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Facts
The assessee, a charitable trust, claimed exemptions under sections 11, 10(34), and 10(35) of the Income Tax Act. The Assessing Officer reopened the assessment, disallowed exemptions under sections 10(34) and 10(35) due to alleged violation of Section 13(1)(d), and also disallowed exemption under Section 11. The First Appellate Authority partially allowed the appeal, holding that exemptions under sections 10(34) and 10(35) were allowable prior to AY 2015-16, and the investment in Tata Sons Ltd. was bonus shares, thus not violating Section 13(1)(d). The appeal then went to the tribunal.
Held
The Tribunal upheld the First Appellate Authority's decision regarding the allowability of exemptions under Sections 10(34) and 10(35) prior to AY 2015-16, considering the effective date of cancellation of registration. For later AYs, it was held that the assessee could not claim exemption under Section 11 as the registration was cancelled effective from March 20, 2015. However, the Tribunal allowed the assessee's claim for deduction under Sections 80G and 80GGA, relying on previous coordinate bench decisions.
Key Issues
Whether the assessee, a charitable trust, is eligible for exemptions under Sections 10(34), 10(35), and 11, and deductions under Sections 80G and 80GGA, considering the cancellation of its registration and its investment activities.
Sections Cited
13(1)(d), 10(34), 10(35), 11, 164(2), 12A, 11(7), 80GGA, 80G, 13(2)(h)
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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI NARENDRA KUMAR BILLAIYA
O R D E R Per Saktijit Dey, Vice President: Captioned appeals relating to the same assessee arise out of separate orders of learned First Appellate Authority pertaining to Assessment Years (AYs) 2008-09, 2010-11, 2013-14, 2014-15, 2015-16, 2016-17 and 2017-18. Except which is by the assessee, rest of the appeals are by the Department. (Revenue’s appeal) A.Y. 2008-09 2. Grounds raised by the Department are as under:-
1. "1.Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in allowing the assessee appeal despite the fact that there is violation of provisions of section 13(1)(d) of the I.T. Act because of the investment by the Trust in prohibited mode of investment that it would lead?"
2. Whether, 1 on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in allowing the assessee appeal despite the fact that assessee cannot claim alternative exemption under section 10(34/35/38) because section 10(34/35/38) does not deal with income derived from property held under trust. Clearly in this case, section 164(2) is attracted" 2. "
Whether the Ld.CIT(A) is justified in ignoring that the investment made by the assessee in the shares of Tata Sons Ltd. is in clear violation of the provisions of the Section 13(1)(d) of the Income Tax Act, 1961 and ignoring the decision of Hon'ble Supreme Court in the case of Bharat Diamond Bourse, (259 ITR 280), wherein, in similar circumstances the complete denial of exemption u/s 11 of the Act. was upheld?"
3. The assessee is a Charitable Trust registered under Section (u/s.) 12A of the Income Tax Act, 1961 (in short the ‘Act’). In the return of income filed by the assessee for the assessment year under dispute, the assessee claimed exemption u/s. 3 ITA 2483 to 2486/Mum/2025 ITA 2475, 3441 and 3442/Mum/2025 Tata Social Welfare Trust, 11 of the Act. Additionally, the assessee also claimed exemption u/s. 10(34) and 10(35) of the Act in respect of dividend income and income from units. While completing the original assessment, the Assessing Officer (AO) allowed assessee’s claim. Subsequently, assessment was reopened u/s. 147 of the Act on the reasoning that claim of exemption u/s. 10(34) of the Act has been wrongly allowed. While completing the assessment u/s. 143(3) r.w.s. 147 of the Act, the AO not only disallowed assessee’s claim of exemption u/s. 10(34) and 10(35) of the Act but he also disallowed assessee’s claim of exemption u/s. 11 of the Act alleging violation of condition of Section 13(1)(d) of the Act. Against the assessment order so passed, assessee preferred an appeal before the First Appellate Authority. After considering the submissions of the assessee, in the context of facts materials on record, learned First Appellate Authority held that amendment to Section 11 of the Act debarring claim of exemption u/s. 10(34) and 10(35) of the Act was brought to the statute with insertion of sub section 7 to 11 of the Act w.e.f. A.Y. 2015-16. Thus, he held that prior to A.Y. 2015-16, assessee’s claim of exemption u/s. 10(34) and 10(35) of the Act cannot be disallowed. In so far as violation of conditions of Sections 13(1)(d) and 13(2)(h) of the Act for disallowing claim of exemption u/s. 11 of the Act, learned First Appellate Authority found that the so-called investment of Rs.21,96,667/- in ordinary shares of Tata Sons Ltd. is nothing but accretion of bonus shares, which is exempted under Section 13(1)(d) of the Act. Accordingly, he allowed assessee’s claim of exemption u/s. 11 of the Act.
