DY. COMMISSIONER OF INCOME TAX(EXEMPTIONS)-2(1), MUMBAI, MUMBAI vs. SHEILA GOPAL FOUNDATION, MUMBAI

ITA 3317/MUM/2025Status: DisposedITAT Mumbai28 August 2025AY 2017-1810 pages
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What did the Tribunal hold?

The Tribunal held that the loan advanced to K. R. Foundation qualifies as an application of income under Section 11 of the Income Tax Act, 1961. The Tribunal relied on judicial precedents and CBDT Circular No. 100 dated 24.01.1973, which state that money advanced to another charitable trust with similar objects can be treated as application of income. The Tribunal noted that the assessee had offered the repaid amounts as income in subsequent assessment years. The Tribunal also observed that the departmental authorities had not questioned such claims in prior and subsequent assessment years, except for the disputed years. Regarding the Revenue's grounds concerning violations of Section 13(1)(c) and 13(2)(h) due to common trustees, the Tribunal agreed with the First Appellate Authority that none of the conditions specified in Section 13(3) applied to the assessee's case. Therefore, the Tribunal held that the provisions of Section 13(1)(c) and Section 13(2) of the Act were not applicable to deny the assessee's claim for exemption under Section 11. The issue of interest under Sections 234B and 234C was not specifically adjudicated as it was dependent on the primary issue of application of income, and the Tribunal stated that other issues raised by the assessee were kept open.

What were the facts?

This case involves 14 appeals, comprising 7 sets of cross-appeals, stemming from a consolidated order dated March 10, 2025, by the National Faceless Appeal Centre (NFAC), Delhi. The appeals pertain to assessment years 2012-13 through 2018-19. The core dispute revolves around the assessee, Sheila Gopal Foundation, a charitable trust, and the Revenue (Dy. CIT, Exemption, Circle-2). The primary issue is whether an amount of Rs. 5,12,85,353/- advanced by the assessee to another charitable trust, K. R. Foundation, can be considered as application of income for the purpose of Section 11 of the Income Tax Act, 1961. The Assessing Officer disallowed the exemption, citing that the loan is recoverable and that there was a common trustee in both trusts, violating Section 13(1)(c) read with Section 13(2)(h). The assessee argued that the repayment of loans was offered to tax in subsequent years.

What were the issues?

1. Whether the amount of Rs. 5,12,85,353/- advanced to K. R. Foundation, another charitable trust, can be considered as application of income for the purpose of Section 11 of the Income Tax Act, 1961, as argued by the assessee. The assessee contended that the payments were donations, and that aggregate sums of Rs. 2,48,00,000/- received back from K. R. Foundation were offered to tax. The assessee also argued that the sum of Rs. 2,48,00,000/- should be considered as application of income or reduced from the computation of income, and that the CIT(A) erred in holding that no evidence was filed to show repayments were offered to tax. The Revenue argued that the CIT(A) erred in allowing the appeal, ignoring that the assessee violated Section 13(2)(a) by advancing a loan to K. R. Foundation where a trustee of the assessee trust is also a trustee of K. R. Foundation. The Revenue further argued that the loan was for constructing a cultural center for revenue generation, making it commercial in nature, thus denying exemption under Section 11. The Revenue also contended that the common trustees violated Section 13(1)(c) and Section 13(2)(h) of the Act. 2. Whether the levy of interest under Section 234B and 234C of the Act is bad in law, as argued by the assessee.

Which sections of the Income-tax Act were involved?

Section 11,Section 13(1)(c),Section 13(2)(a),Section 13(2)(h),Section 13(3),Section 234B,Section 234C

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Cases cited in this judgment(3)Show list

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Heard together (2 matters)

ITA No. 3161/Mum/2025
ITA No. 3312/Mum/2025

Read from the judgment's own cause title. This page is filed under one of them.

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VP AND SHRI NARENDRA KUMAR BILLAIYA, AM 3155/Mum/2025 3156/Mum/2025 3157/Mum/2025 3158/Mum/2025 3159/Mum/2025 3160/Mum/2025 Sheila Gopal Foundation Construction House-B, 2nd Floor, 623, Linking Road, Khar (W), Mumbai-400 052 PAN/GIR No. AABTS 5672 B (Assessee) 3313/Mum/2025 3314/Mum/2025 3315/Mum/2025 3316/Mum/2025 3317/Mum/2025 3318/Mum/2025 Dy. CIT, Exemption, Circle-2, Room No. 608, 6th Floor, Cumballa Hill MTNL TE Building, Pedder Road, Dr. Gopalrao Deshmukh Marg, Cumballa Hill, Mumbai-400 026 PAN/GIR No. AABTS 5672 B (Revenue)

Appellant by Respondent by Date of Hearing Date of Pronouncement

Assessment Year 2012-13 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 Vs.

Assessment Year 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Vs. : : : : Dy. CIT, Exemption, Circle-2, Room No. 608, 6th Floor, Cumballa Hill MTNL TE Building, Pedder Road, Dr. Gopalrao Deshmukh Marg, Cumballa Hill, Mumbai-400 026 Sheila Gopal Foundation Construction House-B, 2nd Floor, 623, Linking Road, Khar (W), Mumbai-400 052 (Assessee) Shri Percy Pardiwala a/w Adv. Sanjay

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