Deputy Commissioner of Income Tax vs. Maneckji Cooper Education Trust

Parties Involved

Facts Summary

The Assessee is a charitable trust running a school in Mumbai for more than 60 years. For the Assessment Year 2016-2017, the Assessee filed a return of income on 22/09/2016 declaring income of INR 1.68 Crores after claiming exemption of INR 7.34 Crores under Section 11(2) of the Act in respect of funds accumulated for construction of a school building, purchase of school furniture, upgrading the school building, and purchase of electrical equipment. The Assessee filed Form 10, dated 15/09/2016, physically along with the board resolution passed by the Assessee-Trust. The return of income and Form 10 were filed before 30/09/2016, which was the due date for filing the return of income as per Section 139(1) of the Act. The case of the Assessee was selected for regular scrutiny. During the assessment proceedings, the Assessee filed Form No.10 electronically on 24/11/2018. However, the Assessing Officer disallowed the exemption of INR 7.34 Crores claimed by the Assessee under Section 11(2) of the Act on the ground that the Assessee had failed to file Form 10 electronically before the due date of filing the return of income as mandated by Rule 17 of the Income Tax Rules 1962. The Commissioner of Income Tax (Exemptions), Mumbai, set aside the Assessment Order, dated 29/11/2018, as being erroneous in so far as prejudicial to the interest of Revenue. The CIT(E) directed the Assessing Officer to frame fresh assessment on the Assessee. The Assessing Officer framed fresh assessment on the…

Legal Issues

• 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the appeal of the assessee without appreciating the fact that As per Income Tax Rule 17(3) of the option the Form No.9A referred to in sub Rule (1) and the statement in Form No.10 referred to in sub Rule (2) shall be mandatorily furnished electronically either under digital signature or electronic verification code and in the case of the assessee, the Form No.10 is not furnished electronically?
• 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the appeal of the assessee on the basis of the decision in the case of Shree Dadar Jain Vs. ITO [2019] 111 taxmann.com 272 (Mumbai tribunal) wherein the Hon’ble ITAT on identical ground has allowed the appeal of the assessee on the basis of the decision of the Hon’ble Supreme Court in the case CIT Vs. Nagpur Owners Association [2001] 114 Taxman 255/248 ITR 201 (SC) without appreciating the fact that the case law referred by the Hon’ble ITAT is very old and facts of that case is different from the facts of the case under consideration, and w.e.f. 01.04.2016, it is mandatory for the assessee trust to file Form No.10 electronically to avail the benefit of section 11(2) of the Income Tax Act?
• 3. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing relief when the assessee is aware that the fund are not utilised as per the provisions of section 11(1)(a) [being 85%] and in order to accumulate the same with the particular purpose earmarked for that object only was required by law w.e.f. 01.04.2016 to file the Form 10 as necessary in order to claim benefits of section 11(2) of the Act?

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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