A) to decide the issue in accordance with the law. 9. Issue raised in the appeal in 1175/Kol/2024 for AY 2017-18 as decided by us in ITA No. 1174/Kol/2024 for AY 2016-17 would mutatis mutandis apply to this appeal as well. Consequently the appeal of the assessee is allowed for statistical purposes. 4 I.T.A. Nos. 1174 & 1175/Kol/2024 Assessment Years: 2016-17 & 2017-18 Society for the Betterment of Education In the result, both the appeals of the assessee are allowed for statistical purposes. Order is pronounced in the open court on 5th December, 2024 Sd/- Sd/- (Rajesh Kumar/राजेश क ुमार) (Pradip Kumar Choubey /Ĥदȣप क ुमार चौबे) Accountant Member/लेखा सदèय Judicial Member/ÛयाǓयक सदèय Dated: 5th December, 2024 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- Society for the Betterment of Education, Midnapore Sepoy Bazar, Midnapore Kotowali, Paschim Medinipur-721101 2. Respondent – ITO, Ward-38(4), Midnapur 3. Ld. CIT(A)-NFAC, Delhi 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata "