ST. AUGUSTINES SCHOOL TRUST,DARJELING vs. I.T.O.(EXEMP), WARD - 2(2),, SILIGURI

PDF · subscribers
ITA 3095/KOL/2025Status: DisposedITAT Kolkata14 July 2026AY 2018-201911 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the purpose of purchase/investment in movable and immovable properties is concrete and specific, especially for a charitable trust running an educational institution with ongoing development projects. The Tribunal found that the lack of detailed plans in Form 10 should not be fatal to the exemption claim.

What were the facts?

The assessee, a charitable trust, claimed exemption under Section 11 by accumulating Rs. 1,10,00,000/- for purchasing/investing in movable and immovable properties. The Assessing Officer disallowed the exemption, deeming the purpose vague and not specific enough. The CIT(A) upheld this disallowance.

What were the issues?

Whether the accumulation of income by a charitable trust for purchasing/investing in movable and immovable properties is specific enough to qualify for exemption under Section 11(2) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 11,Section 11(2),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No.3095/KOL/2025 Assessment Year: 2018-19 St. Augustines School Trust......................................................................................Appellant C/O. Subash Agarwal & Associates, Advocates, Siddha Gibson, 1, Gibson lane, Suite 213, 2nd Floor, Kolkata- 700069 [PAN No. AACTS1480Q] Vs. I.T.O.(Exemp), Ward – 2(2)....…………..…………………....……….Respondent Aayakar Bhawan, Matigara, Paribahan Nagar, Siliguri, West Bengal- 734101 Appearances by: Siddharth Agrawal, Adv., appeared on behalf of the Appellant. Sanat Kumar Raha, CIT(DR),appeared on behalf of the Respondent. Date of concluding the hearing : June 29, 2026 Date of pronouncing the order : July 14 ,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee is directed against the order dated 21.11.2025 of the National Faceless Appeal Centre (NFAC), passed under Section 143(3) of the Assessment Year 2018-19 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

2.

The brief facts of the case of the assessee is that assessee being a charitable trust filed its return of income for A.Y. 2018-19

ITA No.3095/Kol/2025 Assessment Year- 2018-19 on 22.09.2018 declaring NIL income after claiming exemption u/s 11. The case was selected for complete scrutiny under CASS on the issue of Accumulation of income by trust and statutory notices under sections 143(2) and 142(1) were issued calling for detailed information, to which the assessee made submissions through e-proceedings. During assessment, it was noted that the assessee had filed Form No.10 claiming accumulation of Rs. 1,10,00,000/- under section 11(2) for the purpose of Purchase/Investment in movable and immovable properties which the Assessing Officer held to be vague, general, and not aligned with the statutory requirement of specifying a concrete, definite project necessitating long-term accumulation. Relying on judicial precedents, the AO observed that the assessee failed to earmark any specific purpose out of its multiple objects and that such a general-purpose accumulation defeats the scheme and distinction between sections 11(1)(a), 11(2), and 11(3A). Considering the accumulation to be non-specific, unreasonable, and mechanically claimed, the AO disallowed the exemption under section 11(2) and brought the accumulated surplus of Rs. 1,10,00,000/- to tax. The assessment was completed under section 143(3) r.w.s. 144B at a total income of Rs. 1,10,00,000/-

ITA No.3095/Kol/2025 Assessment Year- 2018-19 Aggrieved by the said order assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been dismissed.

Being aggrieved by and dissatisfied the assessee preferred appeal before us.

3.

The Ld. AR has challenged the very impugned order thereby submitting that Ld. CIT(A) erred in law and on facts in upholding the disallowance of Rs. 1,10,00,000/- being the amount accumulated u/s 11(2). The ld. AR submits that ld. CIT(A) as well as ld. Assessing Officers was not justified in upholding that the purpose satisfied in form no. 10 was generic and not specific concrete and precise the further submission of the AR is that the ld. AO relied upon certain decision which are not applicable in the present case for justifying the disallowance. The ld. AR filed following documents which were filed before the lower authorities in order to substantiate his case.

SI. No 1. ITR Acknowedgement, A.O & CIT(A)

ITA No.3095/Kol/2025 Assessment Year- 2018-19 Computation of income, Financial Statements for the Assessment Year 2. Form 10 and acknowledgement of A.O & CIT(A) Form 10 Form 10B and acknowledgement A.O & CIT(A) of Form 10B Ledger Accounts Evidencing ITAT Construction, Renovation and Development Work (FY 2021-22 & 2022-23) (a) Tennis Court – Roof Construction Work (FY 2021-22) (b) Land & Building – Classroom Construction (FY 2022-23) (c) Primary Block – Construction & Renovation Work (FY 2022-23)

ITA No.3095/Kol/2025 Assessment Year- 2018-19 Contrary to that Ld. DR supports the impugned order.

