ORDER
R.K. Panda, Vice President.- The above 2 appeals filed by the Revenue are directed against the separate orders dated 15.02.2024 of the CIT(A) / NFAC, Delhi relating to assessment years 2016-17 and 2017-18 respectively. Since identical grounds have been raised by the Revenue in both the appeals, therefore, for the sake of convenience, these appeals were heard together and are being disposed of by this common order.
ITA No.808/pUN/2024 (A.Y. 2016-17)
2. Facts of the case, in brief, are that the assessee is a religious and charitable trust engaged in the work of managing the administration and functioning of Sikh Gurudwara Suchkhand Shri Hazur Sahib, Nanded. The Gurudwara institution is an autonomous body constituted by the Government under the Nanded Sikh Gurudwara Sachkhand Shri Hazur Apchalnagar Sahib Act, 1956 by Notification in the official Gazette. The main object of the Trust is for religious purpose consisting of the everyday pooja, utsav of Sikh Gurudwara Suchkhand Shri Hazur Sahib, Nanded. The Trust is also running an educational institute in the name of “Bhakti Niwas” at Trimbakeshwar for the devotees who visit to Trimbakeshwar for performing various religious functions. The Trust is registered under the Charitable and Religious Trust Act, 1920 (Central Act XIV of 1920) and the Bombay Public Trusts Act, 1950. The Management of the Trust is looked after by the District Collector of Nanded, Superintendent of the Gurudwara as ex-officio member and three members nominated by the Board at its first meeting in the prescribed manner from amongst the Sikhs of Nanded. The rules and regulations of the trust are regulated by the Charity Commissioner of Maharashtra. The assessee trust filed its return of income for the year under consideration on 24.01.2017 declaring a total income at Rs.Nil. The case was selected for scrutiny under CASS for AY 2016-17 and accordingly, statutory notices under section 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as „the Act’) were issued and served on the assessee in response which the assessee made submissions time to time.
3. During the course of assessment proceedings, the Assessing Officer upon verification of the assessee’s financial statements, Tax Audit Report and other relevant details / information furnished observed that the assessee had claimed exemption u/s 10(23C)(v) of the Act. He noted that during the year under consideration, although the assessee has received total receipt at Rs.69,13,90,763/-, however, the assessee was able to apply an amount of Rs 41,10,97,718/- only. So, the assessee generated surplus of Rs.28,02,93,045/-. From the balance sheet of the assessee, the Assessing Officer observed that the assessee had corpus fund of Rs.1,59,51,94,751/- and FDRs of Rs.1,33,28,20,331/-. He noted that the surplus to net receipt ratio for various years in the case of assessee is as below:-
| Sr. No | AY | Gross receipt | Surplus | % age of surplus to receipt |
| 1 | 2012-13 | 458649931 | 148679535 | 32.5% |
| 2 | 2013-14 | 520814778 | 154425682 | 29.6% |
| 3 | 2014-15 | 595291950 | 243351386 | 40.9%o |
| 4 | 2015-16 | 645741318 | 250080360 | 38.7% |
| 5 | 2016-17 | 691390763 | 280293045 | 40.5% |
4. According to the Assessing Officer, as per the above table, it is clear that the assessee is not able to utilize its fund every year and there is surplus in excess of 15% from AY 2012-13 to 2016-17. The assessee has claimed exemption u/s 10(23C)(v). As per third proviso to sec. 10(23C) read with section 139(4A), assessee trust was required to file audit report in Form 10BB within due date of time. But the assessee trust had filed return of income as well as Form 10BB after due date of time. The Assessing Officer was of the opinion that the funds are not being properly utilised/supervised as is required by provisions of section 10(23C)(v) under which the trust has placed its claim of exemption. He, therefore, rejected the claim of exemption u/s 10(23C)(v). He further noted that the assessee had filed form 10BB on 30/01/2017. It had also filed application for condonation of delay with CIT(E), Pune on 25/07/2018 which was rejected by CIT(E), Pune vide its order dated 26/12/2018. The Assessing Officer, therefore, added the surplus of Rs.28,02,93,045/- to the income of the assessee.”
