JM FINANCIAL FOUNDATION ,MUMBAI vs. ITO (EXEMPTION)-WARD-1(4), MUMBAI

Assessment Year – 2018-19 “1. That on the facts and circumstances of the case and in law the Ld. National Faceless Appeal Centre (NFAC) has erred on facts and in law in confirming reopening the assessment of the appellant u/s. 147 on the ground of addition of CSR contribution received during the year without appreciating that the reopening of assessment was on the basis of change of opinion and further reopening on the basis audit objection in the present case is not in justified and hence reopening of assessment is bad in law.

2. That on the facts and circumstances of the case and in law the Ld. NFAC has erred in issuing notice under section 148 of the Act without fulfilling the requirement of section 151A of the Act and is thus bad in law.

3. That on the facts and circumstances of the case and in law the Ld. National Faceless Appeal Centre (NFAC) has erred in confirming order of A.O. holding that the CSR fund received by the Appellant amounting to Rs. 15,65,17,000/- is to be treated as income under section 11 and unspent CSR contribution amounting to Rs. 14,18,78,917/- was to be accumulated as per section 11(2) without appreciating that said funds were given in accordance with the requirements of Companies Act, 2013 and said funds are in the nature of corpus donation provided by the Donors with specific directions regarding its utilisation and were thus not voluntary in nature and it did not have the character of income of the trust being involuntary and were capital in nature and were thus treated as earmarked restricted fund in the balance sheet as per the relevant accounting standards issued by ICAI and hence the addition of Rs. 14,18,78,917/- may be deleted.

Without prejudice to above, the learned NFAC failed to appreciate that CR funds accumulated during the year were spent in subsequent years and thus there was effective compliance of provisions of Section 11(2) & 11(1) and the non-intimation of accumulation u/s. 11(2) & 11(1) in prescribed form in the facts of the present case cannot result in denial of exemption u/s. 11 and hence the addition of Rs. 14,18,78,917/- may be deleted.”

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2. At the outset, the assessee has filed an application seeking admission of additional grounds dated 10/12/2025. It is noted that the additional ground is raised for assessment year 2018-19, which is reproduced as under:-

“1. Without prejudice to other grounds, the CR funds accumulated during the year were spent by the Appellant in subsequent years and thus there was effective compliance of provisions of Section 11(2) & 11(1) and the delayed intimation of accumulation u/s. 11(2) & 11(1) by filing of belated Form 10 may be condoned and admitted and hence the addition of Rs.14,18,78,917/- may be deleted.

in the case of National Thermal Power Co. Ltd. v. Commissioner of Income-Tax reported in [1998] 229 ITR 383 (SC) and Jute Corporation of India Ltd. v. Commissioner of Income-Tax reported in [1991] 187 ITR 688 (SC), we admit the additional grounds raised by assessee for assessment year 2018-19.

Accordingly, additional grounds raised by assessee vide application dated 10/12/2025 for both the years under consideration stand allowed.

JM Financial Foundation (assessee) is a Charitable Trust, registered u/s 12A of the Act dated 28/09/2010. The main objects of the trust are of charitable nature for income tax purposes. The assessee filed its return of income for assessment year 2017-18 on 17/10/2017 declaring Nil income and for assessment year 2018-19 on 05/10/2018 also declaring Nil income.

3.1. It is submitted that, assessee has been identified by JM Financial group companies as an implementing agency for the purpose of undertaking the CSR activities in accordance with the applicable provisions of Companies Act, 2013, and the rules made thereunder. For the AY 2017-18, the assessee received contribution from various group entities towards corpus of Rs. 1,88,00,000/- and voluntary contributions other than the corpus amounting to Rs.1,00,51,138/- and CSR fund of Rs.11,46,00,000/-. Similarly, for assessment year 2018-19, assessee received voluntary contribution towards CSR fund of Rs.15,65,17,000/-.

Subsequently, the case was reopened u/s 148 of the Act by issuing notice dated 26/08/2019 for assessment year 2017-18 and 13/03/2024 for assessment year 2018-19. After following the due procedure under the new provisions of the Act, the assessment was completed u/s 147 r.w.s. 144B of the Act. In the assessment order, the Ld.AO, disallowed the claim of assessee towards CSR fund aggregating to Rs. 11,46,00,000/- for assessment year 2017-18 and Rs.15,65,70,000/- for AY 2018-19. A sum of Rs.14,18,78,917/- was held to be disallowed as the assessee had not filed Form 10 within the statutory period of limitation for assessment year 2018-19.

