Request to Postpone Form 10B & 10BB Applicability

The Chartered Accountants Association, Ahmedabad (CAAA), established in 1950, has written a formal letter to the Hon’ble Union Finance Minister, Ms. Nirmala Sitharaman, and the Hon’ble Chairman of the Central Board of Direct Taxes, Shri Nitin Gupta. In the letter dated September 15, 2023, the CAAA makes a compelling request to postpone the applicability of Form 10B and Form 10BB for Audit Reports in the case of Charitable and Religious Trusts from April 1, 2023, to April 1, 2024, effectively shifting it from the Assessment Year 2023-24 to 2024-25. Additionally, they seek an extension of the due date for filing ITR 7. Read their representation as given below:-

Chartered Accountants Association, Ahmedabad

Dated: 15^th September, 2023

Ms. Nirmala Sitharaman
The Hon’ble Union Finance Minister
Ministry of Finance, Govt. of India,
North Block, Parliament Street,
New Delhi-110001
Email: [email protected]
[email protected] to FM]

Shri Nitin Gupta
The Hon’ble Chairman
Central Board of Direct Taxes,
Ministry of Finance,
North Block, Parliament Street,
New Delhi-110001
Email: [email protected]

Respected Madam/Sirs,

Sub: Request to postpone the applicability of Form 10B & Form 10BB [Audit Report in case of Charitable & Religious Trusts) from 01.04.2023 to 01.04.2024 [i.e. from A.Y. 2023-24 to A.Y. 2024-25] & extension of due date for filing ITR 7.

About the Association:-

1. The Chartered Accountants Association, Ahmedabad (CAAA) established in the year 1950, is a voluntary and non-profit organization of immense repute, having dedicated membership of more than 1900 Chartered Accountants from all over Gujarat and India. The main object of the CAAA is to disseminate professional education to promote quality service and excellence in the profession of Chartered Accountancy; and to educate & create awareness in the public at large to promote the compliance of tax laws. The Representation Committee of CAAA arranges regular interactions with various Tax Authorities to provide feedback on various issues relating to administration of law and to streamline its processes, in order to support Government’s Policy of Easy of Doing the Business.

2. CAAA appreciates constant efforts are made by the Finance Ministry to promote digital revolution for seamless delivery of services to tax payers by enhancing efficiency of administration, to reassure the citizens that government remains committed to Tax Payers’ rights by promoting open, accountable, policy driven transparent governance by developing ideal taxation system in the Country.

3. Recently, significant amendments were made in the Income Tax Law applicable to the Charitable & Religious trusts or institutions [ herein after referred to as Trusts] including prescription to maintain books of account. The CBDT has notified Rule 17AA (the Rule) w.e.f. 10.08.2022 prescribing the books of account and records to be maintained by the Trusts during the Financial year 2022-23. This Rule casts onerous responsibility on every trust registered u/s 12AB or u/s 10(23C) to maintain detailed books of account, other documents & records.

4. To ensure the compliance of above stated requirements Rule 17B has been substituted w.e.f. 01.04.2023 mandating trusts to obtain and furnish audit report in Form 10B, where the total income of the trust exceeds Rs. five crores during the previous year or it has received Foreign Contribution; Or Form 10BB in other cases. As aforesaid requirements are made applicable in relation to financial period from 01.04.2022 to 31.03.2023 therefore, Trusts are also mandated to file the audit report in newly introduced Form no. 10B or 10BB for the Ass. Year 2023-24, on or before 30.09.2023, followed by submission of further information required in the ITR Form 7, on or before 31^5t October, 2023.

5. We hereby approach your kind office with a request to defer the applicability of newly introduced Form 10B & 10BB from 01.04.2023 to 01.04.2024 in view of following submissions;

Voluminous Data Requirements

a. The newly introduced Form 10B & 1OBB involve the compilation of voluminous information required to be furnished under various clauses. This is evident from the fact that Form 10B has 49 clauses followed by several sub clauses with 29 schedules. Form 1OBB has 32 clauses with 7 schedules. Both these forms are designed on the lines of Form 3CD, applicable to business entities required to get their accounts tax audited when their turnover exceeds the prescribed limit.

Compilation of voluminous data involve time consumption

b. The new Rule 17AA relating to maintenance of records/accounts by the trusts w.e.f. 10.08.2022, not only prescribes the list of books of account to be maintained, but it also mandates to keep other documents & compilation of records for all projects and institutions undertaken by the trust, including the information of loans and borrowing, such as the names & addresses of lenders, repayment details of borrowings etc. Institutions are also expected to compile records of all the properties owned by it, including registers of immovable properties showing their nature and cost of acquisition. That would involve scrutiny and study of historical data/documents requiring lot of time consumption.

Notification of Forms at the Fag end of financial year

c. The Form no. 10B & 10BB are notified at the end of the financial year 2022-23 mandating the compilation of records/registers for the whole financial year including pertaining to preceding periods. Most of the charitable trusts are operating with limited resources, preparation of records does not involve only cost factor, but requires proper understanding of requirements of law and training to the accounting staff/trustees.

