Non filing of Form No. 10B: Benefit of exemption u/s 11 cannot be denied if otherwise assessee is eligible to claim the same – Mumbai ITAT

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Non filing of Form No. 10B: Benefit of exemption u/s 11 cannot be denied if otherwise assessee is eligible to claim the same – Mumbai ITAT

There are many cases wherein the benefit of deduction u/s 11 is denied to the charitable trust for the reason that the audit report in Form No. 10B is no filed by the assessee. It may be noted that section 11 also mandates the filing of an Audit Report for claiming an exemption U/s 10B. Rather, furnishing of audit report along with the return of income is a pre-condition for claiming deduction under section 11 of the Act.

Even the CPC, Bengaluru while processing the return is also not giving the benefit of deduction while processing the return if the Form No. 10B is not filed by the assessee prior to filing of the return.

The issue is highly controversial and is resulting in hefty tax liability on the charitable trust.

Here is one landmark judgment by ITAT Mumbai in the case of SAVITRI FOUNDATION, B-601 Prasad Apartment, Janta Market, Bhandup (West) Mumbai 400 078. PAN: AAFAS-9569-J  vs. ITO wherein it is held that the benefit of exemption u/s 11 cannot be denied if otherwise assessee is eligible to claim the same . In the first appeal before CIT(A), the case was dismissed merely on the ground that the audit report in the prescribed form was not filed along with the return.

On appeal before ITAT Mumbai, in the operative part at Para 5, 6 & 7 observed as under:

  1. In my considered view non-filing of Audit Report in Form 10B along with Return of Income is merely a procedural defect which is rectifiable.  If the Audit Report was available with the assessee at the time of filing of Return of Income and was not filed due to bonafide reasons the benefit of exemption under section 11 cannot be denied if otherwise assessee is eligible to claim the same.

 

  1. The Hon’ble Bombay High Court in the case of CIT vs. Mumbai Metropolitan Regional Iron & Steel Market Committee(supra) has held that late filing of required documents would not disentitle the assessee from availing benefit of section 11 of the Act.  Thus, in the facts of the case and in the light of  decision of Hon’ble Bombay High Court, I deem it appropriate to restore the file back to the Assessing Officer for denovo assessment after considering  the audit report field by the assessee, in accordance with law.

 

  1. In the result, impugned order is set aside and appeal by assessee is allowed for statistical purposes. 

 

 Order pronounced in the open Court on Monday  the  1st    day of August, 2022.    “

 

Though the ITAT has decided the issue in favour of the assessee, the issue would continue to be litigated in each and every case. It would be better if the CBDT gives a human touch to the provision related to the charitable trust in case of belated filing of Form NO. 10B by issuing relaxation guidelines.

 

The copy of the ITAT Mumbai order is as under:

Non filing of Form No. 10B: Benefit of exemption u/s 11 cannot be denied if otherwise assessee is eligible to claim the same - Mumbai ITAT

1 Comment

  1. September 10, 2022
    CA Bakul V Ganatra

    A timely, very reasonable and proper reporting. Congratulations

    Reply

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