Aggrieved by the order of Ld.AO for both the assessment years, assessee preferred appeal for both the years before Ld.CIT(A).

The Ld.CIT(A) upheld the reassessment orders passed by Ld.AO for both years under consideration.

Aggrieved by the order of Ld.CIT(A) for both the years under consideration, assessee is in appeal before this Tribunal.

3. The Ld. Counsel, submitted that for assessment year 2017-18, assessee filed Form10 before Ld.CIT(A) based on a board resolution that was passed on 27/10/2021. The Ld.AR submitted that assessee was under bona fide belief that, it was not required to file Form 10. It was submitted that assessee was acting only in a fiduciary capacity for such funds.

3.1. Ld. Counsel placing reliance on the board resolution placed in the paperbook for AY 2017-18 at page 122, submitted that, the assessee was not allowed to utilize funds towards its objectives according to the discretion of the trust. It was submitted that the donor companies had committed these funds for CSR activities that was identified by the donors and, therefore, these funds were not freely available to the assessee. The Ld.Counsel submitted that, as and when the activities are identifiable as per the requirements of the donor, the said funds were utilized and treated to be used for the purposes of the trust. He submitted that, until the amounts are set apart and is shown in the balance sheet as not utilised for the relevant assessment years.

3.2. Ld.Counsel vehemently submitted that the money so set apart, therefore, cannot be treated as income in the hands of assessee for the year under consideration. The Ld.Counsel referred to paperbook page 66 to 99 - assessment year 2017-18 and page 50 to 78 – assessment year 2018-19, wherein copies of the letters from the donors towards CSR contribution is placed. He submitted that, the details of CSR funds received during the year under consideration along with details of the CSR expenditure carried on out of such CSR contributions supported by the acknowledgement of receipt have been furnished in the paper book which is not been considered by the authorities below.

3.3. He submitted that, the CSR funds given by the donors are subject to quarterly report being furnished to the donors. The donors are continuously monitoring the utilisation of the said funds to be in accordance with their requirements. It is also submitted that as per the letters issued by the donors, the respective CSR funds are to be utilised over a period of 3 to 4 years and in the 3.4. The Ld.Counsel submitted that, assessee does not have any control over these funds that has been specifically received from the donors of the group companies which are to be utilised exclusively for the specific activity as per the requirements of the donor. The Ld.Counsel placed reliance on following decisions to support his contention that funds held under a specific direction being tied up grant received from a donor would not be covered within the scope of Section 12 of the Act and cannot be treated within the ambit of income u/s 2(24)(2a) of the Act:- • Hon’ble Kerala High Court in the case of Pala Marketing Co- operative Society Ltd. vs. UOI reported in [2009] 311 ITR 177 (Kerala) • Hon’ble Bombay High Court in the case of Sitaldas K. Motwani vs. DGIT reported in [2010] 323 ITR 223 (Bom)(HC) • Hon’ble Bombay High Court in the case of Sanchit Software & Solutions (P.) Ltd. vs. CIT reported in [2012] 349 ITR 404 (Bom)(HC) 4. For assessment year 2018-19, the Ld. Counsel submitted that, Form 10 was not filed before any of the authorities below and is filed for the first time before this Tribunal, and assessee has sought admission of the said document by way of additional ground and also has prayed for condonation of delay in filing the said form.

4.1. In the preceding paragraph, we have already admitted the ground raised by assessee for assessment year 2018-19. It is noted that, the claim of assessee is genuine and deserves consideration by the Ld.AO. From the application filed, it is noted that there is delay of almost 2500 days in filing Form 10 along with the resolution. He has also placed reliance on various decisions wherein, filing of Form 10 was treated as procedural instead of a mandatory requirement. He submitted that, it was under a bona fide situation that, assessee did not furnish Form

10. However, all the relevant information in respect of the funds set apart as tied up grant was very much available before the authorities below in the financials filed by assessee.

4.2. The Ld.DR on the contrary objected to the form being admitted at the stage. However, he could not deny the genuinity of the claim of assessee that deserves to be examined.

We have perused the submissions advanced by both sides in light of the records placed before us.