4 ITA 2483 to 2486/Mum/2025 ITA 2475, 3441 and 3442/Mum/2025 Tata Social Welfare Trust,
We have considered rival submissions and perused materials on record. In so far as claim of exemption u/s. 10(34) and 10(35) of the Act in respect of dividend income and income from units, the issue is squarely covered by the decision of the Coordinate Bench in case of Tata Social Welfare Trust vs. ITO (Exemption), ITA No. 3079/Mum/2018. Respectfully following the decision of Coordinate Bench, we uphold the order of learned First Appellate Authority on the issue. In so far as alleged violation of Section 13(1)(d) and 13(2)(h) of the Act are concerned, as could be seen from the order of learned First Appellate Authority, the so-called investment in shares is nothing but accretion of bonus shares, hence, not hit by the provisions of Section 13(1)(d) of the Act. In view of the aforesaid, we do not find any infirmity in the decision of learned First Appellate Authority.
In the result, appeal is dismissed.
In view of our decision, the application filed by the assessee under Rule 27 of Income Tax (Appellate Tribunal) Rules, (1963) having become infructuous is not entertained.
(Revenue’s appeal) A.Y. 2010-11 7. Grounds raised in the appeal are identical to decided in the earlier part of the order. Decision taken therein by us will apply mutatis mutandis to this appeal also. Hence, appeal is dismissed.
5 ITA 2483 to 2486/Mum/2025 ITA 2475, 3441 and 3442/Mum/2025 Tata Social Welfare Trust, (Revenue’s appeal) A.Y. 2013-14 8. Grounds raised in the appeal are identical to decided in the earlier part of this order. Decision taken therein by us will apply mutatis mutandis to this appeal also. Hence, appeal is dismissed. ITA No. 2486/Mum/2025 (Revenue’s appeal) A.Y. 2014-15
9. Grounds raised in the appeal are identical to ITA No. 2483/Mum/2025 decided in the earlier part of this order. Decision taken therein by us will apply mutatis mutandis to this appeal also. Hence, appeal is dismissed. ITA No. 2475/Mum/2025 (Assessee’s appeal) A.Y. 2015-16
10. Grounds raised by the assessee are as under:
1. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ["Ld. CIT(A)' erred in affirming the Learned Assessing Officer's ['Ld. AO' rejection of the Appellant's claim u/s, 10(34) and 10(35) of the Income Tax Act, 1961 ('Act') on the ground that the Appellant's registration was in force during the relevant previous year.
2. On the facts and circumstances of the case and in law, the Ld. CTT(A) erred in upholding the order of the Ld. AO holding that the entire income of the Appellant is chargeable to tax at the maximum marginal rate on account of alleged violation of sections 13(1)(d) and 13(2)(h) of the Act.
3. Without prejudice to Ground 1 and 2 above, if the Ld. CIT(A) was of the opinion that the Appellant's registration was still in force, the Ld. CIT(A) ought to have granted the Appellant the benefit of section 11 and 12 of the Act.
4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the order of the Id. AO holding that deduction u/s 80GGA of the Act is not available to the Appellant as the same has not been claimed in the income tax return.
