THE GASPER EDUCATION SOCIETY,KOLKATA V. ITO, WARD 7(1), KOLKATA

ITA 871/KOL/2025

AI Insights

The case involves The Gasper Education Society appealing against the order of the CIT(A), National Faceless Appeal Centre, which confirmed the Assessing Officer's decision denying the benefit of Sections 11 & 12 of the Income Tax Act. The denial was based on the return being filed under section 139(4), which the lower authorities interpreted as ineligible for the exemptions provided under Sections 11 & 12. The Tribunal, referencing a CBDT Circular and a similar case decided by the ITAT Ahmedabad Bench, found that the assessee was indeed eligible for the exemptions as the return was filed within the extended time limit under section 139(4).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669456 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Other Referred Cases: Shri Mahudi Madhupuri Jain NSM Bhojanshala & Prashadi Bhavan, Shri Rajkot Vishashrimali Jain Samaj
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P.N. BARNWAL
• Assessee Lawyers: GIRIDHAR DHELIA
• Keywords: Revised return; Benefit of exemption
• Section: 11; 12AA; 12A; 139; 12; 10

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER आयकर अपील सं/ITA No.871/KOL/2025 (निर्धारण वर्ा / Assessment Year : 2018-2019) The Gasper Education Society 40A, AJC Bose Road, Nonapukur Tram Depot, Kolkata-700017 Vs ITO Ward-7 (1), Kolkata PAN No. :AAABT 0159 K (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्धाररती की ओर से /Assessee by : Shri Giridhar Dhelia, Advocate रधजस्व की ओर से /Revenue by : Shri P.N.Barnwal, CIT-DR सुनवाई की तारीख / Date of Hearing : 25/06/2025 घोषणा की तारीख/Date of Pronouncement : 25/06/2025 आदेश / O R D E R Per George Mathan, JM : This is an appeal filed by the assessee against the order dated 06.03.2025 of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, passed in DIN & Order No.ITBA/NFAC/S/250/2024- 25/1074097940(1) for the assessment year 2018-2019. 2. Shri Giridhar Dhelia, ld. Advocate appeared on behalf of the assessee. Shri P.N.Barnwal, ld. CIT-DR appeared on behalf of the revenue. 3. It was submitted by the ld. AR that the return filed by the assessee was processed and the assessment came to be completed u/s.143(3) of the Act, wherein the Assessing Officer has denied the assessee the benefit of Sections 11 & 12 of the Act on the ground that the return filed by the assessee was u/s.139(4) of the Act. It was the submission that the ld. CIT(A) has also confirmed the order of the Assessing Officer. Ld.AR drew our attention to the Circular issued by the CBDT in F.No.173/193/2019-ITA- ITA No.871/Kol/2025 2 I, dated 23.04.2019, wherein in para 3 the CBDT has held that if the return filed u/s.139 of the Act, the assessee would be entitled the benefit u/s.11 & 12 of the Act. The said circular reads as follows :- F.No. 173/193/2019-ITA-1 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, 23 April, 2019 To. The Pr. DGIT (Systems). New Delhi Subject: Clarification with regard to the time allowed for filing of return of income subsequent to the insertion of clause (ba) in sub-section (1) of section 12A of the Income-tax Act, 1961. Sir, Undersigned is directed to refer to the representation(s) received on above mentioned subject stating that while processing of ITR-7 for the A.Y. 2018-19, in respect of the belated returns filed u/s 139(4) of the Income-tax Act, 1961 (Act), the following is being communicated u/s 143(1)(a) of the Act:- \"As per section 12A(1)(ba) of the Income-tax Act, 1961 the person in receipt of the income has furnished the return of income for the previous year in accordance with the provisions of sub-section (4A) of section 139, within the time allowed under that section. Otherwise the exemption u/s 11 ie. Sr. No. 4(1) and 4 (viii) in Schedule Part BTI is not allowed\" Based on this, exemption u/s 11 of the Act has been denied to otherwise eligible trust, thereby creating huge demand 2. In the matter, the memorandum explaining the relevant provisions of the Finance Bill, 2017 reads as under: \"as per the existing provisions of said section, the entities registered under section 12AA are required to file return of income under sub- section (4A) of section 139, if the total income without giving effect to the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable to income-tax. However, there is no clarity as to whether the said return of income is to be filed within time allowed u/s 139 of the Act or otherwise. In order to provide clarity in this regard, it is proposed to further amend section 12A so as to provide for further condition that the person in receipt of the income ITA No.871/Kol/2025 3 chargeable to income-tax shall furnish the return of income within the time allowed under section 139 of the Act. These amendments are clarificatory in nature. These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to assessment year 2018-19 and subsequent years.