5. Before the Ld. CIT(A) / NFAC the assessee made elaborate submissions. The decision of the Tribunal in assessee’s own case for assessment year 2014-15 was also brought to the notice of the Ld. CIT(A) / NFAC. Based on the arguments advanced by the assessee and following the decision of the Coordinate Bench of the Tribunal in assessee’s own case, the Ld. CIT(A) / NFAC deleted the addition made by the Assessing Officer on the ground of late filing of Form 10BB. He further noticed that there is no material brought on record by the Assessing Officer in support of his observation that the funds of the trust were not properly utilized, managed and supervised and held that the observation of the Assessing Officer is a bald observation. He further held that the filing of audit report in the prescribed form before completion of assessment proceedings is sufficient compliance under the provisions of the Act. He accordingly deleted the addition made by the Assessing Officer by observing as under:
“7.1. I have carefully gone through the assessment order u/s 143(3), Grounds of appeal and statement of facts, the findings of AO in the assessment order and the written submissions and case laws uploaded by the assessee in support of the Grounds of appeal.
All Grounds of appeal are taken together and are effectively directed against addition of Rs. 28,02,93,045/- for late filing of Form No. 10BB filed by the assessee.
7.2. Findings on Grounds of appeal
In his assessment order, the AO makes the observation that the assessee had claimed exemption u/s 10(23C)(v) of the Act. During the year under consideration, the assessee received a total receipt of Rs. 69,13,90,763/-. The assessee was able to apply an amount of Rs.41,10,97,718/- during the year under consideration, generating a surplus of Rs. 28,02,93,045/-.
The AO further observed that the assessee was not able to utilize its fund every year and there is a surplus in excess of 15% from AY 2012-13 to 2016-17. As per the third proviso to sec. 10(23C) read with section 139(4A), the assessee trust was required to file an audit report in Form 10BB within the due date. However, the assessee trust had filed the return of income as well as Form 10BB after the due date.
The AO eventually denied the claim of exemption u/s 10(230)(v) holding that the funds were not being properly utilized/supervised as is required by the provisions of section 10(230)(v) under which the trust has placed its claim of exemption. The AO further noted that the application for condonation of delay filed with CIT(E), Pune on 25/07/2018 was rejected by CIT(E), Pune vide its order dated 26/12/2018. Consequently, the surplus of Rs. 28,02,93,045/- was added to the income of the assessee.
7.2.1. The case of the present assessee has been decided by the Hon’ble ITAT Pune in its judgment delivered in ACIT v. Nanded Sikhgurudwara Sachkhand Hazur Apchalnagar Sahib for AY 2014-15 where the facts and circumstances of the case are exactly similar. The judgment of the Hon’ble ITAT is reproduced here as under-
“2. The Revenue raised the following grounds of appeal:-
| 1. | | The Ld. CIT(A), has erred in allowing exemption u/s 10(23C)(v) of the Act in the given facts of the case, particularly the assessee failed to furnish Audit report in Form No. 10BB us 10(23C) (v) r.w.r. 16CC AX DEPAR |
| 2. | | The Ld. CIT(A), has erred in granting exemption u/s 11 of the Act by accepting Form No. 10 filed during the course of assessment proceedings, even though the Trust is not registered u/s 12A of the Act.” |
3. Briefly, the facts of the case are that the respondent-assessee is a religious and charitable trust engaged in the work of managing the administration and functioning of Sikh Gurdwara Sachkhand Shri Hazur Sahib, Nanded. It is to be noted that “The Nanded Sikh Gurudwara Sachkhand Hazur Apchchalnagar Sahib” as anonymous body constituted by the Govemment under the Nanded Sikh Gurudwara Sachkhand Hazur Apchchalnagar Sahib Act, 1956 by way of notification in the official Gazette of the Hyderabad Government vide Gazette Extraordinary No. 216. It is registered under the Charitable and Religious Trusts Act, 1920 (Central Act XIV of 1920) and the Bombay Public Trusts Act, 1950. The respondent-assessee filed the return of income for the assessment year 2014-15 declaring Rs. Nil income after claiming exemption of income under the provisions of section 10(230)(v) of the Income-tax Act, 1961 (the Act) Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax. Exemption Circle Aurangabad (the Assessing Officer) vide order dated 30-12-2016 passed us 143(3) of the Act of total income of Rs. 24,33,51,386/- denying the claim for exemption of Income u/s 10(23C) (v) on the ground that the respondent-assessee trust generated surplus of 41% of the gross receipts indicating that the funds were not utilized for which the trust was formed. Secondly, the respondent-assessee trust does not enjoy the registration u/s 12AA of the Act. Also the fact that Form No. 10 was not filed within the due date.
