The Kolkata bench of Income Tax Appellate Tribunal (ITAT) allowed exemption under section 11 of Income Tax Act 1961 on delayed filing of return of income and Form 10B due to the outbreak of Pandemic of Covid-19.
The assessee Camellia Educare Trust is a Trust registered under Section12AA of the Income Tax Act, running an educational institution in the name of Camellia School of Engineering & Technology. While computing theincome, the Assessing Officer observed that the return of income and Form 10B filed by the assessee was after the due date declared by them, that is after 15.02.2021.
Further, the assessee also claimed exemption under section 11 of the Income Tax Act. Due to the overdue return, the Centralised Processing Centre (CPC) of Income Tax made an adjustment by denying the assessee’s request under Section 11 of the Income Tax Act on the application of income.
Aggrieved by the order of the CPC of Income Tax, the assesee filed an appeal before the Commissioner of Income Tax (Appeals)[CIT(A)], who allowed the claim of the assessee .
The observation of the Commissioner of Income Tax (Appeals) was that “delay in filing the return of income and Form 10B was due to the outbreak of Pandemic of Covid-19 coupled with a fire which broke at the premises of the assessee wherein most of the original office records, files, documents and computer hard disk were burnt. There was a delay in completing the books of account, due to these circumstances’’.
The Commissioner of Income Tax (Appeals) also mentioned that the Supreme Court has extended the limitation period of filing returns and Form 10 B due to the situation of Covid Pandemicfrom 15.03.2020 to 28.02.2022.
Aggrieved by the order, revenue filed an appeal before the tribunal.
P. P. Barman, the counsel for the revenue submitted that exclusion of limitation granted by the Supreme Court relied on by the Commissioner of Income Tax (Appeals) was misplaced since the exclusion given by the apex court was in respect of all the judicial or quasi-judicial proceedings.
Therefore, the filing of return and Form 10B did not fall within the meaning of judicial or quasi-judicial proceedings and the exclusion of limitation should not apply.
S. K. Tulsiyan, the assessee’s counsel stated that the CPC accepted the revenue expenditure and capital expenditure claims made by the assessee in its return while processing its delayed return. Although the notification under Section 143(1) of the Income Tax Act declares that “No form filed,” Form 10B was electronically filed on March 30, 2021.
According to the instruction of the CBDT vide File no. F. No.173/193/2019-ITA returns included returns filed within the time allowed under Section 139 of the Income Tax Act. As ensues, the time permitted by Section 139(4) of the Income Tax Act is also included. The assessee’s return was submitted on time in accordance with Section 139(4) of the Income Tax Act and CPC has processed it.
Further the counsel argued that the entire income of the trust in the commercial sense had been spent for the purpose of charity. Thus, there is no reason to deny the benefit of exemption granted under Section 11 merely by holding that the return has been filed after the due date prescribed under Section 139(1) of the Income Tax Act.
After considering the submissions of the both parties, the Two-member bench of Rajpal Yadav, (Vice President) and Girish Agrawal, (Accountant Member) observed that the assessee has filed belated return under Section 139(4) of the Income Tax Act which the department has not held to be a defective return under Section 139(9). Also, it was processed by accepting the revenue and capital expenditure though denying the exemption claimed under Section 11 Income Tax Act and computed the total income equal to the total receipts of the assessee for the year.
Moreover, regarding the claim under Section 11 of Income Tax Act, the CPC failed to issue prior intimation to the assessee before making an adjustment. There fore the bench allowed the appeal filed by the assessee.
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