SRI ALAGUMALAI MURUGAN TRUST,TIRUPPUR V. ACIT, EXEMPTIONS, COIMBATORE

ITA 2995/CHNY/2024

AI Insights

The case involves the Sri Alagumalai Murugan Trust, which appealed against the orders of the Assistant Commissioner of Income Tax, Exemptions, Coimbatore, for the assessment years 2019-20 and 2020-21. The primary contention was the denial of the claim of exemption under section 10(23C) of the Income Tax Act and the erroneous addition of gross receipts instead of net receipts in the tax assessment. The Trust argued that the delay in filing Form 10 for the respective assessment years was condoned by the competent authority, and relied on a precedent set by the Hon'ble Madras High Court in a similar case. The Tribunal, referencing the decision of the Hon'ble Madras High Court, directed that only the net income should be taxed and not the gross receipts, and the matter was remanded back to the Assessing Officer for re-assessment accordingly.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470326 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2020-2021
• Other Referred Cases: Sree Venkateswara Educational Trust v. ITO, University of Madras v. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: I.ROOPA
• Assessee Lawyers: .S.SRIDHAR; ERODE
• Keywords: Condonation of delay; Set aside; Revised return; Rectification of order; Competent authority; Charitable institution
• Section: 250; 143(1); 12AA; 12A; 139; 12; 139(4)

