Anjana Foundation Vadodara Vs A.O. (ITAT Ahmedabad)
Introduction: The case of Anjana Foundation Vadodara vs A.O. was brought before the Income Tax Appellate Tribunal (ITAT) in Ahmedabad. The dispute revolved around whether the advance filing of Form 10B along with the income tax return is a mandatory requirement for claiming exemption under Sections 11 and 12 of the Income-tax Act.
Detailed Analysis: The appellant, Anjana Foundation Vadodara, contested an adjustment made by the Commissioner of Income Tax (Appeals) regarding the exemption claimed under Sections 11 and 12 of the Act. The adjustment was based on the non-filing of Form 10B along with the income tax return.
The ITAT examined the matter and observed that the failure to file Form 10B was the sole reason for denying the exemption claimed by the appellant. However, the appellant had prepared Form 10B well in advance but failed to file it due to its income being below the taxable limit.
Citing relevant legal precedents, including a decision by the Hon’ble Gujarat High Court, the ITAT emphasized that the filing of Form 10B along with the return of income is not a mandatory requirement for claiming exemption under Sections 11 and 12. The tribunal noted that even if Form 10B is filed at a later stage, the exemption cannot be denied if all other conditions are met.
Referring to similar cases where exemptions were granted despite delayed filing of Form 10B, the ITAT concluded that the appellant had fulfilled the procedural requirements and was entitled to the claimed exemption under Sections 11 and 12.
Conclusion: The ruling by the Ahmedabad ITAT in the case of Anjana Foundation Vadodara vs A.O. provides clarity on the procedural requirement of filing Form 10B for claiming exemption under Sections 11 and 12 of the Income-tax Act. The tribunal’s decision underscores that the advance filing of Form 10B is not mandatory, and exemptions cannot be denied solely on this basis. This decision offers relief to trusts and charitable institutions by ensuring that their eligibility for exemptions is not hindered by procedural technicalities.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
Present appeal has been filed by the assessee against order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)” for short] dated 09.08.2023 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act” for short], for the Assessment Year (AY) 2021-22.
2. The grounds raised by the assessee are as under:-
“1. The Learned CIT(A) has grievously erred in law and on facts in upholding the income of Rs. 16,40,93,967/- computed in the intimation u/s. 143(1) by the AO without properly appreciating and considering the facts that it is not the amount receipt but the land received as gift in kind by the assessee-trust, which does not fall under purview of income, so not liable to tax, as it is a capital receipt.
2. The assessee has received the Gift in kind i.e. land from trustee, duly registered gift deed with the sub-registrar, without any consideration and the same could not be applied, accumulated or invested, therefore, it cannot be treated as income.
The gift received in kind- land should not have been treated as income of the assessee trust, as it will not come under the definition of income u / s 2(24) of the act, therefore, it will not be the income of the trust u / s 12(1) of the act, that includes the income from voluntary contribution and the acceptance of gift in kind will not come under the purview of income u/s 2(24)(iia) for the purpose of section 11 of the act, that includes the income of corpus donations – exempted u/s 11(1)(d).
The assessee has not received any corpus donation, but received a gift in kind – land, from trustee, for the purpose of to carry out trust charitable object purpose activities. Which is irrevocable, Gift in nature. It should have been held to be the capital receipt, so not liable to tax.
3. Rs. 70,60,000/- is contribution received from the trustee in trust fund (capital account), who has gifted the Land to the trust. This amount has been used for stamp duty, for registration of gift deed, so it is an inbuilt- inter related, irrevocable, non separatable part of Land-Gift, hence it is a capital receipt and does not fall under the purview of income.
4. The Learned CIT(A) has erred in law and facts in upholding the adjustment made by the AO, based on the information indicated in the ITR filed by the appellant, as the inadvertent mistake made in the return cannot be upheld factually as well as legally.
5. The learned CIT(A) has erred in relying on the issue of belatedly filling of Audit report – form 10B, which is not relevant and not applicable to the facts of capital receipt -gift in kind (immovable property) and as the assessee had already paid the tax on gross annual income of Rs.22967/- Also the assessee trust had the income below the taxable limit, so there was bonafide belief that form no 10B is not required to be filed.
6. The learned CIT(A) has erred in law and facts in relying upon the decision of Balraj Singh Jagjit Singh ITAT (Mum) dated 07-06-23, being not applicable to the facts of the assessee trust.
7. The Learned CIT (A) has erred in law and facts in not appreciating the fact that when the land has been gifted to the trust without any consideration and duly registered with the sub-registrar, the value adopted (Rs.15,70,11,000/-) for paying stamp duty cannot be treated as income of the trust, also it does not fall under purview of income.
8. On the facts of the assessee, the mistake committed in the return should not have been taken as advantage, keeping in the principle of natural justice, and the Circular 14 (XL – 35) dated 11/04 /1955 issued by the Government ought to have been applied to the facts of the assessee providing that the department must not take advantage of ignorance of the assessee to collect more tax out of him, then is legitimately due.
9. On the facts of the assessee, the Nil income ought to have been accepted.
10. The income of Rs. 16,40,93,967/- computed in the intimation, deserves to be deleted along with consequent demand of Rs. 8,59,78,930/-.”
3. We have heard both the parties. The issue before us relates to the adjustment made to the income returned by the assessee in the intimation made by the CPC u/s 143(1) of the Act. The adjustment relating to entire income of the assessee trust including corpus donation, voluntary donation and other income, amounting in all to Rs.16,40,71,000/- being denied exemption claimed u/s 11/12 of the Act to the assessee and treated as entirely taxable in the intimation u/s 143(1) of the Act. This adjustment to the total income of the assessee was confirmed by the ld. CIT(A).
4. A perusal of the intimation u/s 143(1) of the Act reveals that the assessee had disclosed voluntary contribution forming part of corpus to the tune of Rs.16,40,71,000/- along with voluntary contribution other than corpus funds amounting to Rs.14,000/-. The assessee had also shown other income of Rs.8,967/- in its return of income filed. Against the same, the assessee had shown application of income to the tune of Rs.74,061/-. The same are reflected at page No.14 of the intimation as under:-
