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2023 (5) TMI 1170 - AT - Income TaxExemption u/s 11 - denial of claim while processing return u/s 143(1) on the reason that assessee has not filed the audit report in form No.10B along with return of income - HELD THAT:- The assessee stated before us that the medical emergency of the trustee is a reason for delay in filing the audit report in form no.10B along with return of income. Admittedly, the assessee filed the return of income on 10.1.2018, wherein assessee enclosed the income and expenditure account and balance sheet and statement of income which are dated 1.1.2018. When the assessee was in a position to get audited its books of accounts and filed the audited income and expenditure account and balance sheet along with statement of income, how it was not able to file the audit report in form no.10B is not explained. Assessee has taken the support of petition filed for condonation of delay in filing the appeal before this Tribunal dated 18.1.2023 so as to explain the delay in filing audit report in form no.10B along with return of income. Assessee has not separately explained this delay in filing the audit report in form no.10B along with return of income with any reasonable causes. Having said this, we are of the opinion that there is no good and sufficient reason to condone the delay in filing the audit report in form no.10B along with return of income - Lower authorities are justified in denying the exemption u/s 11 of the Act to the assessee in view of the non-filing of audit report in form no.10B along with return of income.Decided against assessee. If the exemption u/s 11 is denied for non-filing of audit report in form no.10B, the assessee’s income is to be computed in accordance with law as “business income” and gross income of the assessee cannot be taxed by the AO - Once the exemption claimed by the assessee u/s 11 of the Act has been denied, the income of the assessee has to be assessed as “business income” and assessee is entitled for all usual deductions under the provisions of the Act while computing the income of the assessee under the head “business”, more so, deduction u/s 30 to 38 of the Act it has to be allowed. In view of this, we direct the AO to tax only the net income of the assessee after granting all usual expenditure u/s 30 to 38 of the Act and not gross income of the assessee. Ordered accordingly.
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