Judgement Text

"Page - 1 - of 6 आयकर अपीलीय अधिकरण, ‘‘ए’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI श्री एबी टी. वर्की, न्यायिर्क सदस्य एवं श्री अयिताभ शुक्ला, लेखा सदस्य क े समक्ष BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA 2994 / Chny/2024, Assessment Years-2019-20 आयकर अपील सं./ITA 2995 / Chny/2024, Assessment Years-2020-21 Sri Alagumalai Murugan Trust, No.9, Selvi Complex, Dharapuram Road, Kandiyan Kovil, Tirupur, Tamil Nadu-641 608. [PAN: AABTA9235E] The Assistant Commissioner of Income Tax, Exemptions, Coimbatore. (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr..S.Sridhar, Advocate (Erode) by virtual प्रत्यर्थी की ओर से /Revenue by : Dr.I.Roopa, Addl. CIT सुनवाई की तारीख/Date of Hearing : 27.02.2025 घोषणा की तारीख /Date of Pronouncement : 04.04.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M : The below mentioned appeals have been filed by the appellant assessee for AY-2019-20 and AY-2020-21 contesting the order of Ld. First Appellate Authority indicated Column-E, herein below:- S. No. Appeal Nos. AYs Appellant CIT(A) Order Details Respondent A B C D E F 1 ITA No. 2994 / Chny / 2024 2019-20 Sri Alagumalai Murugan Trust, No.9, Selvi Complex, Dharapuram Road, Kandiyan Kovil, Tirupur, Tamil Nadu-641 608. [PAN: AABTA9235E] DIN & Order No. ITBA / APL / S / 250 / 2024-25 / 1069771114(1) dated 18.10.2024 The Assistant Commissioner of Income Tax, Exemptions, Coimbatore. 2 ITA No. 2995 / Chny / 2024 2020-21 DIN & Order No. ITBA / APL / S / 250 / 2024-25 / 1069767518(1) dated 18.10.2024 ITA No.2994 & 2995/Chny/2024 Page - 2 - of 6 2.0 The twin appeals are centering around a common issue and hence for the purposes of convenience, adjudicated together. For the purposes of this adjudication the facts and figures for AY-2019-20 have been taken. The decision for AY-2019-20 shall apply mutatis mutandis for appeal AY-2020-21. 3.0 In ITA No 2994 for AY-2019-20, assessee has contested the decision of the revenue in denying it benefit of claim of exemption u/s.10(23C) of the act vide its order u/s 143(1) . The Ld council for the assesee submitted that form 10 was belatedly filed and that , in terms of extant instructions of CBDT it has applied for condonation of delay before the competent authority. It has also been argued that CPC has erroneously added gross receipts as against net receipts. The Ld Council for the assesee relied upon order of this tribunal in ITA 2169-70 / chny 2024 Dt. 13/12/2024 wherein placing reliance upon decision of Hon’ble Madras High Court relief was accorded to the assesee and net receipts were directed to be taxed. The Ld DR would like to make us believe upon correctness of the order of lower authorities. She also contended that no delay condonation application of asessee has been filed by the assessee before competent authority. 4.0 We have heard rival submissions on the matter in the light of material on records . It is undisputed fact on record that gross receipts of assesse have been taxed. The asessee has belatedly filed Form 10 for ITA No.2994 & 2995/Chny/2024 Page - 3 - of 6 which it has admittedly filed delay condonation application before competent authority . We have noted with deference the decision of Hon’ble coordinate bench of this tribunal in ITA number 2169 & 2170 supra, reproduced hereunder :- “…..3. The brief facts are that the assessee Madras University had filed its return of income (RoI) for AY 2019-20 on 30.10.2019; and filed the Audit Report in Form 10BB belatedly on 11.01.2023 [delay of more than three years] and since, the assessee didn’t file the Audit Report within the due date to be eligible for claiming exemption u/s.10(23C)(vi) of the Income Tax Act, 1961 (hereinafter in short ‘the Act’), the CPC while processing ITA Nos.2169 & 2170/Chny/2024 (AYs 2019-20 & 2020-21) M/s. University of Madras :: 3 :: the return, didn’t allow the exemption claimed by the assessee u/s.10(23C)(vi) of the Act and disallowed the entire expenditure and taxed the gross receipts, thereby, resulting in high demand of Rs.67,76,57,091/-. 4. On appeal, the assessee brought to the Ld.CIT(A)’s notice that it had filed application for condoning the delay in belatedly filing Audit Report in Form 10BB before the CBDT through an application filed via mail on 09.03.2024 u/s.119(2)(b) of the Act read with Circular No.2/20 (F) No.19/7/55/2018-ITA-1 dated 03.01.2020 and Circular No.15/2022 dated 19.07.2022 issued in connection with the same; and which is still pending before the CBDT and filed the screen shot to prove that application has been filed on 09.03.2024 and prayed before him to keep the appeals pending for adjudication until the disposal of the condonation of delay filed before the CBDT for AY 2019-20 as well as for AY 2020-21. However, the First Appellate Authority finding that the assessee neither filed Audit Report in Form 10BB of the Act within due date nor obtained condonation of delay in filing of the Audit Report, held that the assessee was not eligible for exemption u/s.10(23C) of the Act. 5. Before us, the Ld.AR has first of all assailed the impugned action of the CPC/CIT(A) taxing the gross receipts without allowing the corresponding expenses which according to him is per-se erroneous; and ITA Nos.2169 & 2170/Chny/2024 (AYs 2019-20 & 2020-21) M/s. University of Madras :: 4 :: according to him, even if the assessee is treated as an AOP, still only the net income ought to have been brought to tax rather than the whole gross receipts which action of the CPC/CIT(A) is arbitrary, whimsical and unjust. According to him, even if assessee is treated as an AoP, or not granted benefit under Chapter- III of the Act, for any reason viz due to belated filing of RoI or for non-filing of the condonation of delay in respect of belated filing of Audit Report, etc, still the assessee University’s gross receipts can’t be brought to tax and the corresponding expenses for earning income needs to have been allowed. And for such a proposition, he cited the decision of the Hon’ble Madras High Court in the case of Sree Venkateswara Educational Trust v. ITO order dated 02.09.2024 in a similar factual scenario, wherein that case, the CPC passed intimation u/s.143(1) of the Act denying not only the exemption u/s.11 of the Act but also made addition of gross receipts, which impugned action was interfered by the Hon’ble High Court by ITA No.2994 & 2995/Chny/2024 Page - 4 - of 6 holding that the AO couldn’t have taxed the entire gross receipts but should have only taxed the net income. In other words, assessee can’t be denied the legitimate deduction that would be available to it, even if it is treated as an AOP. The Hon’ble High Court in Sree Venkateswara Educational Trust supra held as under: “…19. The facts of this case are not in dispute. The appellant/assessee had claimed exemption-cum-payment under the Act without actually ITA Nos.2169 & 2170/Chny/2024 (AYs 2019-20 & 2020-21) M/s. University of Madras :: 5 :: filing application under Section 12A(a) of the Act as it stood then during the period in dispute. 