4. Being aggrieved by the above assessment of order, an appeal was preferred before the Ld. CIT(A) contending that the submission of audit report before the competent authorities constitutes sufficient compliance and, therefore, there is no requirement under the law that in order to avail the exemption u/s 10(23C)(v) of the Act. The Trust should also enjoy the registration u/s 12AA of the Act and finally the mere fact that the respondent-assessee generated surplus does not lead to conclusion that the funds were not properly utilized by the respondent-assessee trust. The ld. CIT(A) considering the following decisions relied upon by the respondent-assessee Hon’ble Supreme Court in the case of (i) CIT v. Nagpur Hotel Owner’s Association ITR 201 , (ii) Hon’ble Gujarat High Court in the case of ACIT v Stock Exchange Ahmedabad(iii) Hon’ble Delhi High Court in the case of Association of Corporation & Apex Societies of Handlooms v. Asstt. DIT ITR 287 held that furnishing of audit report before completion of the assessment proceedings would constitute sufficient compliance and claim for exemption u/s 10(23C)(v) cannot be denied. Similarly, the ld. CIT(A) also held that the findings of the Assessing Officer that the funds of the trust were not properly utilized is bald allegation as the respondent-assessee trust is supervised by the District Collector The office of the Charity Commissioner also not found any irregularity in the functioning of the trust as well as funds utilized by the respondent-assessee trust. Accordingly, the ld. CIT(A) directed the Assessing Officer to grant the exemption u/s 10(23C)(v) and delete the addition of Rs.24,33,51,366/-.
5. Being aggrieved by the above decision of the Id. CIT(A), the Revenue is in appeal before us in the present appeal.
6. The ld CIT-DR submits that mere fact that the respondent-assessee trust had generated surplus of 41% goes to prove that the funds were not properly utilized by the respondent-assessee trust. He further submitted that the ld. CIT(A) ought not to have held that the filling of the audit report before completion of the assessment proceedings constitutes a sufficient compliance under the provisions of the Act, as it is contrary to the plain provisions of the Act which stipulates under second proviso and third proviso of section 10(23C)(v) of the Act the audit report should be filed within due date of filing return of income u/s 139 of the Act. He further contended that the Id. CIT(A) ought not to have held that the findings of the Assessing Officer that the funds were not properly utilized, administered and supervised is bald in the absence of any material on record controverting the findings of the Assessing Officer He further submitted that the respondent-assessee trust was granted registration u/s 12AA only on 15-5-2017 which is applicable from financial year 2016-17 onwards Thus, in the absence of any registration u/s 12AA, the respondent-assessee trust is not entitled for benefit of exemption under the provisions of section 10(23C)(v) of the Act.
7. On the other hand, ld. AR for the respondent-assessee trust submitted that the observation of the ld. CIT(A) that the finding of the Assessing Officer that the funds of trust were not properly utilized and the affairs of the trust were not properly managed is bald, is correct, inasmuch as, the affairs of the trust were managed under the direction and control of the District Collector. He further submitted that the fact that audit report in the prescribed form was not submitted by the respondent-assessee trust within the due date for filing the return of income cannot come in the way of granting exemption u/s 10(230)(v), inasmuch as, the requirement of filing the audit report in the prescribed form is only directory and it would be sufficient compliance if audit report is submitted before completion of the assessment proceedings. He further submitted that mere generation of surplus does not lead to conclusion that the trust is not existing only public religious and charitable purposes.
As regards to the registration u/s 12AA, he submitted that there is no requirement under the provisions of section 10(23C)(v) that the claim for exemption under this section can be allowed only if the registration u/s 12AA is granted.
8. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the exemption under the provisions of section 10(23C)(v) of the Act. Admittedly, the respondent-assessee trust was granted approval u/s 10(23C)(v) of the Act. However, the Assessing Officer had denied the claim for exemption u/s 10(23C)(v) primarily on the ground that:
| (i) | | The funds of the trust were not properly utilized/supervised. |
| (ii) | | The respondent-assessee trust does no enjoy the registration under the provisions of section 12AA of the Act. |
| (iii) | | The audit report in the prescribed form was not filed within the stipulated date i.e. along with return of income filed u/s 139(1) of the Act. |
9. On appeal before the ld. CIT(A), the ld. CIT(A) was of the opinion that the Assessing Officer was not justified in observing that the funds of the trust were not property utilized without bringing any material on record.
Further, as regards to the filing of audit report in the prescribed form, the Ld. CIT(A) placing reliance on the decision of the Hon’ble Supreme Court in the case of Nagpur Hotel Owner’s Association (supra) held that if the audit report was filed before the completion of the assessment proceedings, it would meet the requirement of law as the provision of Act is a directory in nature. Thus, the appeal of the respondent-assessee trust was allowed by the ld. CIT(A).
