Mandatory Filing of ITR within S. 139(1) Time Limit for Claiming Exemption u/s 11 Applicable Only From AY 2018-19, Not AY 2014-15: ITAT [Read Order]
The amendment, as clarified in the Memorandum to the Finance Bill, was effective only from AY 2018-19 onwards. Therefore, such a requirement could not be applied to AY 2014-15.
The Cochin Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the requirement to file a return of income within the time limit prescribed under Section 139(1) of the Income Tax Act, 1961, for claiming exemption under Section 11, is applicable only from Assessment Year (AY) 2018-19 onwards, and not to earlier years such as AY 2014-15.
The assessee, All India Spices Exporters Forum, a charitable institution registered under Section 12A, filed its return of income for AY 2014-15 on 31 March 2015, declaring nil income after claiming exemption under Section 11.
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However, while processing the return under Section 143(1), the Centralized Processing Centre (CPC) denied the exemption on multiple grounds, delay in filing audit report in Form 10B, investments not conforming with Section 11(5), and failure to file notice of accumulation under Section 11(2) before the due date. The rectification application filed by the assessee under Section 154 was also rejected.
The CIT(A) upheld the denial, holding that the return itself was not filed within the due date under Section 139(1).
On appeal, the Tribunal noted that the law requiring charitable entities to mandatorily file their return within the S.139(1) timeline was introduced through the Finance Act, 2017, by inserting Clause (ba) in Section 12A(1). The amendment, as clarified in the Memorandum to the Finance Bill, was effective only from AY 2018-19 onwards. Therefore, such a requirement could not be applied to AY 2014-15.
The bench said that “the requirement to file return of income by a charitable institution claiming exemption under Section 11 of the Act within the time specified under Section 139 of the Act was application from the Assessment Year 2018-2019 and therefore, did not apply to the Assessment Year 2014-2015 to which the present appeal pertains to.”
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Accordingly, the bench of Inturi Rama Rao (Accountant member) and (Rahul Chaudhary (Judicial member) set aside the CIT(A)’s order and restored the matter for fresh adjudication, directing that the claim of exemption should not be rejected merely on account of late filing of return.
The CIT(A) was asked to verify factual aspects, such as the actual date of filing of Form 10B, and decide afresh after giving the assessee an opportunity of hearing.
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