\" 3. Additionally, an excerpt of Circular 2/2018, dated 15.2.2018 \"Explanatory Notes to the Provisions of the Finance Act, 2017 on insertion of clause (ba) in sub-section (1) of section 12A is quoted as under \"the entities registered under section 12AA are required to file return of income under sub-section (4A) of section 139 of the Income-tax Act, if the total income without giving effect to the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable to income-tax. Amendment to section 12A of the Income- tax has been made so as to provide for additional condition that the person in receipt of the income chargeable to income-tax shall furnish the return of income within the time allowed under section 139 of the Income-tax Act.\" 3. Thus, for a trust registered u/s 12AA of the Act to avail the benefit of exemption u's 11 shall inter alia file its return of income within the time allowed u/s 139 of the Act. Accordingly, orders u/s 143(1)(a) in those cases in which demand has been raised on this issue may please be rectified. This issues with the approval of Chairman (CBDT). (Vinay Sheel Gautam) JCIT (OSD) (ITA-1) Telefax: 011-23093070 E-mail: xinaxaheel [e-mail] Copy to The Pr. CCIT (Exemptions), New Delhi. 4. Ld. AR placed reliance on the decision of the ITAT Ahmedabad Bench of the Tribunal in the case of Shri Mahudi Madhupuri Jain NSM Bhojanshala & Prashadi Bhavan, passed in ITA No.184/Ahd/2024, dated 04.06.2024, wherein the coordinate bench of the Tribunal under identical circumstances has after considering the CBDT Circular held as follows :- ITA No.871/Kol/2025 4 9. In order to resolve this controversy, it will be relevant to examine the Memorandum of the Finance Bill, 2023 which is found to be as under: 9. Denial of exemption where return of income is not furnished within time 9.1 As per the provisions of twentieth proviso to clause (23C) of section 10 of the Act, if the return of income is not furnished by a trust or institution under first regime within the time under section 139 of the Act, exemption under sub- clause (iv)/(v)/(vi)/(via) of clause (23C) of section 10 of the Act shall not be available to such trust or institution. a. Similarly, as per the provisions of clause (ba) of sub-section (1) of section 12A of the Act, if the return of income is not furnished by a trust or institution under the second regime within the time under section 139 of the Act, exemption under section 11, 12 of the Act shall not be available to such trust or institution. b. Section 139 of the Act was amended by the Finance Act, 2022 providing for an option to the taxpayers to furnish updated return of income up to 2 years from the end of assessment year. c. This resulted in unintended consequences of allowing exemption under section 11, 12 of the Act and sub-clause (iv)/(v)/(vi)/(via) of clause (23C) of section 10 of the Act will be available to the trusts where they furnish updated return of income. Accordingly, it is proposed to clarify that the exemption under section 11, 12 and sub-clause (iv)/(v)/(vi)/(via) of clause (23C) of section 10 of the Act will be available only if the return of income has been furnished within the time allowed under sub- section (1) or sub- section (4) of section 139 of the Act. d. Hence, it is proposed to, a) amend the twentieth proviso of clause (23C) section 10 of the Act to provide that the fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub- clause (vi) or sub- clause (via) shall furnish the return of income for the previous year in accordance with the provisions of sub- section (4C) of section 139 of the Act, within the time allowed under sub-section (1) or sub-section (4) of that section. b) amend clause (ba) of sub-section (1) of section 12A of the Act to provide that the person in receipt of the income shall furnish the return of income for the previous year in accordance with the provisions of sub- section (4A) of section 139 of the Act, within the time allowed under sub- section (1) or sub-section (4) of that section. ITA No.871/Kol/2025 5 e. These amendments will take effect from 1stApril, 2023 and will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years.\" 10. It is apparent from the above clarification that this amendment was introduced to exclude the category of updated returns of income u/s 139(8) of the Act. The requirement of Section 12A(1)(ba) of the Act for this year was that the return should be filed within the time allowed under that section (i.e. u/s. 139 of the Act). Section 139 provides time limit for filing of original return, belated return, revised return as well as updated return. Thus, all these category of returns were eligible for consideration under the general time line of section 139 of the Act. In order to exclude the category of updated return of income, this amendment was brought in to exclude the revised/updated category of returns and specific mention of section 139(1) & 139(4) of the Act was made in Section 12A(1)(ba) of the Act. It is apparent from the Memorandum that time limit for belated return u/s 139(4) of the Act was available for the earlier years as well which was continued and made specific vide this amendment. There is no dispute to the fact that the assessee has filed its return of income for this year within the time limit of section 139(4) of the Act. Therefore, the department was not correct in denying the exemption u/s11 of the Act while processing the return. 