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2019 (9) TMI 145 - AT - Income TaxDenying deduction u/s 11(2) - failure to file Form No. 10 being notice to the AO of accumulation of income - Exemption u/s. 11(1)(a) on account of application of its income for religious purpose - accumulation of income for purchase of property for temple, dharmshala etc..- HELD THAT:- We have seen that Hon‘ble Supreme Court has held in Nagpur Hotel Owners Association [2000 (12) TMI 99 - SUPREME COURT] that it will be sufficient compliance of law, if Form No. 10 is filed at any stage prior to completion of assessment proceedings by the AO. The law as declared by Hon‘ble Supreme Court in the above case shall hold the field till amendments were brought in the 1961 Act itself by Parliament which are substantive amendments in the 1961 Act - there will be substantial compliance if the said Form No. 10 is filed by the assessee before the AO before completion of assessment proceedings, The assessee did filed Form No. 10 in physical mode on 21.12.2016 before the AO during the course of assessment proceedings which culminated into an assessment order dated 28.12.2016 passed by the AO u/s 143(3) of the 1961 Act. The assessee also filed Resolution dated 10.02.2014 of the Board of Trustee authorising accumulation of income to the tune of ₹ 6.50 crores for purchase of property for temple, dharmshala etc. Thus, the assessee did substantial compliance of requirements of filing form no. 10 with the AO before the culmination of assessment proceedings. There was an amendment in proviso to Rule 12(2) of the 1962 Rules which provided Form No. 10 to be filed electronically w.e.f. 01.04.2014. This is the first year for compliance of said amended Rule to file Form No. 10 electronically. The assessee however defied proviso to Rule 12(2) of the 1962 Rules as it did not file Form No. 10 electronically before the conclusion of the assessment proceedings by the AO. The assessee however later on 07.11.2017 e-filed Form No. 10 electronically. The said Form No. 10 filed electronically along with Resolution dated 10.02.2014 of the Board of Trustee authorising accumulation of income to the tune of ₹ 6.50 crores for purchase of property for temple, dharmshala etc. were duly filed before learned CIT(A) before the culmination of first appellate proceedings vide appellate order dated 08.02.2019. As observed that the assessee has stated that it is due to oversight that it skipped its attention that from this assessment year onwards i.e. with effect from 01.04.2014 , there was an amendment in proviso to Rule 12(2) requiring it to file Form No. 10 electronically which amendment was applicable from 01.04.2014. Further, it is claimed that Rule 17 was not amended simultaneously when aforesaid amendment in proviso to Rule 12(2) of the 1962 Rules took place. We have also observed that CBDT vide its circular number 7 of 2018 has taken a liberal view in condoning delays in electronic filing of Form No. 10 albeit it is for ay: 2016-17. We are presently concerned with ay: 2014-15 . CBDT circular no. 7 of 2018 dated 20.12.2018(F.No. 197/55/2018-ITA-I) wherein CBDT has relaxed the provisions relating to filing of form no. 10 electronically for AY 2016-17 There is no dispute between rival parties as to the genuineness of the deduction claimed by the assessee u/s 11(2). It is also undisputed that purpose of accumulation of income u/s 11(2) of ₹ 6.50 crores was to purchase property for furtherance of activities and objects of the assessee. It is also undisputed that the assessee invested said accumulation of income in one of the modes prescribed u/s. 11(5) of the 1961 Act by taking FDR‘s with banks. It is also undisputed that the assessee did purchase property in immediately succeeding financial year for ₹ 16.50 crores and the aforesaid accumulation of income of ₹ 6.50 crores u/s 11(2) stood applied in immediately succeeding year for the purposes of the objects and activities of the assessee trust - the assessee is entitled for deduction u/s 11(2) of the 1961 Act to the tune of ₹ 6.50 crores towards accumulation of income for purchase of property for temple, dharmshala etc.. We have also observed that the assessee rightly relied upon judicial precedents which are mentioned in preceding para‘s of this order. The assessee succeeds on ground number 1 raised by it in memo of appeal filed by it with tribunal which stand allowed Disallowance of expenses which are stated to be incurred against earmarked donations received by the assessee - HELD THAT:- Claim made by the assessee that these expenses and donations were not routed through Profit and Loss Account but were directly reflected in Balance Sheet, we are of the considered view that this matter is factual and requires verification by the AO and hence in the interest of justice and fairness to both the rival parties, the matter need to be set aside and restored to the file of the AO for fresh adjudication after due verification and enquiry as the AO may deem fit. Needless to say that the AO shall grant proper and adequate opportunity of being heard to the assessee in denovo assessment proceedings . The AO shall admit all relevant evidences and explanations submitted by the assessee in its defence in denovo proceedings. The ground number 3 is allowed for statistical purposes. We order accordingly.
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