CBDT condones delay in submitting Form 9A Form 10, Form No. 10B & 10BB

Condonation of delay in submitting Form 9A Form 10, Form No. 10B & 10BB under section 119(2) for AY 2018-19 or for any subsequent Assessment Years. Fresh Income Tax Circulars No. 15, 16 and No. 17 dated 19th July 2022.

On 19^th July 22 I had published an article on taxguru.in ex-plaining the implications of the very Important Judgement of the Hon’ble SC on Exemption from tax u/s 10B, which is almost were Pari Materia with the exemption provisions for Charitable Trusts/Institutions etc. under section 11/12A (1). Article can be accessed at the below link-

https://taxguru.in/income-tax/supreme-court-india-unsettling-settled-legal-position.html

The settled legal position uptill now is that for availing exemptions from tax the following conditions must be fulfilled:

1) The assessment proceedings could be said to be pending even at the stage of appeal, and as such, the details in Forms could be furnished even at the stage of appeal.

2) As long as the entitlement of the assessee regarding the exemption or deduction is not doubted, no addition can be made on the pretext that pre-scribed Form was filed belatedly.

3) Provision regarding furnishing of audit report in prescribed Form with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice.

4) Prescribed Form can also be submitted during the appellate proceedings before the CITA

Thus, as per the well settled judicial precedents of the Hon’ble courts it can be stated that condition (i) i.e. furnishing a declaration to the assessing officer in writing as per the provisions of Section 10B (8) is mandatory. Non filing of this declaration is very fatal to the availment of the exemption u/s 10B(8).

The same courts have given their judgements on condition (ii) i.e. the said declaration to be furnished before the due date of filing the return of income under sub-section (1) of Section 139 of the IT Act and stated that this condition (ii) is just directory.

In summary, it may be submitted that the courts in India are of the opinion that wherever a condition is prescribed for availment of any exemption/deduction as per any ex-emption Notification, then that condition is to be treated as “Mandatory”, non-compliance of which would be fatal to the availment of the exemption e.g. submission of Audit Report in prescribed Form.

However, According to the judgement of the Hon’ble SC in the case of Wipro Ltd. dated 11th July 2022 for exemption u/s 10B the SC has held that for claiming the benefit un-der Section 10B(8) of the IT Act, the following twin conditions both are Mandatory.

(i) furnishing a declaration to the assessing officer in writing that the provisions of Section 10B (8) may not be made applicable to him; and

(ii) the said declaration to be furnished before the due date of filing the return of income under sub-section (1) of Section 139 of the IT Act.

The Hon’ble SC noted that the wording of the Section 10B (8) is very clear and unambiguous. For claiming the benefit under Section 10B (8), the twin conditions of furnishing the declaration to the assessing officer in writing and that the same must be furnished before the due date of filing the return of income under sub-section (1) of section 139 of the IT Act are required to be fulfilled and/or satisfied. It cannot be disputed that in a taxing statute the provisions are to be read as they are and they are to be literally construed, more particularly in a case of exemption sought by an assessee.

Even claiming benefit under section 10B (8) and furnishing the declaration as required under section 10B (8) in the revised return of income which was much after the due date of filing the original return of income under section 139(1) of the IT Act, cannot mean that the assessee has complied with the condition of furnishing the declaration before the due date of filing the original return of income under section 139(1) of the Act.

Under the above background the CBDT has issued 3 circulars No. 15, 16 & No. 17 on 19th July 2020 whereby it authorized the Commissioners of Income-tax to admit applications of condonation of delay in filing Form 9A Form 10, Form No. 10B & 10BB for AY 2018-19 or for any subsequent Assessment Years where there is the delay of up to 365 days and decide on merits. The gist of these circulars is as under:

“Further to the powers delegated to Commissioners of Income-tax as discussed above, the CBDT hereby directs that where there is delay of beyond 365 days upto three years in filing Form No. 9A and Form No. 10 for Assessment Year 2018-19 or for any subsequent Assessment Years, the Pr. Chief Commissioners of Income-tax / Chief Commissioners of Income-tax are authorized to admit such applications of condonation of delay under section 119(2) of the Act and decide on merits”.

3. “The Pr. Chief Commissioner / Chief Commissioner of Income-tax, as the case may be, while entertaining such applications for condonation of delay in filing Form No. 9A and Form No. 10, shall satisfy themselves that the applicant was prevented by reasonable cause from filing such Form within the stipulated time. In respect of Form No. 10, the Pr. Chief Commissioner / Chief Commissioner of Income-tax, as the case may be, shall also satisfy themselves that the amount accumulated or set apart has been invested or deposited in any one or more of the forms or modes specified in sub-section (5) of section 11of the Act”.

4. “Further, the Pr. Chief Commissioner / Chief Commissioner of In-come-tax, as the case may be, shall preferably dispose the application within three months of receipt of the application.”

Link to the Circulars are as follows:-