4.

Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order we find that assessee is a charitable trust filed its return of income declaring NIL income after claiming exemption u/s 11.The Ld. AO observed that the assessee failed to earmarked in specific purpose out of his multiple objects and that such a general purpose accumulation defeats the scheme and distinction between section 11(1)(a), 11(2) and 11(3A). The Ld. AO in its order has held that there must be specific object that the charitable trust must designate, out of its permitted objects for which such amount has to be set apart.In the present case we find that one specific purpose has been mentioned in form No. 10 which is purchase or investment in movable and immovable properties. It is pertinent to mention here that assessee is a charitable trust runs an educational institution and is already in the process of developing new school block which clearly involves heavy outlay funds and cannot be accomplished from the available funds during the year. The submission of the AR is that huge accumulation is only to complete the project of

ITA No.3095/Kol/2025 Assessment Year- 2018-19 developing the new school block which is clearly a movable property. 5. Audited financials of the trust reveals that the organization have already spent more than crore Rupees and it is still under the process of further development. We further find that revenue does not dispute the fact that all the three purposes specified by the assessee in form no. 10 are for achieving the objects of the trust and that the purposes as well as the objects are both charitable. Moreover purchase/investment in movable and immovable properties is clearly a definite and concrete purpose in itself and it could have been considered as specific in nature. It is a fact that construction of new school block involves long term accumulation to fulfil this project in pursuits of the main object which is education. Lack of declaration or details in form no. 10 regarding specific purpose cannot be fatal to the exemption claimed u/s 11(2) of the Act. The ld. AR brought a decision of the Gujarat high Court passed in CIT Bochasanwasi Shri Akshar purshottamPublic Charitable Trust v. Bochasanwasi Shri Akshar purshottam Public cable Trust. Hon’ble Gujarat High Court has held thus:-

ITA No.3095/Kol/2025 Assessment Year- 2018-19 8. Section 11(2) of the Act provides that eighty five percent of the income which is not utilized by the Trust for charitable or religious purposes would not be included in the total income of the previous year of receipt of the income provided the conditions laid down in clause (a) to (c) contained therein are satisfied. Clause (a) in particular, which is applicable, provides that such person furnishes the statement in the prescribed form and in prescribed manner to the Assessing Officer staying the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart which shall in no case exceed five years. Undoubtedly therefore, the statement of purpose for which the income is being accumulated or set apart is one of the requirements which must be satisfied before the assessee can avail the benefit under sub-section (2) of section 11 of the Act. However, that by itself would not mean that any inaccuracy or lack of full declaration in the prescribed format by itself would be fatal to the claimant. The prime requirement of this clause is of stating of the purpose for which the income is being accumulated or set apart. In the present case, we are prepared to accept the Revenue's stand

ITA No.3095/Kol/2025 Assessment Year- 2018-19 that the declaration made in Form 10 by the assessee was not sufficient to fulfill this requirement. However, as noted, during the course of assessment proceedings, the Assessing Officer called upon the assessee to explain the position in response to which, the assessee in detail pointed out background under which the board of trustees had met, considered the material and eventually passed a formal resolution setting apart the funds for the ongoing hospital projects of the Trust and for modernization of the existing hospitals. There was thus a clear statement made by the assessee setting out the purpose for which the income was being set apart. We therefore do not find any error in view of the Tribunal. Tax Appeals are dismissed. It is pertinent to mention here that judgment passed by the Gujarat High Court has been confirmed by the Apex High Court as the SLP filed by the department has been dismissed (reported in 2019-105 taxmann.com97 Supreme Court)

ITA No.3095/Kol/2025 Assessment Year- 2018-19 6. Keeping in view the discussion made above and considering the facts of the case we find substance in the arguments of the AR is that nearly because more than one purpose has been specified and details about the plans of such expenditure has not been given, the same would not be sufficient to deny the benefits u/s 11(2) of the Act to the assessee as long as the objects of the trust are charitable in character and purpose mentioned in Form No. 10 are for achieving the objects of the trust. In the result, appeal of the assessee is hereby allowed.

Kolkata, the 14th July , 2026.

Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member

DC Dated: 14.07.2026.

ITA No.3095/Kol/2025 Assessment Year- 2018-19 Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Assistant Registrar, Kolkata Benches

ITA No.3095/Kol/2025 Assessment Year- 2018-19

More judgments on Section 11

All 7,190 judgments and leading authorities on Section 11 →

Recent GST High Court judgments

Search GST case law →