20. The appellant/assessee obtained registration under Section 12AA of the Act only on 02.03.2016. The case pertains to the Assessment Year 2013- 2014. Therefore, in terms of the decision of the Division Bench of this Court in M/s.Soundaram Chokkanathan Educational and Charitable Trust case (cited supra), the benefit of registration would not enure in favour of the appellant/assessee before registration. 21. At the same time, the appellant/assessee cannot be denied all the legitimate deductions that would have been available, if the returns were filed either as a “Regular Assessee” or as an “Association of Person”. 22. The purpose of assessment is to recover just tax and not subject an assessee to unjust tax by holding that no return was filed either as a “Regular Assessee” or as an “Association of Person” merely because revised return was not filed under Section 139(4) of the Act, within a time specified under Section 139 of the Act. 23. The last date for filing the returns under Section 139(4) of the Act would have expired on 31.03.2015 which was just few days before the return was processed on 12.03.2015 under Section 143(1) of the Act. 24. The Hon'ble Supreme Court in Formica India Division, Bombay, Burma Trading Corporation Limited Vs. Collector of Central Excise and others, 1995 Supp (3) SCC 552/1995 (77) ELT 511, had held as under:- “When it was found that they were liable to pay duty on the intermediary product and had not paid the same, but had paid the duty on the end product, they could not ordinarily have complied with the requirements of Rule 56A. Once the Tribunal took the view that they were liable to pay duty on the intermediary product and they would have been entitled to the benefit of the notification had they met with the requirement of Rule 56A, the proper course was to permit them to do so rather than denying to them the benefit on the technical ground that the point of time when they could have done so had elapsed and they could not be permitted to comply with Rule 56A after that stage had passed. We are, therefore, of the opinion that the appellants should be permitted to avail of the benefit of the notification by complying at this stage with Rule 56A to the satisfaction of the Department.” 25. In our view also, if assessments are to be completed, deductions and applicable exemptions that are otherwise available to an assessee ought to have been extended by the Assessing Officer to an assessee before finalizing the assessment. Since the appellant/assessee was not entitled to exemption as a Trust under Sections 11, 12 and 12A of the Act in absence of registration under the Act as it stood Section 12AA of ITA Nos.2169 & 2170/Chny/2024 (AYs 2019-20 & 2020-21) M/s. University of Madras :: 6 :: the Act, benefit of other deductions under the Act ought to have been given. The Assessing Officer is not expected to act mechanically to confirm the liability to fasten an unjust tax liability on an assessee. 26. Therefore, we are inclined to set aside the Impugned Common Order dated 30.12.2019 and remit the case back to the Assessing Officer to pass a fresh order deleted under Section 143(1) of the Act. 27. These appeals stand disposed of with the above ITA No.2994 & 2995/Chny/2024 Page - 5 - of 6 observations. The substantial questions of law are partly answered in favour of the appellant/assessee. No costs. Connected Civil Miscellaneous Petitions are closed…” . 6. In the light of the aforesaid decision of the Hon’ble Madras High Court (supra), we set aside the impugned orders of the First Appellate Authority and restore the assessment back to the file of the AO/CPC with a direction to tax only the net income of the assessee for AY 2019-20 as well as AY 2020-21 as per the respective income & expenditure account filed by the assessee. In this regard, the Ld.AR brought to our notice that for AY 2019-20, the excess expenditure over income is to the tune of Rs.22,31,78,628/- which may be verified by the AO/CPC and pass order u/s143(1) of the Act in accordance to law. Likewise for AY 2020- 21, the excess expenditure over income as per the income and expenditure account is of Rs.2,06,32,878/- which may be verified by the AO/CPC and pass order u/s.143(1) of the Act accordingly. 7. And further, since the application for condonation of delay in filing belatedly the Audit Report in Form 10BB is pending before the CBDT as noted (supra), the assessee’s claim regarding exemption u/s.10(23C)(vi) of the Act be granted subject to the condonation being granted by the CBDT by passing rectification order as per law. 8. In the result, appeals filed by the assessee are allowed for statistical purposes….” 5.0 We have noted that the facts of present case are identical to those deliberated upon by the coordinate bench in the case of Madras University supra. The Revenue has not able to identify any distinguishment on facts. Accordingly, in respectful compliance to the decision cited above, we set aside the impugned orders of the First Appellate Authority and restore the assessment back to the file of the AO/CPC with a direction to tax only the net income of the assessee. The assessee’s claim regarding exemption u/s.10(23C)(vi) of the Act be decided in the light of final decision upon its request for condonation of delay, currently reported to be pending before the competent authority. ITA No.2994 & 2995/Chny/2024 Page - 6 - of 6 Accordingly, all the grounds of appeal raised by the assessee are allowed for statistical purposes. 6.0 In the result the assessee’s appeal for ITA No.2994 is allowed for statistical purposes. 7.0 The decision taken herein above shall apply in Revenue’s appeal vide ITA No.2995 for AY-2020-21, mutatis mutandis. Order pronounced on 4th , April-2025 at Chennai. Sd/- ( एबी टी. वकी) (ABY T VARKEY) न्याययक सदस्य / Judicial Member Sd/- (अयिताभ शुक्ला) (AMITABH SHUKLA) लेखा सदस्य /Accountant Member चेन्नई/Chennai, यदनांक/Dated: 4th , April-2025. KB/- आदेश की प्रयतयलयप अग्रेयषत/Copy to: 1. अपीलार्थी/Assessee: 2. प्रत्यर्थी/Revenue 3. आयकर आयुक्त/CIT - Coimbatore 4. यवभागीय प्रयतयनयि/DR 5. गार्ड फाईल/GF "