10. We find from maternal on record that the observation made by the Assessing Officer that the funds of the trust were not properly utilized, managed and supervised is mere bald observation as there was no material brought on record in support of the above allegation, Further, we find that the funds of the trust are managed by the member of the trustees headed by the District Collector, no mala fide can be attributable to Government authorities in the absence of any evidence. The Assessing Officer holding the position of quasi judicial authority, should refrain from making bald allegation without bringing on record conclusive evidence in support of such allegation From reading of the assessment order, it appears that the Assessing Officer is carried away by the fact that the respondent-assessee trust generated surplus of funds of 41% of gross receipts and inferred that the funds were not utilized for the object for which the respondent-assessee trust was formed. The Hon’ble Supreme Court in the case of Queen’s Educational Society v CIT ITR 699 held that merely because a charitable trust had generated surplus does not lead to conclusion that the appellant trust is not charitable or religious exiting for the purpose of profit. To the similar effect in the decision of the Hon’ble Supreme Court in the case of Aditanar Educational Institution v. Addl. CIT . Therefore, the Assessing Officer cannot jump to the conclusion that the respondent-assessee trust is not religious and charitable trust merely because it generated surplus income.
11. We have carefully gone through the provisions of section 10(23C)(v) which does not prescribe any stipulation, which makes the registration u/s 12AA as a condition precedent for availing the exemption u/s 10(23C)(v) of the Act. In fact, the provisions of section 11 and section 10/23C)(v) are two parallel regimes and operate independently in their respective realms. This position was clarified by CBDT Circular No. 14 of 2015 dated 17-8-2015. Further, it is well-known canon of construction of the Statute, no words can be added to in Act or a new stipulation which is not prescribed in the statute can be read into the Act as held by the Hon’ble Supreme Court in the case of CIT v. Vadilal Lallubhai [1972] 86 ITR 2
As regards to the delay in filing the audit report in the prescribed form, the Courts have taken a consistent view that filing of audit report in the prescribed form before completion of the assessment proceedings would constitute a sufficient compliance under the provisions of the Act as held by the Hon’ble Supreme Court in the case of Nagpur Hotel Owner’s Association (supra), also by the Hon’ble Punjab & Haryana High Court in the case of National Horticulture Board v. Chief CIT and the Hon’ble Delhi High Court in the case of Association of Corporation & Apex Societies of Handlooms (supra). Even the CBDT Circular No. 19 of 2020 w.e.f. 3-11-2020 as amended by the CBDT Circular No 6 of 2021 dated 26-3-2021 had authorized the Commissioner of Income-tax to entertain the application belatedly up to the assessment year 2018-19. Thus, in the light of the above discussions, we do not find any illegality and unreasonableness in the order of the Id CIT(A) in reversing the findings of the Assessing Officer denying the exemption u/s 10(23C)(v) of the Act. In view of findings given by us supra, none of reasons assigned by Assessing Officer, while denying the claim of exemption u/s 10(23C)(v) can be sustained in the eyes of law. We do not find any merits in the grounds of appeal filed by the Revenue. Accordingly, the grounds of appeal filed by the Revenue stand dismissed.
12. In the result, the appeal filed by the Revenue stands dismissed.”
7.2.2. As seen above, the Hon’ble ITAT Pune has held that there was no material brought on record by the AO in support of his observation that the funds of the trust were not properly utilized, managed and supervised and held the observation of the AO as a bald observation. It further held that filing of audit report in the prescribed form before completion of the assessment proceedings is sufficient compliance under the provisions of the Act.
7.2.3. In view of the above facts and respectfully following the judgment of Hon’ble ITAT Pune (supra) and further in view of CBDT Circular 19/2020, addition of Rs. 28,02.93,045/- on the ground of late filing of Form 10BB is hereby deleted. Accordingly, Grounds of appeal are allowed.
