ROTARY CLUB OF BANJARA HILLS CHARITABLE TRUST,HYDERABAD vs. INCOME TAX OFFICER, EXEMPTIONS- WARD-1(3), HYDERABAD

The assessee has raised five grounds in its appeal however, the crux of the issues is that the Ld. CIT (A) has erred in confirming the order of the Ld. AO who had brought the amount of Rs 46,27,544 to tax since the purpose for which the accumulated fund is set apart is not stated in Form-10.

The brief facts of the case are that the assessee is charitable trust registered U/s. 12A of the Act filed its return of income on 30/09/2016 claiming exemption U/s. 11 of the Act declaring NIL income. During the course of scrutiny assessment it was observed by the Ld. AO that the assessee had accumulated and set aside Rs. 46,27,544 during the relevant assessment year against which Form 10 was filed. However, it was noticed by the Ld. AO that in the Form 10 filed by the assessee, assessee had not mentioned the purpose for which the amount was accumulated. Therefore, the Ld. AO brought the amount of Rs. 46,27,544 to tax. On appeal, the Ld. CIT (A) confirmed the order of the Ld. AO by agreeing with his view.

Before us, the Ld. AR submitted that in the Form-10 under Rule 17(2) filed by the assessee dated 30/09/2016, by mistake, the assessee had stated “Trust” in the column wherein the purpose for which the amount is accumulated or set apart is to be mentioned. The ld. AR further argued stating that it was only a technical mistake by oversight. However, the Trust had passed a Board resolution on 21/09/2016 wherein it was stated that the amount of Rs. 46,27,544 is set apart which is to be utilised in the next five years to provide palliative care to “terminally ill cancer patients”. It was therefore pleaded that the tax levied by the ld. Revenue Authorities on the amount of Rs. 46,27,544 may be deleted. The ld. DR on the other hand relied on the orders of the Ld. Revenue Authorities and also on few decisions of the higher judiciary.

I have heard the rival submissions and carefully perused the materials on record. On verifying the Form 10 filed by the assessee under Rule 17(2) of the Rules, I am of the view that the mentioning of the word “Trust” in the column mentioned purpose for which amount is being accumulated or set apart is only a mistake by oversight which is rectifiable. The intention of the assessee is clear from the resolution passed by the Governing Body of the Members of the Trust dated 21/09/2016 that the amount of Rs. 46,27,544 is set aside which is to be utilised for the succeeding five years in order to provide palliative care to “terminally ill cancer patients”. Therefore, in the interest of justice, I hereby remit the matter back to the file of the Ld. AO with direction to provide proper opportunity to the assessee to rectify the mistake committed in the Form-10 submitted by the assessee under Rule 17(2) of the Rules. I further make it clear that on such rectification stating the purpose for which amount is accumulated or set apart is for the purpose of utilising the amount of Rs. 46,27,544 for the succeeding five years in order to provide palliative care to “terminally ill cancer patients”, the Ld. AO shall delete the tax levied on the amount of Rs. 46,27,544. It is ordered accordingly. It is also pertinent to mention that the decisions relied by the Ld. DR is not applicable to the facts in the case of the assessee.

In the result, appeal of the assessee is allowed.