6 ITA 2483 to 2486/Mum/2025 ITA 2475, 3441 and 3442/Mum/2025 Tata Social Welfare Trust,
5. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the order of the Ld. AO restricting the deduction u's 80G of the Act is restricted to 10% of the total income.” 11. In Ground No.1, the assessee has challenged the denial of exemption claimed u/s. 10(34) and 10(35) of the Act. 12. Briefly stated, the assessee filed its return of income for the impugned assessment year in the Status of Association of Persons (AOP) claiming exemption u/s. 10(34) and 10(35) of the Act in respect of dividend income and income from units. In course of assessment proceeding, the AO observed that the assessee, though, is a Charitable Trust and should have filed its return of income in ITR-7, however, it has filed its return of income in ITR-5 without claiming any exemption u/s. 11 of the Act. In response to query raised by the AO, the assessee submitted that it has surrendered its registration u/s. 12A of the Act. Hence, has not claimed any exemption u/s. 11 of the Act. The AO, however, did not accept the claim of the assessee. He observed, since the assessee was granted registration u/s. 12A of the Act by the Principal Commissioner of Income Tax, he is the competent authority, who can cancel the registration. Assessee cannot suo motu surrender the registration granted u/s. 12A of the Act. On such reasoning, the AO disallowed assessee’s claim of exemption u/s. 10(34) and 10(35) of the Act. Having held so, he did not even grant exemption u/s. 11 of the Act alleging violation of Section 13(1)(d) of the Act. Against such decision of the AO, assessee preferred an appeal before the First Appellate Authority. While deciding the appeal, learned First Appellate Authority
7 ITA 2483 to 2486/Mum/2025 ITA 2475, 3441 and 3442/Mum/2025 Tata Social Welfare Trust, observed that though the assessee had surrendered its registration u/s. 12A of the Act, however, PCIT had cancelled the registration vide order dated 31.10.2019. He further observed that while deciding the appeal of the assessee, the Tribunal has held that the cancellation of registration u/s. 12A of the Act shall take affect from 20.03.2015. Accordingly, the First Appellate Authority observed that since assessee’s registration u/s. 12A of the Act was cancelled w.e.f. 20.03.2015, the assessee had valid registration u/s. 12A of the Act up to 19.03.2015. Hence as per amended provision of Section 11(7) of the Act, the assessee cannot avail exemption u/s. 10(34) and 10(35) of the Act. Accordingly, he upheld the disallowance of exemption claimed u/s. 10(34) and 10(35) of the Act.
We have considered rival submissions and perused the materials on record. While deciding identical issue in case of DCIT vs. Jamsetji Tata Trust in & 2058/Mum/2025, the Coordinate bench had an occasion to deal with an identical issue. While deciding the issue, the Coordinate Bench in order dated 08.08.2025 has held as under:
“8. Before us, the ld. D/R placed strong reliance on the assessment order and the ld. Counsel for the assessee reiterated what has been stated before the lower authorities and drew our attention to the order of the Co- ordinate Bench in the case of Jamsetji Tata Trust in wherein the Co-ordinate Bench drawing support from the decision of the Mumbai Bench in the case of Navajbai Ratan Tata Trust vs. PCIT in wherein the Co-ordinate Bench held as under:- “Our conclusions: 68. In view of the above discussions, as also bearing in mind the entirety of the case, we are of the considered view that the impugned order of cancellation of registration granted to the assessee under section 12A
8 ITA 2483 to 2486/Mum/2025 ITA 2475, 3441 and 3442/Mum/2025 Tata Social Welfare Trust, must be held to be effective from the date on which the hearing on first show-cause notice was concluded and the show cause notice issued by the Commissioner was formally acquiesced by the assessee in the said hearing, i.e., 20' March 2015, since, without disposing of the said matter, the Commissioner, or his successors, could not have started other parallel proceedings for cancellation of registration obtained under section 12A. The registration having been "obtained" under section 12A was in the nature of a benefit to the assessee, and it was, therefore, entirely at the option of the assessee. In our considered view, an assessee unwilling to avail the "benefit" of registration "obtained" under section 12A cannot be, directly or indirectly and by actions or by inactions, compelled by the revenue authorities, to continue with the said registration "obtained' by the assessee, particularly when it pertained to the registration obtained in a period prior to the insertion of section 12AA. The present cancellation of registration under section 12A must, therefore, be held to be effective from 20th March 2015. To this limited extent, we uphold the plea of the assessee.
