TMI Blog2023 (7) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... nds were being accumulated by assessee-trust, would not be fatal to exemption claimed under section 11(2). Similar view was taken in the case of CIT v. Hotel Restaurant Association [ 2003 (3) TMI 92 - DELHI HIGH COURT ] CIT(A) respectfully following the above judgments, deleted the addition correctly - Decided against revenue. - ITA No. 267/JP/2023 - - - Dated:- 12-7-2023 - Shri Sandeep Gosain, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Revenue : Shri A.S. Nehra, Addl. CIT-DR For the Assessee : Shri R.S. Pooonia, CA, Shri Rajat Choudhary, Advocate ORDER PER SANDEEP GOSAIN, JM This appeal filed by the Revenue is directed against order of the ld. CIT(A) dated 01-03-2023, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2014-15 wherein the Revenue has raised the following grounds of appeal. i. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) is justified in allowing the appeal of the assessee and deleting the disallowance of Rs. 2,05,11,280/- made by the AO on account of accumulation of fund ignoring the fact that the procedural requirements are also p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not chargeable to income-tax in any previous year), the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 (before the specified date referred to in section 44AB and the person in receipt of the income furnishes by that date] the report of such audit in the prescribed form57 duly signed and verified by such accountant and setting forth such particulars as may be prescribed.) .. As per section 12A, the appellant had to file Form 10B to avail the benefits of exemption u/s 11 12 before the specified date as per Section 44AB The specified date to file Form 10B is mentioned in explanation (ii) of section 44AB which is as under: [ii. specified date in relation to the accounts of the assessee of the previous year relevant to an assessment year, means [date one month prior to][ the due date for furnishing the return of income under sub-section (1) of section 139]]] 5.3.3 The question of delayed filing of audit report, after the return of income has been filed, has been scrutinized by various courts of law. It has generally been held that if the assessee submits the aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 11. Therefore, compliance of the requirement of the Act will have to be any time before the assessment proceedings. 5.3.4 In the instant case the appellant/assessee submitted the Form 10 dated 28 11 2014 during the assessment proceedings on 20.09.2016, which is also confirmed by the assessing officer in the assessment order. The audit report was also available before the assessing officer during the assessment proceedings as well as before the CIT(A) during the appellate proceedings. As per the case laws mentioned above, the Hon'ble Courts took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the audit report and it is permissible for the assessee to produce the audit report at a later stage, either before the AO or the appellate authority. This view has been reiterated by the Hon'ble Court in the recent judgement of Hon'ble Gujarat High Court in the case of Sarvodaya Charitable Trust v. Income Tax Officer. (Exemption) [2021] 125 taxmann.com 75 (Gujarat) 5.3.5 In view of the above discussion, I am of the view that the assessing officer erred in not allowing deduction to the appellant/assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by various courts. Further Hon'ble Gujarat High Court, in the case of CIT(Exemptions) v. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust [2019] 102 taxmann.com 122 (Gujarat), held that lack of declaration in Form No. 10 regarding specific purpose for which funds were being accumulated by assessee-trust, would not be fatal to exemption claimed under section 11(2). Similar view was taken by the Hon'ble High Court of Delhi in the case of CIT v. Hotel Restaurant Association [2003] 132 Taxman 76 (Delhi) wherein it was held as under:- It is true that specification of certain purpose or purposes is needed for accumulations of trust's income under section 11(2) of the Act. At the same time the purpose or purposes to be specified cannot be beyond the objects of the trust Plurality of the purposes for accumulation is not precluded but it depends on the precise purpose for which the accumulation is intended. In the present case, both the Appellate Authorities below have recorded a concurrent finding that the income was sought to be accumulated by the assessee to achieve the object for which the assessee was incorporated, it is not the case of the Revenue that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year), the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 (before the specified date referred to in section 44AB and the person in receipt of the income furnishes by that date] the report of such audit in the prescribed form57 duly signed and verified by such accountant and setting forth such particulars as may be prescribed.) .. It is also note worthy to mention that as per section 12A of the Act, the assessee had to file Form 10B to avail the benefits of exemption u/s 11 12 before the specified date as per Section 44AB of the Act. The specified date to file Form 10B is mentioned in explanation (ii) of section 44AB which is as under: [ii. specified date in relation to the accounts of the assessee of the previous year relevant to an assessment year, means [date one month prior to][ the due date for furnishing the return of income under sub-section (1) of section 139]]] The question of delayed filing of audit report, after the return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because such requirement is mandatory and without the particulars of the income, the assessing authority cannot entertain the claim of the assessee under section 11. Therefore, compliance of the requirement of the Act will have to be any time before the assessment proceedings. It is also noted in the instant case that the assessee submitted the Form 10 dated 28.11. 2014 during the assessment proceedings on 20.09.2016 and the same is also confirmed by the assessing officer in the assessment order. The audit report was also available before the assessing officer during the assessment proceedings as well as before the CIT(A) during the appellate proceedings. As per the case laws mentioned above, the Hon'ble Courts took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the audit report and it is permissible for the assessee to produce the audit report at a later stage, either before the AO or the appellate authority. This view has been reiterated by the Hon'ble Court in the recent judgement of Hon'ble Gujarat High Court in the case of Sarvodaya Charitable Trust v. Income Tax Officer. (Exemption) [2021] 125 taxmann.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided the following conditions are complied with, namely:-] (a) such person furnishes a statement in the prescribed form and in the prescribed manner to the Assessing Officer, stating the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed five years . It is noted from the ld. CIT(A) order that the issue of indicating purpose for fund accumulated as per above mentioned section 11(2) has been decided upon by various courts. Further Hon'ble Gujarat High Court, in the case of CIT(Exemptions) v. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust [2019] 102 taxmann.com 122 (Gujarat), held that lack of declaration in Form No. 10 regarding specific purpose for which funds were being accumulated by assessee-trust, would not be fatal to exemption claimed under section 11(2). Similar view was taken by the Hon'ble High Court of Delhi in the case of CIT v. Hotel Restaurant Association [2003] 132 Taxman 76 (Delhi) wherein it was held as under:- .It is true that specification of certain purpose or purposes is needed for accumulations of trust's income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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