8. In the result, the appeal is allowed. Order passed under section 250 read with section 251 of the Act.”
6. Aggrieved with such order of the Ld. CIT(A) / NFAC, the Revenue is in appeal before the Tribunal by raising the following grounds:
| 1. | | On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in allowing the appeal of the assessee by accepting the plea of the assessee that filing of statutory forms in Form 10/10B can be made acceptable during assessment proceedings subsuming the error of the assessee ipso facto the decision of Hon’ble Supreme Court in the case of CIT v. Nagpur Hotel owner’s Association 255 without discussing the element of bonafide belief or meeting of purposes of timely filing of the statutory forms and without interpreting the statute on the basis of ratio laid vide the Apex Court for strict interpretation of statute in the case of exemption regime in Commissioner of Customs (Imports), Mumbai v. Dilip Kumar & Company & Ors. in Commissioner of Customs (Import), Mumbai v. Dilip Kumar/Commissioner of Customs (Import), Mumbai v. Dilip Kumar Commissioner of Customs (Import), Mumbai v. Dilip Kumar Civil Appeal No 3327 of 2007 and The Principal Commissioner Of Income v. M/S Wipro Limited in Pr. CIT v. Wipro Ltd. |
| 2. | | On the facts and circumstance of the case, Ld. CIT(A) erred in allowing the alternate plea of the assessee without considering the decision of Hon’ble High Court of Bombay in the case of Little Angels Education Society v. Union of India and others in WRIT PETITION NO 1061 OF 2020 wherein the Hon’ble court has denied any relief to the assessee as regards the plea to condone the delay and deeming it appropriate to revert the matter to be competent authorities |
| 3. | | On the facts and circumstance of the case, Ld CIT(A) erred in allowing the plea of the assessee without considering the decision of Hon’ble Apex court in M/s. Vishwanath Traders v. Union of India & Ors. [Special Leave to Appeal (C) No(s) 15594 of 2023 dated August 04, 2023] wherein the Apex Court has upheld the requirements of exercising all possible alternative remedies. |
7. The Ld. DR strongly opposed the order of the Ld. CIT(A) / NFAC. He submitted that the Pune Bench of Tribunal while deciding the issue for assessment year 2014-15 has followed the decision of the Hon’ble Supreme Court in the case of CIT v. Nagpur Hotel Owner’s Association ITR 201 (SC) where it has been held that it is sufficient for the assessee to submit before the assessing authority the required form 10B during the assessment proceedings. However, the Hon’ble Supreme Court in the case Commissioner of Customs (Import), Mumbai v. Dilip Kumar /Commissioner of Customs (Import), Mumbai v. Dilip KumarCommissioner of Customs (Import), Mumbai v. Dilip KumarCivil Appeal No 3327 of 2007 has held that the exemption provisions are to be visited with strict interpretation of the statute.
8. Referring to the decision of the Hon’ble Supreme Court in the case of Pr. CIT v. Wipro Limited )/[2022] 446 ITR 1 (SC /in Civil appeal No. 1449 of 2022, he drew the attention of the Bench to the following observations of the Hon’ble Supreme Court:
“14. In view of the above discussion and for the reasons stated above, we are of the opinion that the High Court has committed a grave error in observing and holding that the requirement of furnishing a declaration under Section 10B (8) of the IT Act is mandatory, but the time limit within which the declaration is to be filed is not mandatory but is directory. The same is erroneous and contrary to the unambiguous language contained in Section 10B (8) of the IT Act. We hold that for claiming the benefit under Section 10B (8) of the IT Act, the twin conditions of furnishing a declaration before the assessing officer and that too before the due date of filing the original return of income under section 139(1) are to be satisfied and both are mandatorily to be complied with. Accordingly, the question of law is answered in favour of the Revenue and against the assessee.”
9. He also relied on the following decisions:
| (i) | | Little Angels Education Society v. Union of India (Bombay)/[2021] 434 ITR 423 (Bombay) / in Writ Petition No.1061 of 2020, order dated 25.03.2021 |
| (ii) | | . Viswanath Traders v. Union of India vide Special Leave to Appeal (C) No.15594 of 2023, order dated 04.08.2023 |
| (iii) | | Basawaraj. v. Spl. Land Acquisition Officer [Civil Appeal No.6974 of 2023, dated 22-08-2013]. |
| (iv) | | Pradeep Kumar Batra v. Dy. CIT [ ITAppeal No. 6384/Del/2019, dated 23.10.2020] |
10. He accordingly submitted that the order of the Ld. CIT(A) / NFAC being not in accordance with law should be reversed.
11. The Ld. Counsel for the assessee on the other hand while strongly supporting the order of the Ld. CIT(A) / NFAC submitted that the issue raised by the Revenue in its appeal is directly covered by the decision of the Coordinate Bench of the Tribunal in assessee’s own case wherein it has been held that the exemption u/s 10(23C) of the Act is allowable even though the audit report was belatedly filed. He submitted that the audit report in Form 10BB was filed and available with the Assessing Officer during the assessment proceedings.
