Tribunal held that failure to file return under S.139(4A) cannot be interpreted to mean that income cannot be computed in case of a charitable trust under S. 11 of the Act. Once return has been filed in response to notice issued under S. 148, provisions of Act shall apply as if such return were a return required to be furnished under S. 139 and, thus, return filed under section 148 is treated as return filed under S. 139. Which will include S. 139(4A) of the Act. Once such return is treated as return filed under S. 139, then all provisions of Act shall apply which will include S. 11. A new clause (ba) which has been inserted in section 12A by Finance Act, 2017 to put a further condition w.e.f. 1-4-2018 of furnishing return within time allowed under section 139(4A) has been made applicable from assessment year 2018-19 onwards. Failure to produce evidence in respect of electricity expenses, amount to be excluded while computing application of income. S. 40(a)(ia), 40A(3) and S. 43B fall in Chapter IV-D which are applicable for computing profits and gains of business or profession and, thus, they are not applicable in respect of charitable trust or institution whose income is to be computed under Chapter-III and, accordingly, no disallowance or adjustment can be made while determining income of society under S. 11 and 12 of the Act. Penalty was levied by bank for mortgaging a property without permission of prescribed authority on assessee-society by invoking Explanation to S 37 is not applicable to charitable Trust since provisions of Chapter IV-D, i.e., S28 to 44D are applicable while computing income of business or profession and these provisions are not applicable in respect of charitable institution whose income is to be computed under S 11 and 12 falling under Chapter III of the Act As per section 11, income of a eligible institution to extent of which such income is applied to charitable purpose in India is not to be included in total income and application of income towards charitable purposes include application towards acquisition of assets, i.e., capital expenditure. (AY. 2006 -07, 2009 -10)
United Educational Society v. JCIT (2019) 74 ITR 11 / 178 ITD 716/ 202 TTJ 928/( 2020) 188 DTR 153 (Delhi)(Trib.)
S. 11 : Property held for charitable purposes-Failure to file return- Return is filed in pursuance of notice u/s.148–Entitle to exemption as applicable to charitable Trust-Failure to produce evidence in support of its claim of electricity expenses-Such amount had to be excluded while considering application of income-S.40(a)(ia), 40A(3) and S. 43B falls in Chapter IV-D which are applicable for computing profits and gains of business or profession and Chapter IV-D is not applicable in respect of charitable trust or institution whose income is to be computed under S 11 and 12 falling under Chapter-III. S. 37(1), Explanation is not applicable to charitable trust. Capital expenditure is to be allowed as application of income. [S. 12, 37(1), 40(a)(ia), 40A(3), 43B, 139, 139(4A), 147, 148]