TaxTMI 
TaxTMI 
2026 (4) TMI 1608
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....n u/s 12A(a) of the Income Tax Act, 1961 (the "Act") vide certificate dated 24.10.1974. It is also registered u/s 80G(5)(vi) of the Act effective from 28.11.2009. For AY 2017-18, the assessee filed its return of income on 25.07.2017 declaring total income at Rs. Nil. In its return of income, the assessee declared gross receipts of Rs. 1,89,43,855/- and claimed expenditure of Rs. 47,55,973/-. The assessee trust claimed exemption u/s 11(2) of the Act of Rs. 1,11,00,000/-. The case of the assessee was selected for scrutiny under CASS for the reason "Form 10 filed after due date and Large amount accumulated or set apart u/s 11(2)". Accordingly, statutory notice(s) u/s 143(2) and 142(1) of the Act along with questionnaire were duly issued and served upon the assessee. In response thereto, the assessee made requisite submissions online on e-assessment portal. The Ld. Assessing Officer ("AO") disallowed the claim of the assessee u/s 11(2) of the Act of Rs. 1,11,00,000/- on the ground that the assessee has failed to comply with any of the conditions laid down in clauses (a), (b) and (c) of section 11(2) of the Act and has also failed in filing Form 10 electronically as required under Rule ....
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....sidering the resolution passed stating the specific purpose of accumulation and further failed to appreciate that the accumulation is made u/s 11(2) as per the law. 3. The appellant craves leave to add, alter, amend or delete any of the grounds of the appeal." 5. The Ld. AR submitted that Form 10 does not specify any specific purpose to be stated for accumulation of income. She submitted that admittedly the assessee trust had delayed to comply with clause (a) of section 11(2) of the Act in the prescribed manner, however, a proper resolution has been passed by the assessee trust for specifying the funds for accumulation stating therein the specific purpose of accumulation. The Ld. AR submitted that mere failure to file Form 10 in due time does not disentitle the assessee trust to claim benefit of exemption u/s 11(2) of the Act. She submitted that under similar set of facts, the Courts/Tribunals have allowed the claim of exemption u/s 11(2) even if there is delay in filing Form 10. She, therefore, submitted that the delay in filing Form 10 should be condoned and benefit of exemption u/s 11 should be allowed to the assessee. In support of the above proposition, the Ld. AR ....
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....eal of the assessee for the reasons reproduced in the preceding paragraphs which is mainly on account of non-compliance to the provisions of section 11(2)(a) and filing of Form 10 being barred by limitation. It is the submission of the Ld. AR that the Resolution passed by the assessee trust (placed on pages 07 and 17 of the paper book) clearly states the objects for which the funds were set apart, however, both the Ld. AO as well as the Ld. CIT(A)/NFAC has failed to take cognizance of the said Resolution specifying the specific purpose of accumulation therein. It is further contented that the accumulation has been made u/s 11(2) of the Act as per law. The assessee trust had deposited funds under the specified mode(s) prescribed u/s 11(5) of the Act and hence the claim of accumulation u/s 11(2) is a bonafide claim made by the assessee. The Ld. AR submitted that Form 10 (placed at pages 30-32 of the paper book) specifies the purpose as the object of the trust for the accumulation done by the assessee trust and one of the object is renovation and extension of the trust building. Placing reliance on the various judicial precedents (supra), the Ld. AR argued that even otherwise lack of ....
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....23 has disallowed the accumulation of income of Rs. 54 lakhs, only on the reason that assessee Trust didn‟t file Form No.10 [accumulation of income]. 7. According to the assessee, while uploading RoI & Audit Report [Form 10B], the assessee also uploaded Form 10 [accumulation of income] and was of the bona fide belief that it has uploaded the Form 10 in the Income Tax Portal, but to its dismay when the return was processed by the CPC, and intimation dated 31.03.2023 was passed, it came to know that accumulation of income of Rs. 54 lakhs has been denied, for not uploading the Form 10. The assessee Trust is noted to have re-filed/uploaded Form No.10 on 02.06.2023; and during the appellate proceedings before the Ld.CIT(A), has brought to his notice that the assessee Trust had filed/uploaded return as well as Audit Report in Form No.10B before the due date u/s.139(1) of the Act i.e. on 07.09.2022 as well as Form No.10 was uploaded, but due to technical glitches, it was unsuccessful and since, there was heavy load server got hung and which resulted in CPC rejecting the accumulation of Rs. 54 lakhs. And assessee had again re-filed/uploaded on 02.06.2023 and a copy of Form N....
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....y rather than to foreclose the claim of assessee on technicalities. Therefore, respectfully taking note of the binding decision of the Hon'ble High Court (supra), we hold that the Ld.CIT(A) erred by misdirecting on an issue which wasn‟t raised by CPC; and since the TAR had been filed along with RoI filed within due date u/s.139(1) of the Act, and Form No.10 was again uploaded by the assessee on 02.06.2023, we are of the view that the First Appellate Authority erred in passing the impugned order, which we set aside and direct the CPC/AO to allow the accumulation of income claimed by the assessee u/s.11(2) of the Act to the tune of Rs. 54 lakhs." 11. Similar view has been taken by the Ahmedabad Bench of the Tribunal in the case of Takshshila Foundation (NGO) (supra) wherein it has been held as under : "6.2. It has been held by various Courts that the requirement of filing Form 10/10B is merely directory in nature and failure to furnish Form 10/10B before due-date prescribed u/s 139(1) of the Act cannot be so fatal so as to deny they very claim of exemption u/s.11(2) of the Act. The following judicial precedents have reiterated the aforesaid principal: I. As....
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.... from same set of facts, the finding given by us while adjudicating the appeal in ITA No. 2147/PUN/2025 would mutatis mutandis apply to the appeal in ITA No. 2148/PUN/2025 as well. Accordingly, the grounds of appeal raised by the assessee in ITA No. 2148/PUN/2025 are allowed in the same terms. 15. To sum up, both the appeals of the assessee in ITA Nos. 2147 & 2148/PUN/2025 are allowed. Order pronounced in the open court on 27th March, 2026. ============= Document 1 CIRCULAR No.2 /2020 F.No.197/55/2018-ITA-1 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes ..... New Delhi, the 3 January, 2020 Sub: Condonation of delay under section 119(2)(b) of the Income-tax Act, 1961 in filing of Form No.10B for Assessment Year 2018-19 and subsequent years- Reg. Under the provision of section 12A of Income Tax Act, 1961 (hereafter 'Act') where the total income of a trust or institution as computed under the Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income tax in any previous year, the accounts of the trust or institution for that year have to be aud....