12. Referring to the decision of the Hon’ble Gujarat High Court in the case of CIT (Exemptions) v. Laxmanarayan Dev Shrishan Seva Khendra (Gujarat), he submitted that the Hon’ble High Court, after considering the decision of the Hon’ble Supreme Court in the case of PCIT v. Wipro Limited (supra) has held that where assessee, a public charitable trust, did not upload audit report in Form 10B along with its return of income and CPC processed return under section 143(1) denying benefit of section 11, since assessee had already filed audit report in Form 10B electronically during pendency of appellate proceedings along with copy of audited financial statements, delay in filing said form was to be condoned.
13. Referring to the decision of the Hon’ble Gujarat High Court in the case of CIT (Exemption) v. Anjana Foundationhe submitted that the Hon’ble High Court in the said decision has held that charitable trust cannot be denied benefit of section 11 solely for not filing audit report in Form No.10B, as it is only a procedural requirement.
14. Referring to the decision of the Delhi SMC Bench of the Tribunal in the case of B.R. Hospital Research Institute v. ITO he submitted that the Tribunal, relying on various decisions, has held that conditions of filing Form 10B for availing benefit under section 11 are directory in nature and not mandatory; therefore, where assessee had not filed audit report in Form 10B along with return of income, however filed the same later on before Commissioner (Appeals), claim of assessee for exemption under section 11 was to be allowed.
15. So far as the decision in the case of Viswanath Traders (supra) relied on by Ld. DR is concerned, he submitted that the case was relating to Bihar Goods & Services Tax Act, 2017. Further, the Hon’ble Supreme Court has dismissed the SLP filed. Therefore, the same is not applicable.
16. So far as the decision of the Hon’ble Bombay High Court in the case of Little Angels Education Society (supra) is concerned, he submitted that in that case the delay for assessment year 2017-18 was condoned by the CIT(E). So far as assessment year 2018-19 is concerned, the CIT(E) refused to condone the delay which was more than 365 delays. The Hon’ble High Court directed the assessee to approach the CBDT. He submitted that as per CBDT Circular No.5, dated 03.01.2020 the CIT can condone the delay in filing Form 10B when the delay is up to 365 days for assessment year 2018-19 and onwards. He accordingly submitted that the above decision is also distinguishable and not applicable to the facts of the present case.
17. Referring to the decision of the Coordinate Bench of the Tribunal in assessee’s own case, he submitted that the Tribunal in the said decision has held that where funds of assessee-charitable trust were managed by member of trustees headed by District Collector and audit report was submitted before competent authorities before completion of assessment proceedings, since there was sufficient compliance to claim exemption under section 10(23C)(v), claim could not be denied merely on the ground that assessee generated surplus income. He accordingly submitted that the order of the Ld. CIT(A) / NFAC being in accordance with law should be upheld and the grounds raised by the Revenue be dismissed.
18. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed by both sides. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case disallowed the claim of exemption u/s 10(23C) of the Act on the ground that the assessee trust has not filed Form No.10BB before the statutory time limit but has filed the return of income as well as Form No.10BB after the due date of time. Further, the application for condonation of delay filed with the CIT(Exemption) was also rejected by the CIT(Exemption). The Assessing Officer further held that the funds of the trust are not being properly utilized / supervised as required by the provisions of section 10(23C) of the Act. We find the Ld. CIT(A) / NFAC allowed the claim of exemption u/s 10(23C) made by the assessee, the reasons of which have already been reproduced in the preceding paragraphs. We do not find any infirmity in the order of the Ld. CIT(A) / NFAC on this issue.
19. So far as the observations of the Assessing Officer that the funds of the assessee trust are not properly utilized, managed and supervised as required under the provisions of section 10(23C)(v) of the Act is concerned, we find the Ld. CIT(A) / NFAC following the decision of the Coordinate Bench of the Tribunal in assessee’s own case has given a finding that the observation of the Assessing Officer is a bald observation. We find the Revenue is not in appeal on this issue as per the grounds of appeal and therefore, we are not concerned with the same.
