Association of Indian Panel Board Manufacturer Vs DCIT (Gujarat High Court)
In a significant ruling for charitable trusts and institutions, the Gujarat High Court has held that the denial of tax exemption under Sections 11(1) and 11(2) of the Income Tax Act, 1961, is not justified merely because the audit report in Form 10B was filed electronically after the income tax return but before the processing of the return by the tax authorities.
The judgment, delivered in the case of the Association of Indian Panel Board Manufacturer against the Deputy Commissioner of Income Tax, came in a Tax Appeal challenging the order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, for Assessment Year 2018-19. The ITAT had upheld the decision of the tax authorities to deny the exemption.
The appellant, a charitable trust registered under Section 12AA of the Income Tax Act, had filed its return of income for AY 2018-19 within the statutory due date, declaring nil income after claiming exemptions totaling over Rs. 48 lakhs under Section 11 of the Act, related to income applied and accumulated for charitable purposes.
However, the trust inadvertently failed to file the mandatory audit report in Form 10B along with the income tax return. The Form 10B was subsequently filed electronically on December 7, 2019. On the same date, the income tax authority processed the return under Section 143(1) of the Act and issued an intimation denying the claimed exemptions under Section 11(1) and 11(2). The sole reason cited for the denial was the belated filing of the audit report in Form 10B, arguing it was not submitted along with the return of income.