We have noted that many other peripheral issues, with regard to the conduct of the assessee trust and compliance with the statutory provisions under section 11 to 13, are raised in the course of the impugned proceedings. In our humble understanding, there is no need to deal with these aspects so far as our adjudication, on the core issue requiring our adjudication in this appeal, is concerned. All these issues so raised by the revenue authorities are left open for adjudication at the appropriate stage such as in the assessment, or any other related, proceedings, if and so necessary. Our observations hereinabove have no bearing, or should be construed as having any bearing, on these issues.
The admission of additional ground of appeal
is also an academic issue in the light of the above conclusions arrived by us, and there is no need to deal with that aspect of the matter either. As we have decided this appeal on the short issue about the date from which the impugned order must be held to be effective, we refrain from dealing with all other issues, including the additional ground of appeal, at this stage. There are many other facets of arguments advanced before us and the grievances raised before us. However, we see no need to deal with all these aspects of the matter at this stage.
6. We see no reasons to take any other view of the matter than the view so taken by the coordinate bench in the case of Navajbai Ratan Tata Trust vs PCIT (Supra). These observations will apply mutatis mutandis in the present case as well. Respectfully following the same, we hold that the impugned order cancelling registration granted to the assessee trust will have effect from the date on which hearing, on the first show cause notice
9 ITA 2483 to 2486/Mum/2025 ITA 2475, 3441 and 3442/Mum/2025 Tata Social Welfare Trust, requiring the assessee to show cause as to why registration under section 12A not be cancelled, and the assessee formally acquiesced to the said notice 10.03.2015, i.e on 20th March 2015. 9. As no distinguishing decision has been brought to our notice, respectfully following the decision of the Co-ordinate Bench (supra), we decline to interfere with the findings of the ld. CIT(A).”
The ratio laid down by the Coordinate bench, as reproduced above, clearly applies to the issue at hand. Thus, respectfully following the decision of the Coordinate Bench, we hold that assessee’s registration u/s. 12A of the Act having been cancelled in F.Y. 2014-15. The assessee could not have claimed exemption u/s. 11 of the Act. Thus, assessee’s claim of exemption u/s. 10(34) and 10(35) of the Act is admissible. Accordingly, we direct the AO to allow assessee’s claim of exemption. Ground No.1 is allowed.
In view of our decision in Ground No.1, Ground Nos. 2 and 3 have become academic, hence, kept open.
In Ground Nos. 4 and 5, the assessee has raised the issue of rejection of claim of deduction u/s. 80GGA and 80G of the Act respectively. 17. We have considered rival submissions and perused the materials on record. Identical issue came up for consideration before the Coordinate Bench in case of ACIT vs. Nawajbhai Ratan Tata Trust in ITA No. 3581/Mum/2025. In order dated 11.09.2025, while deciding the issue, the Coordinate bench has held as under:
“5. Insofar as Ground Nos. 2 & 3 are concerned, while scrutinizing the return of income, the AO noticed that the assessee has claimed deduction u/s 80G at Rs. 16,93,07,443/- and u/s 80GGA Rs.29,79,92,156/-. These deductions were claimed in the computation of income by the assessee
10 ITA 2483 to 2486/Mum/2025 ITA 2475, 3441 and 3442/Mum/2025 Tata Social Welfare Trust, but in the return of income, the assessee has claimed deduction u/s 80G of the Act only for which the assessee furnished necessary proof. However, as per the provisions of Section 80G(4), the donation made in excess of credits of sums in respect of deduction has to be allowed u/s 80G of the Act. As mentioned hereinabove, in the computation the assessee claimed deduction u/s 80GGA of the Act but in the return of income, only deduction u/s 80G of the Act was claimed. The AO accordingly rejected the claim of deduction u/s 80GGA of the Act.
6. When the matter was agitated before the ld. CIT(A), the ld. CIT(A) was of the opinion that since there is no column in the return in ITR-V for claiming deduction u/s 80GGA of the Act, therefore such deduction could not be claimed by the assessee due to this technical reason and accordingly directed the AO to allow the claim subject to his satisfaction of other conditions laid down in this regard.