20. So far as the grievance of the Revenue that the Ld. CIT(A) / NFAC has erred in allowing the appeal of the assessee by holding that filing of audit report in the prescribed form before completion of the assessment proceedings is sufficient compliance under the provisions of the Act is concerned, we find the Ld. CIT(A) / NFAC while deciding the issue has followed the decision of the Coordinate Bench of the Tribunal in assessee’s own case for assessment year 2014-15. We find the Hon’ble Gujarat High Court in the case of Laxmanarayan Dev Shrishan Seva Khendra (supra), while deciding an identical issue after considering the decision of the Hon’ble Supreme Court in the case of Wipro Limited (supra), has held that when the assessee has already filed the audit report in Form 10B electronically during the pendency of appellate proceedings along with copy of audited financial statements, delay in filing of the said Form is rightly condoned by the Commissioner of Appeals and the Tribunal. The relevant observations of the Hon’ble High Court read as under:
“4. Learned Senior Standing Counsel Ms.Maithili Mehta for the appellant submitted that in case of Principal Commissioner of Income Tax-III, Bangalore v. M/s.Wipro Limited of the Hon’ble Supreme Court rendered on 11th July, 2022 in Civil Appeal No.1449 of 2022 it was held that requirement of Section 10B(8) of the Act which provides for requirement of furnishing declaration for claiming exemption under Section 10B of the Act is mandatory but the time limit within which such declaration is to be filed is also held to be mandatory. Relying upon the aforesaid decision, it was submitted that the assessee ought to have filed the audit report in Form 10B of the Act before the due date of filing of the return to claim the exemption under Section 12A of the Act.
5. Reliance placed by the learned Senior Standing Counsel Ms.Maithili Mehta for the appellant on the decision of the Hon’ble Supreme Court in case of The Principal Commissioner of Income Tax-III and Others versus M/s. Wipro Limited in Civil Appeal No.1499 of 2022 would not be applicable in the facts of the case, as in the facts of the present case, the assessee has claimed the exemption under Section 11 read with Section 12A(1)(b) of the Act which required the assessee to file Audit Report in Form of 10B of the Act which has nothing to do with claiming 100% exemption of total income in respect of newly established 100% Export Oriented Undertakings under Section 10B of the Act. Section 10B(8) of the Act requires the assessee to file an undertaking before the due date of furnishing of return of income under sub-section (1) of Section 139 of the Act before the Assessing Officer in writing that the provision of Section 10B of the Act may not be made applicable to him, otherwise the provision of this Section shall not apply to him for any of the relevant assessment year.
6. Considering the language of the provision of Section 10B(8) of the Act, the Hon’ble Supreme Court held that it was mandatory on part of the assessee to file declaration before the due date of filing of return under Sub-section (1) of Section 139 of the Act, whereas, in the facts of the said case the assessee filed such undertaking along with the revised return under Sub-section (5) of Section 139 of the Act and in such facts, the Hon’ble Supreme Court held that the twin conditions prescribed under Section 10B(8) of the Act was mandatory to be fulfilled and it cannot be said that though the declaration is mandatory, the filing of such declaration within the due date of filing of return under Sub-section (1) of Section 139 of the Act would be directory.
7. Reference to the aforesaid decision has no connection whatsoever remotely to the facts of the present case and therefore, in the facts of the present case, the Tribunal has rightly followed the decision of this Court in case of Sarvodaya Charitable Trust v. Income Tax Officer (Exemption) in Special Civil Application No.6097 of 2020 decided on 09th December, 2020 as well as the decision in case of Social Security Scheme of GICEA (supra) to uphold the decision of the CIT (Appeals), wherein this Court has held that the approach of the authority in such type of cases should be equitable, balancing and judicious. In the facts of the case, when the assessee has already filed the audit report in Form 10B electronically on 27.02.2021 during pendency of appellate proceedings along with copy of audited financial statements, delay in filing the said form is rightly condoned by CIT(A) and the Tribunal.
8. In such circumstances, we are of the opinion that the Tribunal has not committed any error by not following the decision in case of M/s.Wipro Limited (supra) as referred to and relied upon by learned advocate for the appellantRevenue, and has rightly followed the decision of this Court in case of Social Security Scheme of GICEA (supra).
9. In view of the foregoing reasons, we are of the opinion that no question of law much less any substantial question of law arises from the impugned order of the Tribunal. The Appeal is accordingly dismissed.”
21. We find the Hon’ble Gujarat High Court in the case of Anjana Foundation (supra) has held that a charitable trust cannot be denied benefit of section 11 solely for not filing audit report in Form No.10B, as it is only a procedural requirement.
