The Income Tax Appellate Tribunal (ITAT), Mumbai has allowed deduction under Section 11(1)(a) of the Income Tax Act, 1961 as there was further furnishing audit report along with the Income Tax Return.
The assessee, The Dadabhai Kavasji Tata School Trust is a charitable trust registered both with Charity Commissioner and also under Income Tax Act. For the year under consideration, the assessee filed its Income Tax Return belatedly on 30.3.2017. The assessee also filed audit report in Form 10B itself, i.e. along with the Income Tax Return. Since the audit report was filed belatedly beyond the due date prescribed u/s 139(1) of the Income Tax Act, the Assessing Officer rejected the claim for deduction under section 11 of the Act, being the amount of Rs.7,74,590/- that could be accumulated under section 11(1)(a) of the Act.
The Counsel for the assessee, Neville Deboo submitted that the deduction claimed under section 11(1)(a) of the Act is a general deduction allowed under the provisions of Act. It was submitted that the Act does not prescribe any time limit for filing audit report in Form 10B during the year under consideration.
The Counsel further submitted that the assessee further submitted that the mandatory time limit with regard to filing of Form No. 10, which relates to accumulation of income under section 11(2) of the Act, was inserted only with effect from 1.4.2016. The said provision is not applicable for the deduction claimed u/s 11(1)(a) of the Act.
The Bench consisting of B.R. Baskaran, Accountant Member and Pavan Kumar Gadale, Judicial Member held that “In the instant case, we noticed earlier that the assessee has filed audit report in Form No. 10B alongwith the Income Tax Return filed on 30.3.2017. We noticed that the requirement of filing audit report before the date prescribed in sec.44AB has been brought into the statute only with effect from 1.4.2020, i.e., from AY 2020-21. Accordingly, in the assessment year under consideration, viz., AY 2015-16, the requirement under the Act was to file audit report along with the Income Tax Return. Accordingly, in our view, the assessee has complied with the conditions prescribed in sec. 12(1)(b) by furnishing audit report along with the Income Tax Return. Accordingly, we set aside the order passed by learned CIT(A) and direct the Assessing Officer to allow deduction under section 11(1)(a) of the Act ”
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