TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 661
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....erein the Petitioner, being a charitable institution, filed its Return of Income on 22nd October 2018, claiming exemption under Section 11 and offering Nil income to tax. In the said Return of Income, it inter alia claimed the benefit of accumulation of income in accordance with Section 11(2) of the Act of Rs.1,15,95,743/-. As per Section 11(1) of the Act, a charitable institution is statutorily permitted to unconditionally accumulate fifteen percent of its income and has to apply eighty-five percent thereof towards its objects. If there is a shortfall in the application of income, Section 11(2) enables accumulation thereof to be applied in later years, subject to the fulfillment of specified conditions. In the present case, the said accumulation under Section 11(2) has been carried out in accordance with a resolution passed by the Petitioner's Board of Directors and also stood duly reflected in the Audit Report in Form No. 10B obtained as per Section 12A(b) of the Act. 4. The said Return of Income was selected for scrutiny by issuance of notice dated 22nd September 2019 issued under Section 143(2) of the Act. One of the requirements for claiming accumulation under Section 11(2)....
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....t relating to accumulation as per Section 11(2) of the Act stood duly reflected in the Board Resolution, Audit Report in Form No. 10B and the Return of Income filed by it for the Assessment Year 2018- 19. These documents have been in existence from a point of time before the due date for filing the Return of Income under Section 139(1). Further, the other requirements in Section 11(2), being investment of the accumulated amount in accordance with Section 11(5), and its application towards its objects within the stipulated time, also stand fulfilled. The said amount stood applied towards its objects in the previous year relevant to the Assessment Year 2020-21. Hence, the substantive requirements stood complied with. These facts are not in dispute, and the only reason given for the denial of exemption to the extent of such accumulation in the assessment order for Assessment Year 2018-19 is the delay in filing Form No. 10. As per Section 11(2) as it stood upto Assessment Year 2015-16, there was no stipulation with respect to any period of limitation for filing Form No. 10. The Hon'ble Apex Court in the case of CIT v. Nagpur Hotel Owners Association (2001) 247 ITR 201 had taken ....
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.... suffer such hardship if said delay is not condoned and the accumulated amount is brought to tax, was the submission. The demand raised pursuant to passing of the assessment order dated 28th September 2021 stands at Rs. 82,90,538/-, while the Petitioner has already utilised the entire accumulated amount of Rs.1,15,95,743/- in the previous year relevant to Assessment Year 2020-21. In such circumstances, with a view to pay up the said demand, the Petitioner will have to curtail its application of income towards charitable activities in the later years and/or find means to raise further funds for payment of the demand. In such circumstances, according to the Petitioner, the condition relating to the exercise of power under Section 119(2)(b) with a view to avoid genuine hardship stands fulfilled. In a case like the present one, where the substantive requirement in Section 11(2) stands fulfilled and the filing of Form No. 10, which represents a procedural requirement, has been complied with before completion of assessment, the Petitioner's claim ought to be allowed. 8. On the other hand, the learned Counsel for the Respondents vehemently opposed the Petition and urged that the Pe....
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.... for scrutiny, was issued on 22nd September 2019, and the said Form has been electronically filed on 25th September 2019. This fact relating to the accumulation of income formed part of the Return of Income filed on 22nd October 2018. It has been duly supported by a resolution passed by the Petitioner's Board of Directors and an Audit report in Form No. 10B given by its statutory Auditor. Therefore, this was not a new claim raised for the first time by filing Form No. 10 on 25th September 2019, but represented a claim which was always made and stood duly supported by documents which existed from a point of time before the due date for filing of the Return of Income. Further, the substantive requirements to be fulfilled while claiming the benefit of Section 11(2) of the Act viz., investment of the accumulated amount in accordance with Section 11(5) and its application towards its objects within the stipulated time, also stood fulfilled. In such circumstances, we are of the opinion that a liberal view needs to be taken and, hence, the delay in filing Form No. 10 for the year under consideration needs to be condoned. 11. The Delhi High Court, in Bar Council of India v. CIT(E) (....
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....delay is not condoned, as the accumulated amount of Rs. 1,15,95,743/- has already been applied towards the objects of the Trust in the Assessment Year 2020-21. If the said claim of exemption in respect of the accumulated amount is denied and the tax demand of Rs. 82,90,538/- arising on account of denial of the benefit of accumulation is recovered, it would place the Petitioner in gross financial difficulty. 14. With respect to the reliance placed by the learned Counsel for the Respondent on the judgment of the Hon'ble Supreme Court in the case of Wipro Ltd. (supra) is concerned, we find that the ratio laid down therein was peculiar to the facts of that case. In that case, the assessee for the first time exercised its option to opt out of the exemption claim under Section 10B by filing a revised Return of Income. The exemption under Section 10B, which was claimed in the original Return of Income, was later sought to be foregone. In that scenario, Sub-Section (8) of Section 10B, according to which the declaration for opting out had to be filed before the due date for filing of the Return of Income, has been emphasised. In the present case, the Petitioner has not changed its cl....