Legitimate Deductions Cannot Be Denied Merely for Non-Filing Revised Return: Madras HC

Venkateswara Educational Trust Vs ITO (Madras High Court)

Summary: The Madras High Court partly allowed appeals filed by Sree Venkateswara Educational Trust concerning Assessment Year 2013-14 and set aside the common order of the Income Tax Appellate Tribunal dated 30.12.2019, remitting the matter to the Assessing Officer. The assessee had filed its return on 18.01.2014 claiming exemption as a Trust under Section 11 of the Income Tax Act, 1961, although it did not then hold registration under Section 12AA.

Its application for recognition was made only on 16.12.2015 and registration was granted on 02.03.2016. Meanwhile, the return had been processed under Section 143(1) on 12.03.2015, resulting in tax and interest liability of Rs.99,51,157/-. The assessee’s subsequent application under Section 154 seeking rectification on account of non-consideration of the Section 11 exemption and expenditure of earlier years was rejected on 29.10.2015.

The CIT(A) and thereafter the ITAT also rejected the assessee’s appeals. The High Court held that the question whether subsequently granted registration could benefit the assessee for AY 2013-14 already stood concluded against it by the Division Bench decision in M/s.Soundaram Chokkanathan Educational and Charitable Trust Vs. The Income Tax Officer, Salem. The surviving issue was whether deductions otherwise available to the assessee as a “Regular Assessee” or an “Association of Person” could be denied merely because a revised return had not been filed.