Awaiting issue of Guidance note by ICAI

d. To meet the information requirements of Form 10B and 10BB envisaged by newly substituted Rule 17BB, is the significant condition for claiming the exemption. The Chartered accountants and their staff  need the training and guidance for scrutinizing the voluminous data required by these forms, involving several interpretational issues. The Chartered Accountants required to verify and furnish the data in these audit report forms, await the issuance of Guidance Note on the captioned subject by The Institute of Chartered Accountants of India. Even e-filing wing of income tax dept. has organized webinar to impart training on filing of form no. 10B & 1OBB on 13.09.2023, i.e. just few days prior to due date of filing on 30.09.2023.

Most of the Trusts are operating with non qualified staff

e. Most of the trusts carry out their charitable activities with the help of part-time & non professionally qualified staff working on pro bono basis. The compilation of the historical data and information requires guidance from experts in the field, as several clauses required a deep understanding of the law. These trusts cannot afford to hire the services of expert consultants.

On line utilities for filing these forms released in September 2023

f. The utility for furnishing the information in these new Forms has been released in the first week of September 2023. The assigning of the new forms 1OBB to Chartered Accountant has also been activated in the first week of September, 2023 only. Chartered Accounts require significant amount of time to gather, verify and furnish the voluminous information/data required under various clauses/sub clauses/schedules of Forms. Most of the consultants also use third-party vendor software, which are found to be more user friendly. The offline utilities for filling these forms are not made available till date by the several vendors who generally take some time to update their utilities after schema is released by the dept.

6. By providing the utilities/schema of form 10B/10B6 at the fag end of limitation period for filing audit reports has, belied the hope expressed by the Hon’ble Gujarat High Court in the case of All Gujarat Federation of Tax Consultants V. CBDT [SCA No.12656 of 2014]. In this case Hon’ble High Court while extending the due date in relation to A.Y. 2014-15 observed that any introduction or new utility/software with additional requirement in the middle of the year, ordinarily is not desirable. Any change unless inevitable, can be planned well in advance. Keeping in focus such comprehensive process re-engineering may not result in undue hardship to the stake holders.

7. Again, in the case of All Gujarat Federation of Tax Consultants V. CBDT [SPL No. 15075 of 2015] petitioner prayed to the court to issue a writ, order or direction to the respondents that henceforth, make any alternations in forms and utilities or changes in tax compliance requirements, applicable from the assessment year, subsequent to the assessment year in which such alterations are introduced. The Hon’ble Gujarat High Court, while extending the due date of filing tax audit report in relation to A.Y. 2015-16 also directed to the Board to forthwith issue requisite notification under section 119 of the Act extending the due date for e-filing of the income tax returns in relation to the assessees, who are required to file ITR by 30^th September, 2015 to 31^st October, 2015. The respondents shall henceforth, endeavor to ensure that the forms and utilities for e-filing of income tax returns are  ordinarily made available on the 1st day of April of the assessment year.  Rule is made absolute to the aforesaid extent. re.s.l.

8. Gujarat High Court further observed that, it is expected of the Board to exercise the discretionary powers vested in it under section 119 of the Act to ameliorate the difficulties faced by the assessees on account of no default on their part. In the opinion of this court, the Board should not create a situation whereby the assessees are required to knock the doors of the court year after year, more so, when on account of the delay on the  part of the respondents, it is the assessee who would have to face the consequences of not filing the returns in time. le.s.1.

Harsh consequences of delay in filing of audit report-Tremendous hardships to the Trust

9. Sir, failure to file audit report in Form 10B/10BB before due date, will result into loss of exemption, financial hardship and cause drain on the financial resources of the trusts, and also may hamper its charitable activities. Under these circumstances, we hereby pray that charitable view shall be taken towards the trusts, who have always done commendable work during the times of natural calamities. During the Covid 19

pandemic, many volunteers lost their lives while helping others. There is a general awareness and inclination towards helping poor and destitute people by most of these trusts.

Humble Prayer

10. It is humbly requested to defer the applicability of the newly introduced Form nos. 10B/10BB w.e.f. 01.04.2024, instead of 01.04.2023, that would not impact the revenue collection as most of these trusts enjoy exemption u/s 11/10(23C). Even non deliberate delay in filing the forms before the prescribed due date of 30.09.2023 would cause lot of hardship to these trusts and also avoidable administrative burden on the department officials.

11. We are sure that your honors would take up the urgent remedial action to postpone the applicability of newly introduced Forms nos. 10B & 10BB w.e.f. 01.04.2024 in order to ease the pressure of compliance on the trusts. It is further requested that for the F.Y. ended on 31.03.2023 [A.Y. 2023-24] filing of erstwhile old Form no. 10B shall be continued and due for the same shall be extended up to 31.12.2023 and date of filing ITR Form 7, Form 9A and 10 shall be extended up to 31^st January, 2024.

12. Sir, awaiting favorable response.

Thanks & Regards,
Yours faithfully,