2024 (11) TMI 1365 - AT - Income Tax

Denial of exemption claimed u/s 11(2) - Assessee had failed to file Form 10 electronically before the due date of filing of return of income as mandated by Rule 17 of the Income Tax Rules 1962 but filled in physically - HELD THAT - It is not the case of the Revenue that there was difference between Form 10 filed by the Appellant physically and electronically. Revenue has placed nothing on record to controvert the finding returned by the CIT(A) that the funds were not accumulated casually by the Assessee and were utilize for the purpose of the Assessee Trust. We note that Assessment Year 2016-2017 was also the first year of applicability of amended Rule 17 of IT Rules requiring electronic filing of Form 10 since the said Rule came into effect from 01/04/2016 relevant to the Assessment Year 2016-17. The Assessee has also placed on record Form 10B for the Assessment Year 2016-17 filed electronically on 21/09/2016 wherein it has been clearly stated that INR 7.34 Crores has been accumulated in terms of Section 11(2). Thus we hold that the benefit of exemption claimed by the Appellant under Section 11(2) cannot be denied to the Appellant. As decided in Parle Hindu Devalaya Mandal 2020 (3) TMI 1353 - ITAT MUMBAI and Navodaya Education Trust 2021 (7) TMI 769 - ITAT BANGALORE Tribunal has taken a view that in case where the Form 10 has been filed physically before the due date the benefit of Section 11(2) of the Act cannot be denied merely for non-filing of Form 10 electronically. Decided against revenue.

Summary

Issues:
Denial of exemption under Section 11(2) of the Income Tax Act due to failure to file Form 10 electronically within the prescribed time.

Analysis:

Issue 1: Denial of Exemption
The Appellant-Trust claimed exemption of INR 7.34 Crores under Section 11(2) of the Act for funds accumulated for specific purposes. The Assessing Officer disallowed the exemption as Form 10 was not filed electronically before the due date, citing Rule 17 of the IT Rules. The CIT(E) set aside the Assessment Order as prejudicial to Revenue, leading to a fresh assessment denying the exemption again. The Assessee contended that funds were utilized for the Trust's objectives, and Form 10 was filed physically on time and later electronically. The CIT(A) allowed the appeal, accepting the Assessee's utilization of funds and reliance on legal precedents.

Issue 2: Legal Basis for Exemption
The Tribunal noted that Form 10 was filed physically before the due date, and electronically during the assessment proceedings. The Revenue failed to dispute the proper utilization of funds by the Assessee-Trust. As per the amended Rule 17, the Assessee's compliance with electronic filing requirements was satisfactory for the relevant assessment year. The Tribunal referenced precedents like Shree Dadar Jain and other cases to support the Assessee's claim for exemption under Section 11(2) of the Act.

Conclusion:
The Tribunal dismissed all grounds raised by the Revenue, upholding the CIT(A)'s decision to grant the Assessee the exemption of INR 7.34 Crores under Section 11(2) of the Act. The Tribunal's decision was supported by legal precedents and the Assessee's compliance with filing requirements within the specified timelines. Therefore, the appeal by the Revenue was ultimately dismissed on 09.10.2024.