22. So far as the decision of the Hon’ble Supreme Court in the case of Dilip Kumar & Company. (supra) is concerned, we are of considered opinion that the said decision is not applicable to the facts of the present case as that case was under the Customs Act and not under the Income Tax Act. Further, the facts in that case were that the respondents imported a consignment of Vitamin – F50 powder (feed grade) under Bill of Entry No. 8207, dated 19.08.1999. They claimed the benefit of concessional rate of duty at 5%, instead of standard 30%, as per the Customs Notification No. 20/1999 and classified the product under Chapter 2309.90 which admittedly pertains to prawn feed. They relied on the ratio in Sun Export Case and claimed the benefit of exemption. The benefit of Customs Notification No. 20/1999 was, however, denied to the respondents on the plea of the department that the goods under import contained chemical ingredients for animal feed and not animal feed/prawn feed, as such, the concessional rate of duty under the extant notification was not available. The department classified the consignment under Chapter 29 which attracts standard rate of customs duty. The adjudicating authority, namely, the Assistant Commissioner of Customs, distinguished Sun Export Case (supra), while accepting the plea of the department to deny the concessional rate. The Commissioner of Customs (Appeals) reversed the order of the Assistant Commissioner and came to the conclusion that Sun Export Case (supra) was indeed applicable. The department then approached the Customs, Excise and Service Tax Tribunal (CESTAT), which affirmed the order of the Commissioner of Customs (Appeals). Aggrieved the assessee filed appeal before the Hon’ble Supreme Court. Under these circumstances, the Hon’ble Supreme Court has held as under:
“52. To sum up, we answer the reference holding as under:
(1) Exemption notification should be interpreted strictly, the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.
(2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands overruled.”
23. However, as mentioned earlier, the Hon’ble Gujarat High Court after considering the decision of the Hon’ble Supreme Court in the case of Wipro Limited (supra) has held that where the assessee had already filed audit report in Form 10B electronically during pendency of appellate proceedings along with copy of audited financial statements, it is sufficient compliance for claiming the exemption u/s 11 of the Act. Since in the instant case the assessee has already submitted the audited report in Form No.10BB during assessment proceedings itself, therefore, the assessee in our opinion is in a better position. The various other decisions relied on by the Revenue as per grounds of appeal or during the course of arguments are distinguishable and not applicable to the facts of the present case. In view of the above discussion, we do not find any infirmity in the order of the Ld. CIT(A) / NFAC allowing the claim of exemption u/s 10(23C)(v) of the Act for belated filing of Form No.10BB. We hold and direct accordingly. The grounds raised by the Revenue are accordingly dismissed.
24. In the result, the appeal filed by the Revenue is dismissed.
ITA No.809/pUN/2024 (A.Y. 2017-18)
25. The grounds raised by the Revenue read as under:
| 1. | | On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in allowing the appeal of the assessee by accepting the plea of the assessee that filing of statutory forms in Form 10/10B can be made acceptable during assessment proceedings subsuming the error of the assessee ipso facto the decision of Hon’ble Supreme Court in the case of CIT v. Nagpur Hotel owner’s Association ITR 201 without discussing the clement of bonafide belief or meeting of purposes of timely filing of the statutory forms and without interpreting the statute on the basis of ratio laid vide the Apex Court for strict interpretation of statute in the case of exemption regime in Commissioner of Customs (Imports), Mumbai v. Dilip Kumar & Company & Ors. in Civil Appeal No. 3327 of 2007 and The Principal Commissioner Of Income v. M/S Wipro Limited in Pr. CIT v. Wipro Ltd. |
| 2. | | On the facts and circumstance of the case, Ld. CIT(A) erred in allowing the alternate plea of the assessee without considering the decision of Hon’ble High Court of Bombay in the case of Little Angels Education Society v. Union of India and others in WRIT PETITION NO. 1061 OF 2020 wherein the Hon’ble court has denied any relief to the assessee as regards the plea to condone the delay and deeming it appropriate to revert the matter to be competent authorities |
| 3. | | On the facts and circumstance of the case, Ld. CIT(A) erred in allowing the plea of the assessee without considering the decision of Hon’ble Apex court in M/s. Vishwanath Traders v. Union of India & Ors [Special Leave to Appeal (C) No(s) 15594 of 2023 dated August 04, 2023] wherein the Apex Court has upheld the requirements of exercising all possible alternative remedies. |
26. After hearing both sides, we find the above grounds are identical to the grounds raised by the Revenue in ITA No.808/pUN/2024. We have already decided the issue and dismissed the appeal of the Revenue. Following the similar reasonings, we dismiss the grounds raised by the Revenue.
27. In the result, both the appeals filed by the Revenue are dismissed.