We find that similar difficulty arose and was considered by the Coordinate Bench in the case of RD Tata Trust in ITA No. 4075/Mum/2023. The relevant findings read as under:- “09. We have carefully considered the rival contentions and perused the orders of the lower authorities. We find that the assessee is a public trust registered under the Bombay Public Trust Act, 1950, originally registered under Section 12A of the Act on 10th December, 1990 but subsequently, it surrendered its registration on 26th February, 2015, as it did not want to claim any benefit under Section 11 of the Act. The assessee has earned interest income of ₹247,23,301/-. Out of this interest income, it claimed deduction of ₹1,42,033/- under 80G of the Act and ₹1,27,02,000/- under Section 80GGA of the Act. It was stated that as no separate column was available in ITR filed for section 80GGA of the Act, the assessee clubbed both this deduction together and accordingly, restricted the taxable income to ₹ nil. In Page | 8 RD Tata Trust; A.Y. 2017-18 the computation of total income file during the course of assessment proceedings, the assessee claimed deduction under Section 80GGA of the Act of ₹1,27,02,000/- and also claimed deduction under Section 80G of the Act of ₹1,42,33,000/-. The deduction under Section 80G of the Act was made by the assessee as it donated ₹1,42,33,000/- to Tata Institute of Social Sciences, Deonar, Bombay which is approved university or educational Institution by prescribed authority as per notification dated 15th December, 1993. Therefore, the deduction under Section 80G of the Act was not restricted to 10% of the gross total income as deduction granted to the specified entities and therefore, 50% of the above amount was allowed. The learned CIT (A) has restored the matter back to the file of the learned Assessing Officer to grant deduction to the 11 ITA 2483 to 2486/Mum/2025 ITA 2475, 3441 and 3442/Mum/2025 Tata Social Welfare Trust, assessee under Section 80G of the Act to the entities registered under Section 80G(3)(a)(iiif) of the Act after verification. Thus, according to him on perusal of Section 80G(4) of the Act, it does not restrict the donation given to such entity by restricting it to the 10% of the total income.
Respectfully following the decision of the Co-ordinate Bench (supra), we do not find any error or infirmity in the directions of the ld. CIT(A). Ground Nos. 2 & 3 are accordingly dismissed.”
Facts being identical, respectfully following the decision of the Coordinate Bench, we allow assessee’s claim u/s. 80G and 80GGA of the Act. Hence, grounds are allowed.
18.1 In the result, appeal is party allowed.
(Revenue’s appeal) A.Y. 2016-17 & 2017-18 19. Grounds raised in both these appeals are common except variance in figure. Hence, for the sake of brevity, grounds for A.Y. 2016-17 are reproduced hereunder:
“1. "Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) is erred in treating the assessee as an Association of Persons (AOP) instead of a Charitable Trust for A.Y. 2016-17, despite the fact that the registration u/s 12A had not been cancelled by the Competent Authority, and remained in force during the relevant period. " 2. "Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) is erred in allowing deduction u/s 80GGA of Rs. 1,45,21,000/-, ignoring the fact that the assessee had not claimed such deduction in the return of income and the claim was raised for the first time during appellate proceedings. No revised return was filed and hence such a claim is not admissible under the law". 3. "Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) is erred in directing the AO to allow deduction u/s 80G beyond the statutory limit prescribed under Section 80G(4) of the Act. As per Section 80G(4), the aggregate deduction cannot exceed 10% of Gross Total Income, and the restriction made by the AO was in accordance
12 ITA 2483 to 2486/Mum/2025 ITA 2475, 3441 and 3442/Mum/2025 Tata Social Welfare Trust, with law" 4. "Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) failed to appreciate that the assessee's status as a Charitable Trust remains legally intact, and the assessee cannot unilaterally surrender its registration u/s 12A without a formal order of cancellation by the Competent Authority under the Income Tax Act." 5. "The appellant craves the leave to add, substitute, modify, alter, delete or amend all or any ground of appeal either before or at the time of hearing."
20. We have considered rival submissions and perused the materials on record. While deciding assessee’s appeal in ITA 4156/Mum/2024 (Supra) we have decided the issues raised in these grounds in favour of the assessee and against the Department. Therefore, following our decision therein, we dismissed the grounds.
21. In the result, appeals are dismissed.
22. To sum up, Revenue’s appeals are dismissed and assessee’s appeal is partly allowed.
Order pronounced in the open court on 10/10/2025.