2024 (7) TMI 142 - AT - Income Tax

Exemption u/s 11 - assessee failed to furnish audit report in Form No. 10B within prescribed time limit - HELD THAT - The assessee filed its return of income on 23/11/2022 claiming exemption u/s 11 for the amount applied for charitable purpose during the year. In the return processed u/s 143(1)(a) of the Act exemption u/s 11 of the Act was denied on the ground that audit report on Form No. 10AB is filed belatedly. Assessee challenged the adjustment made by the CPC in its order u/s 143(1)(a) of the Act before the CIT(A) but failed to get relief since the audit report in Form 10B was not e-filed within due date. Subsequent to the passing of the impugned order on 18/01/2024 assessee s application for condonation of delay in filing Form 10B for Assessment Year 2022-23 dt. 11/04/2023 (filed prior to the passing of impugned order) has been allowed and vide order dt. 30/04/2024 delay of 132 days in filing Form 10B for Assessment Year 2022-23 has been condoned. Since the only ground on which the exemption u/s 11 of the Act has been denied was on account of delay of furnishing Form 10B and there is no dispute about the activity of the assessee being carried out for charitable purposes and the amount has been applied for the object for which it is registered u/s 12A in our considered view since delay in filing form 10B has been condoned assessee is entitled to the benefit of deduction u/s 11 of the Act as claimed in the Income Tax return filed for A.Y. 2022-23. Accordingly the sole ground raised by the assessee is allowed.

Summary

Issues:
Exemption under Section 11 of the Income Tax Act denied due to delay in filing audit report in Form No. 10B.

Analysis:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax, Appeal, Addl/JCIT(A) -10 Mumbai, denying exemption under Section 11 of the Income Tax Act for the Assessment Year 2022-23 based on the failure to submit the audit report in Form No. 10B within the prescribed time limit. The assessee had requested condonation of the delay, which was granted after a delay of 132 days. The contention was that since the delay in filing the audit report had been condoned, and there were no adverse observations regarding the claim made under Section 11 of the Act, the assessee should be granted the benefit of exemption under Section 11.

The Tribunal observed that the assessee, a charitable society in West Bengal, had been involved in charitable activities and had been granted registration under Section 12A of the Act. The return of income was filed, claiming exemption under Section 11 for the amount applied for charitable purposes during the year. However, the exemption was denied initially due to the belated filing of the audit report in Form No. 10AB. Despite challenging the adjustment made by the CPC, relief was not granted as the audit report in Form 10B was not e-filed on time. Subsequently, the delay in filing Form 10B was condoned, and as there was no dispute regarding the charitable activities and the application of funds, the Tribunal held that the assessee was entitled to the deduction under Section 11 as claimed in the return for the relevant assessment year.

Therefore, the Tribunal allowed the appeal of the assessee, concluding that since the delay in filing Form 10B had been condoned, the assessee was eligible for the benefit of exemption under Section 11 of the Income Tax Act for the Assessment Year 2022-23.