SHRI CHAMPABERAJA MITRA MANDAL,JAMNAGAR vs. INOCME TAX OFFICER, EXEMPTION WARD 2, RAJKOT, RAJKOT

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ITA 573/RJT/2026Status: DisposedITAT Rajkot22 June 2026AY 2019-206 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance by the CPC was arbitrary and unsustainable. It found that the assessee had complied with the conditions for exemption under Section 11, including filing Form 10 for accumulation within the due date.

What were the facts?

The assessee, a trust engaged in educational activities, claimed exemption under Section 11 for AY 2019-20. The CPC disallowed the claimed exemption of Rs. 6,76,072/- which included application of income, statutory exemption, and accumulated income.

What were the issues?

Whether the disallowance of exemption claimed by the trust under Section 11 was justified, and if the assessee had complied with the conditions for claiming exemption and accumulation of income.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A,Section 11(1),Section 11(2),Section 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before: Dr. Arjun Lal Saini & Shri Sonjoy Sarma

For Appellant: Shri Sagar Shah, Ld. AR
For Respondent: Shri Anadi Dixit, Ld. Sr. DR
Hearing: 10/06/2026

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट। In The Income Tax Appellate Tribunal, Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member And Shri Sonjoy Sarma, Judicial Member

आयकरअपीलसं./ITA No. 573/Rjt/2026 (िनधा�रणवष�/Assessment Year: (2019-20) Shri Champaberaja Mitra Mandal Income Tax Officer, Exemption B-48, GIDC, Shankar Tekri Vs. Ward 2, Rajkot Udhyognagar, Jamnagar Gujarat IT-Office, New Aayakar Bhawan, 361004 Vatiaka, Rajkot, Jamnagar Gujarat 360001 �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AACTS1426L (अपीलाथ�/Assessee) (��यथ�/Respondent) Assessee by : Shri Sagar Shah, Ld. AR Respondent by : Shri Anadi Dixit, Ld. Sr. DR

Date of Hearing : 10/06/2026 22/06/2026 Date of Pronouncement :

ORDER Per, Dr. Arjun Lal Saini, AM: By way of this appeal, the assessee has challenged correctness of the order dated 20.02.2026 passed by the learned Commissioner of Income Tax ( Appeals), [ in brief ld. CIT(A)], in the matter of rectification order under section 154 of the Income Tax Act 1961( for short ‘the Act’), for the assessment year 2019-20.

ITA No. 573/Rjt/2026 [ AY 2019-20] Shri Champaberaja Mitra Manda 2. The Grievances raised by the assessee, are as follows:

1.

On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) and the Centralised Processing Unit, Bengaluru have erred both in law and on facts in passing an order u/s 154 of the Income Tax Act, 1961, thereby disallowing the exemption claimed by the assessee u/s 11 amounting to Rs. 6,76,072/- for A.Y. 2019-20. The authorities have further failed to appreciate that the assessee has complied with all conditions prescribed u/s 12A of the Act to avail exemption u/s 11, including valid registration u/s 12AA, maintenance of proper books duly audited by independent auditor along with filing Form No. 10B and Form No. 10 within prescribed time for accumulation of income. Notwithstanding the aforesaid compliance and submission of all relevant documents before the Ld. CIT(A), the disallowance is contrary to the provisions of law and the facts on record, and the exemption so claimed ought to be allowed accordingly.

3.

Succinct facts are that assessee’s appeal under consideration, is directed against the rectification order passed under section u/s 154 of the Income Tax Act dated 06.09.2025 by the Centralized Processing Centre of the Income Tax Department Bengaluru. The assessee a trust and registered, with Charity Commissioner, dated 02.11.1995, bearing Registration no. E/1281/Jamnagar. The assessee is engaged in the activity, to establish, run and manage educational institutes. It provide assistance to schools, student hostels, and libraries, and gives books to help students. For the assessment year 2019-20 the assessee has filed an income tax return u/s 139(1) dated 27.09.2019 by declaring an income at Rs. "NIL". The assessee trust filled Form No. 10B and Form No.10 along with return of income.During the year under consideration, the trust earned income from various sources including interest, and other operational receipts. These incomes have been duly recorded in the books of account and are reflected in the audited financial statements. However, Central processing unit (CPC-AO) made the following additions:

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ITA No. 573/Rjt/2026 [ AY 2019-20] Shri Champaberaja Mitra Manda (i) Rs. 54,031/- towards application of income for charitable purposes as per section 11(1) through revenue expenditure incurred in furtherance of the trust's objects, however, this disallowed by the CPC-AO. (ii) Rs. 1,01,411/-being the statutory exemption of 15% of income allowable under Section 11(1) of the Act, however, this disallowed by the CPC-AO. (iii) Rs. 5,20,630/- being income validly accumulated for future charitable purposes in accordance with Section 11(2) of the Act, however, this disallowed by the CPC-AO.