11. The Circular F No. 173/193/2019 -ITA-1, dated 23.04.2019 issued by the CBDT and relied upon by the assessee refers to Memorandum to the Finance Bill, 2017 and gives clarification in respect of amendment to section12A of the Act, that a person in receipt of the income chargeable to income tax shall furnish the return of income within the time allowed u/s 139 of the Act. As per this clarification, the return of income was required to be filed within the time allowed u/s 139 of the Act and the relevant portion of the Circular is reproduced below: \"2. In the matter, the memorandum explaining the relevant provisions of the Finance Bill, 2017 reads as under: \"as per the existing provisions of said section, the entities registered under section 12AA are required to file return of income under sub- section (4A) of section 139, if the total income without giving effect to the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable to income tax. However, there is no clarity as to whether the said return of income is to be filed within time allowed under section 139 of the Act or otherwise. In order to provide clarity in this regard, it is proposed to further amend section 12A so as in provide for further-condition that the person in receipt of the income chargeable to income-tax shall furnish the return of income within the time allowed under section 139 of the Act. These amendments are clarificatory in nature. ITA No.871/Kol/2025 6 These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to assessment year 2018-19 and subsequent years.\" 3. Additionally, an excerpt of circular No. 2/2018 dated 15-2-2018 \"Explanatory Notes to the Provisions of the Finance Act, 2017\" on insertion of clause (ba) in Sub-section (1) of section 12A is quoted as under: \"The entities registered under section 12AA are required to file return of income under sub-section (4A) of section 139 of the Income-tax Act, if the total income without giving effect to the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable to income-tax. Amendment to section 12A of the Income-tax has been made so as to provide for additional condition that the person in receipt of the income chargeable to income-tax shall furnish the return of income within the time allowed under section 139 of the Income-tax Act.\" 3. Thus, for a trust registered under section 12AA of the Act to avail the benefit of exemption under section 11 shall inter-alia file its return of income within the time allowed under section 139 of the Act. Accordingly, orders under section 143(1)(a) in those cases in which demand has been raised on this issue may please be rectified.\" (Emphasis supplied) 12. It is, thus, clear from the above Circular that exemption u/s 11 of the Act was available in respect of the return of income filed u/s 139 of the Act. This Circular does not mandate that the return has to be filed only within the time limit available u/s 139(1) of the Act and rather directs to rectify the unjust demand raised u/s 143(1)(a) of the Act. As the assessee had filed its return of income within the time limit of section 139(4) of the Act, it was eligible for benefit of exemption u/s 11 of the Act. It has been held by the Ld. ITAT, Rajkot Bench in the case of Shri Rajkot Vishashrimali Jain Samaj, [2023] 150 taxmann.com 361 (Rajkot-Tri), which has been relied upon by the assessee, that if the assessee had filed return of income after due date of filing of return u/s.139(1) of the Act but before due date prescribed u/s 139(4) of the Act, benefit of exemption u/s 11 of the Act can't be denied to the assessee by invoking the provisions of Section 12A(1)(ba) of the Act. 13. In view of the above provisions of law, the clarificatory Circular of the CBDT as well as the judicial pronouncement, we are of the considered opinion that the department was not correct in disallowing exemption u/s 11 of the Act while processing the return, as the return of income was filed by the assessee within the due date as per the provisions of the Act. Accordingly, findings of the Ld. JCIT(A) is reversed and the department is directed to allow the exemption u/s. 11 of the Act as claimed by the assessee. ITA No.871/Kol/2025 7 5. It was the submission that the assessee may be granted the benefit of the provisions of Section 11 & 12 of the Act. 6. In reply, ld.Sr. DR vehemently supported the order of the ld.AO and ld.CIT(A). 7. We have considered the rival submissions. As it is noticed that the issue in the present appeal is squarely covered by the Circular issued by the CBDT as also the coordinate bench of the Tribunal, referred to supra, therefore, on identical findings, the issues in this appeal are allowed in favour of the assessee and we hold that the assessee is entitled for the benefit under the provisions of Sections 11 & 12 of the Act. 8. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 25/06/2025. Sd/- (SANJAY AWASTHI) Sd/- (GEORGE MATHAN) लेखा सदस्य/ ACCOUNTANT MEMBER न्यधनयक सदस्य / JUDICIAL MEMBER कोलकाता Kolkata; ददनाांक Dated 25/06/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशधिुसधर/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ड फाईल / Guard file. सत्यापपत प्रतत //True Copy// "