Claim Seeking Application Of Income For Charitable Purpose U/s 11 & 12 Can't Be Denied To Trust On Mere Technicalities: Delhi ITAT

The Bench of M. Balaganesh (Accountant Member) and Yogesh Kumar U.S (Judicial Member) observed that “the Revenue has rejected the plea of the Assessee based on mere technicalities and it is not the case of the Revenue that the Audit Report was not ready as on the date of filing of the return or Assessee is not eligible for any other reason for claiming charitable status by claiming application of income for charitable purpose u/s 11 & 12 of the Act”. (Para 8)

As per the brief facts of the case, the assessee, an Educational Trust, filed its return mentioning its 12AA registration and claiming charitable status by claiming application of income for charitable purposes u/s 11 and 12 of the Act. The ITR was processed by the CPC without verification of registration u/s 12AA resulting in non-allowance of application of income for charitable purpose. After receiving intimation u/s 143(1), the assessee filed rectification application u/s 154 for considering deductions for application of income for charitable purposes under relevant Section 11 and 12 of the Act. The order u/s 154 was however passed by denying of application of income for charitable purpose and demand the tax considering the gross receipt of the trust as its income.

The Assessee contended that the return for the relevant year has been uploaded within time showing the very same Audit Report as 29/09/2017, and after coming to know about not uploading the Audit Report, the Assessee filed a letter for condonation of delay uploading the Form 10B along with certificate from auditors explaining the reason for delay and hard copy of Form No. 10B was sent through registered post to the Jurisdictional Commissioner of Income Tax (Exemptions).

The Bench found that is the case of the Assessee that it had uploaded in its Audit Report dated 29/09/2017 in Form No. 10B through its auditor, due to some technical mistake in the software the Audit Report uploaded was neither accepted by the system nor was it rejected immediately and no intimation either through e-mail or any post from the Department has given to the Assessee on this regard.

The Bench found from the record that the Form No. 10B was ready as on 29/09/2017 i.e. before filing Return of Income u/s 139 of the Act i.e. 26/10/2017, and after coming to know about the said mistake of not uploading the Audit Report, the same has been uploaded on 06/09/2019.

The ITAT therefore directed the Revenue Authorities to allow the benefit of exemption to the Assessee.

Counsel for Appellant/ Assessee: Pratiyush Jain

Counsel for Respondent/ Revenue: Vivek Kumar Upadhyay

Case Title: Asha Modern Educational Society verses ITO

Case Number: ITA No.1371/Del/2023

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