Total disallowance comes to Rs. 6,76,072/- ( Rs. 54,031 + Rs. 1,01,411 + Rs. 5,20,630).

4.

Being aggrieved by the said order of the (CPC-AO) Assessing Officer, the assessee filed an appeal before the Ld.CIT(A), but remained unsuccessful. Therefore, assessee is left with no other alternative but to knock on the doors of the Tribunal with this appeal and praying for justice.

5.

We have carefully considered the facts of the case, the submission of the Learned Counsel for the assessee and ld DR for the Revenue and evidences on record. The ld. Counsel for the assessee argued that the assessee-trust submitted a chart before ld.CIT(A), showing total income earned by the trust during the year, which is mentioned in the following table:

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ITA No. 573/Rjt/2026 [ AY 2019-20] Shri Champaberaja Mitra Manda The assessee submitted before ld.CIT(A) proper documentary evidences including books of accounts, bills, vouchers, and audited financial statements. All expenditures were incurred for charitable purposes and are eligible for exemption under section 12 of the Act. The details of each component and supporting documents are given in the table below:

Apart from this, the assessee- trust accumulated amount to the tune of Rs. 5,20,630/-. However, ld.CIT(A) denied the exemption of 15% under section 11(1)(a) of Rs. 1,01,411/-, accumulation of Rs.5,20,630/- and amount spent for charitable purposes at Rs.54,031/-. The ld.Counsel submitted that assessee- trust is registered and eligible for exemption under section 11 & 12 of the Act, and all expenses were made as per its charitable objects. The ld. Counsel submitted that amount of Rs.54,031/-, was spent for charitable purposes and the relevant proof is in the audited books of account vide paper book page No.18, therefore, the claim of the assessee should be allowed. About the amount of Rs.1,01,411/-, Ld. Counsel stated that it is 15% of total income which should have been allowed, as statutory exemption as per the provisions of the Act. About the accumulation amount of Rs.5,20,630/-, Ld. Counsel for the assessee argued that the assessee has field the form No.10, as per the

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ITA No. 573/Rjt/2026 [ AY 2019-20] Shri Champaberaja Mitra Manda provisions of the Act, which is placed at paper book at page No.7, and also stated that it is accumulated amount as per the provisions of the Act and the relevant details are mentioned on paper book at page No.21, therefore, claim of the assessee should be allowed. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer,(CPC-AO) which we have already noted in our earlier para and is not being repeated for the sake of brevity.

6.

We have considered submissions of both the parties and noted that the assessee- trust is duly registered under the relevant provisions governing charitable institutions and is regularly assessed to income tax. For A.Y. 2019- 20, the assessee, electronically filed its return of income within the prescribed time, declaring Nil taxable income after validly claiming exemption under Section 11 of the Income-tax Act, 1961, in respect of its total income of Rs. 6,76,072/-.Vide rectification order passed under Section 154 of the Income Tax Act by CPC, Bengaluru, dated 06.09.2025, all valid claims of exemption under Section 11 of the Act, amounting to Rs. 6,76,072/- were disallowed. The said claim was denied in entirety without assigning any proper justification or valid reasons, rendering the disallowance arbitrary and unsustainable in law.We note that amount of Rs. 54,031/- is towards application of income for charitable purposes as per section 11(1) through revenue expenditure incurred in furtherance of the trust's objects, hence, it is allowable.We note that amount of Rs. 1,01,411/- is being the statutory exemption of 15% of income allowable under Section 11(1) of the Act, hence, it is allowable.We also find that amount of Rs. 5,20,630/- is being income validly accumulated for future charitable purposes in accordance with Section 11(2) of the Act. Accordingly, as per section 11(1) of the Act, the assessee is validly entitled to exemption of Rs.

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ITA No. 573/Rjt/2026 [ AY 2019-20] Shri Champaberaja Mitra Manda 54,031/- for income applied towards charitable purposes through revenue expenditure, along with permissible accumulation Rs. 1,01,411/- of 15% of total income. Further, under Section 11(2) of the Act, the assessee must file Form 10 of the Act for accumulation of income, for income not applied, for charitable or religious purpose within due date as mentioned in section 139(1) of the Act. Therefore, the assessee had furnished Form 10 by claiming accumulation amount to Rs. 5,20,630/-, on 27.09.2019 within due date i.e. 31.10.2019. Therefore, considering these facts, various additions sustained by the learned CIT( A) needs to be deleted, and accordingly we delete the same and allow the appeal of the assessee.

7.

In the result, appeal filed by the assessee, is allowed.

Order is pronounced in the open Court on 22 /06/2026.

Sd/- Sd/- [ Shri Sonjoy Sarma] [ Dr. Arjun Lal Saini ] �याियक सद�य/Judicial Member लेखा सद�य/Accountant Member राजकोट/Rajkot िदनांक/ Date: 22 /06/2026 (True Copy) Copy of the order forwarded to : 1. The assessee 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, Rajkot 6. Guard File By order

Sr. Private Secretary ITAT, Rajkot

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