Case Overview
ITA No. 1417/Del/2022 pertains to an appeal filed by Shri Krishna Das Jajoo Smarak Trust against the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2016-17. The bone of contention was the denial of exemption under section 11 of the Income Tax Act by the Income Tax Officer (ITO), Ward Exemp. 2(2), Delhi.
Background
The appellant, a registered trust under section 12A of the Income Tax Act, filed its return of income for the assessment year 2016-17 on 4th August 2016, declaring total income at NIL and claimed exemption under section 11 for amounts applied towards charitable purposes in India. However, the exemption was denied on processing the return, leading to an appeal against the initial assessment and subsequent orders.
Grounds of Appeal
- The appellant contested the order under section 250 of the Act, upholding the assessment order issued under sections 143(1)/154.
- Arguments were made against the disallowance of a statutory deduction of Rs.5,70,300, being 15% of gross income, due to the non-furnishment of Audit Report in form 10B.
- Further, the appellant disputed the non-allowance of actual expenses incurred for charitable purposes and the wrongful treatment of donations received for the corpus fund as income.
Proceedings and Judgment
In the appeal hearing, it was contended by the appellant that all required documents, including the audit report in Form 10B, were duly filed. It was argued that the submission of Form 10B along with the return is directive and not mandatory for claiming exemption under section 11. The Income Tax Appellate Tribunal (ITAT), considering the submissions and precedents, restored the matter to the AO/CPC for fresh adjudication with directions to consider the Audit Report in Form 10B.
Ultimately, the ITAT partly allowed the appeal for statistical purposes, setting aside the orders of the lower authorities and remanding the case for de-novo consideration.
Conclusion and Implications
This judgment underscores the importance of adhering to procedural requirements for claiming exemptions under the Income Tax Act while also highlighting the judiciary’s role in ensuring justice by allowing exceptions in genuine cases. As a result, trusts and non-profit organizations must take meticulous care in maintaining and submitting all requisite documentation to avail exemptions and benefits rightfully.