5. Admittedly, for AY 2018-19, the assessee did not furnish Form10 before Ld.AO/Ld.CIT(A). Though, we do not agree with the arguments advanced by Ld.Counsel that filing of Form 10 is mere procedure to be followed and cannot be considered to be a mandatory requirement, it is noted that, the details as available in the return filed by assessee will not have the bifurcation or to that extent identify the amount that has been set apart by the assessee as tied up grant. It is, therefore, necessary for the assessee to furnish Form10 in order to identify such amount that will not fall within the ambit of Section 2(24)(iv) of the Act.

Undoubtedly, the present situation of non-filing of Form10 cannot be treated as a culpable negligence on behalf of assessee. The reason being that, assessee was under the bona fide belief that since the amount that falls within the category of tied up grant that was set apart for specific use as per the mandate of the donors cannot be considered to be an income that is available to assessee for applications of funds doing the year under consideration.

5.2. The Ld.Counsel has placed reliance on the decision of Hon’ble Bombay High Court in the case of Sitaldas K. Motwani vs. DGIT (supra), wherein it was held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay.

5.3. In the application seeking condonation of delay, assessee has also placed reliance on the decision of Hon’ble Kerala High Court in the case of Pala Marketing Co-operative Society Ltd. (supra), wherein the Hon’ble Kerala High Court held that Board should condone delay if failure to condone delay causes genuine hardship to assessee, no matter whether delay is meticulously explained or not. He is also placed reliance on the decision of Hon’ble Bombay High Court in the case of Sanchit Software & Solutions (P.) Ltd. vs. CIT (supra), wherein it was held that in any civilized system, the assessee is bound to pay the tax which he is liable under the law to the Government. The Government, on the other hand, is obliged to collect only that amount of tax which is legally payable by an assessee.

Admittedly, the genuineness of the trust has never been douted by the authorities below. Under such circumstances genuine hardship will be caused to the assessee in the event the delay is not condoned. It is also noted that there is no malafide intention on behalf of assessee in not filing the present appeal before the Ld.CIT(A), within the period of limitation. Nothing to establish any such intention was filed by the revenue before this Tribunal. In our opinion there was sufficient cause for condoning the delay as observed by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 in support of his contentions.

5.5. We refer to the Third Member decision of Hon’ble Chennai, ITAT in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein it was held that "when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay".

5.6. At this juncture, it is also necessary to ascertain whether there was excessive or inordinate delay in the present facts of the case. Hon’ble Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. Reported in 153 ITR 596 considered a situation of condonation of delay and held that where there exists a reasonable cause, period of delay may not be a relevant factor. Hon’ble Madras High Court relying on this principle had condoned the delay of nearly 21 years.

We also refer to the decision of Co-ordinate Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. v. Jt. CIT (AT) (277 ITR 1) wherein this Tribunal condoned the delay of 180 days when the appeal was filed after the pronouncement of the Judgment of the Hon’ble Supreme Court. It was noted that, the revenue had not filed any counter-affidavit opposing the application of the assessee for condonation of delay. The Hon’ble Supreme Court under similar circumstances had noted in case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi (AIR 1978 SC 537) held that non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause to condone the delay.

5.8. In the present facts of the case, we note that no such affidavit has been furnished by the revenue countering the condonation application of the assessee. At this juncture, we also take assistance and support from the observation of Justice Krishna Iyer wherein he has quoted at various occasion while dealing with technicalities that "any interpretation that alludes substantive justice is not to be followed and that substantive justice must always prevail over procedural technicalities". Similar is the observation by Hon’ble Supreme Court in the case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471.

5.9. Based on the above discussions, we direct the assessee to furnish application seeking condonation of delay in filing Form 10 for assessment year 2018-19 before the CBDT which shall be considered by the board having regard to the discussion hereinabove. The Ld.AO thereafter will consider the claim of assessee in accordance with law.

In respect of assessment year 2017-18, as the assessee had filed Form 10 along with the Board Resolution before the Ld.CIT(A), the same is directed to be considered by Ld.AO in accordance with law. In the interest of justice, we remit this issue to the Jurisdictional Assessing Officer (JAO) with a direction to consider the claim of assessee for both the years under consideration, in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee.

Accordingly, grounds raised by assessee stand partly allowed for statistical purposes.

In the result, appeal filed by assessee stands at for statistical purposes.

Order pronounced in the open court on 29/12/2025