Loading judgment…
Facts
The assessee, a registered trust, claimed deduction under Section 11 for accumulation of income. The Assessing Officer (AO) denied the claim stating discrepancies in the purpose of accumulation, lack of 12A/12AA registration, and non-compliance with investment modes under Section 11(5). The CIT(A) upheld the AO's order.
Held
The Tribunal held that the assessee is a registered trust and had filed Form 10 correctly. Investments in fixed deposits with HDFC Bank were permissible. The Tribunal found no mismatch between the stated purposes of accumulation and the trust's objects. Minor timing differences in investments were also considered acceptable.
Key Issues
Disallowance of exemption under Section 11 for alleged non-compliance with conditions for accumulation of income, including purpose, investment mode, and timing.
Sections Cited
11, 11(1)(a), 11(2), 11(5), 12A, 12AA, 143(3), 144B, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI ANIKESH BANERJEE & SHRI PRABHASH SHANKAR
O R D E R Per: Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2018-19, date of order 21.07.2025. The impugned order emanated from the order of the National E- Assessment Centre, Delhi (for brevity the ‘Ld. AO’) order passed under section 143(3) r.w.s. 144B of the Act date of order 19.04.2021.
Shree Tardeo Jain Swetamber Murti Pujak Sangh 2. The brief facts of the case are that the assessee is a Trust and during the assessment year the assessee filed the return along with Form No.10. Since the assessee is registered trust and eligible for deduction u/sec. 11 of the Act the computation of income available for accumulation is as follows: Sr. No. Particulars Amount(Rs.) a. Gross Receipts 94,21,849/- b. Less: 15% benefit u/sec. 11(1)(a) (14,13,277/-) c. Less: Application of income for purpose of (29,43,668/-) trust(Accepted by Ld. AO) d. Net Receipt available for Accumulation 50,64,903/-
During the assessment proceeding the assessee submitted all the evidence for fulfilling the substantive conditions for accumulation of 11(2) of the Act. But the Ld. AO has rejected the assessee’s claim u/sec. 11(2) for benefit of accumulation amount to Rs.75,00,000/- was duly denied on the ground that the registration certificate u/sec. 12A/12AA is not available, purpose of accumulation stated in Form No.10, differs from submission made during the assessment proceeding that is difference of the purpose mentioned in trustee and mentioned in Form No.10 is different and the investment mode is not as per section 11(5) r.w.s. 11(2) of the Act. The aggrieved assessee filed an appeal before the Ld. CIT(A). Before the Ld. CIT(A) the assessee produced the certificate of registration duly approved by the revenue u/sec. 12A/12AA of the Act. The Ld. CIT(A) considered that the assessee is a Registered Trust. But related to the purpose of accumulation is considered as difference with the object of the Trust and the Shree Tardeo Jain Swetamber Murti Pujak Sangh investment timing for accumulation of the fund, is not matching with the impugned assessment year.
The Ld. AR in argument stated that the assessee had made the investment of 50,00,000/- during the F.Y. 2017-18 related to A.Y. 2018-19 and only amount of Rs.25,00,000/- was deposited on 05.04.2018 which is beyond the impugned assessment year. All the investments are placed in HDFC Bank Ltd in fix deposits. The details of deposits with certificates are duly enclosed in the APB & a tabular chart related to investment u/sec 11(5) of the Act is as below: Date of Mode of Bank/ Amount (Rs.) Reference in Investment investment Institution Paper Book 13.06.2017 Fixed Deposit HDFC Ltd. 6,00,000/- 59 23.06.2017 Fixed Deposit HDFC Ltd. 5,00,000/- 58 25.09.2017 Fixed Deposit HDFC Ltd. 7,00,000/- 57 11.10.2017 Fixed Deposit HDFC Ltd. 5,00,000/- 56 06.10.2017 Fixed Deposit HDFC Ltd. 8,00,000/- 55 24.11.2017 Fixed Deposit HDFC Ltd. 5,00,000/- 54 28.12.2017 Fixed Deposit HDFC Ltd. 9,00,000/- 53 05.04.2017 Fixed Deposit HDFC Bank 25,00,000/- 52 Total 75,00,000/-
The Ld. AR filed a paper book comprising pages 1 to 100, which has been placed on record. The Ld. AR invited our attention to Form No. 10, wherein the auditors have specifically mentioned in Column No. 1 the purposes for which the amounts were accumulated or set apart. It was stated that a sum of Rs.50,00,000/- was accumulated for carrying out repairs to the garage and Shree Tardeo Jain Swetamber Murti Pujak Sangh common areas of the assessee-trust, with the period of accumulation ending on 31.03.2023. Further, a sum of Rs. 25,00,000/- was accumulated for the maintenance, repair, and renovation of the “Upashraya Hall,” also with the period of accumulation ending on 31.03.2023. Accordingly, it was contended that there is no mismatch between the activities of the trust and the purposes for which the funds were accumulated. The assessee also enclosed a copy of the resolution passed by the trustees, demonstrating that the accumulation was made strictly in accordance with the objects of the trust. It was further submitted that the purposes of “repair and renovation,” as well as acquisition or construction Jirnodhar of Derasaraji and Upashraya, fall squarely within the religious and charitable objects of the assessee. With regard to the validity of investments, it was submitted that the assessee has complied with the provisions of section 11(5). The Ld. AR contended that the investment of Rs. 25,00,000/- made on 05.04.2018 cannot be disregarded merely because it falls in the subsequent financial year, as the same was made immediately after the close of the previous year and, in any event, within the relevant assessment year. It was further argued that while there is a prescribed time limit for filing the prescribed form before the revenue authorities, no such specific time limit is prescribed for making the investment. The only requirement is that the investment should be made before the filing of the return of income or the prescribed form. However, the assessee’s contention was rejected by the Ld. CIT(A), who upheld the order of the Ld. AO. Being aggrieved, the assessee is in appeal before us.
The Ld. DR, on the other hand, supported the orders of the revenue authorities and submitted that the Ld. CIT(A) has made specific observations regarding the investment of accumulated funds, which are contrary to the Shree Tardeo Jain Swetamber Murti Pujak Sangh submissions of the assessee. The Ld. DR, therefore, relied upon the impugned appellate order. The relevant extract of the impugned appellate order is reproduced hereunder: “6.1 The brief facts of the case are that the appellant is a public charitable trust registered under a Trust Deed dated 13.05.1975 and has been granted registration under section 12AA of the Income Tax Act, 1961, by the Commissioner of Income Tax(Exemptions), Mumbai. For the assessment year 2018-19, the appellant filed its return of income electronically on 30.10.2018 declaring total income at Rs. NIL after claiming exemption under section 11 of the Act. The return was processed under section 143(1) and later selected for scrutiny under the CASS for the limited issue of " accumulation of income by the trust." Notices under sections 143(2) and 142(1) were issued, to which the assessee submitted written responses. After considering the same, the Assessing Officer (AO) passed an assessment order under section 143(3) r.w.s. 1448 on 19.04.2021, assessing the total income of the appellant at Rs. 64,78,181/- and disallowing exemption claimed under section 11. This assessment resulted in a tax demand of Rs.26, 10,403/-, against which the appellant has preferred the present appeal before this forum. The core issue in the case pertains to the denial of exemption under section 11 of the Act. As per the assessment order, the only activity carried out by the trust during the year under consideration was to maintain, repair, renovate the Jirnoodhar of Temple and Uppasaraya and repair for garage The AO had observed that as per Form 10 filed by appellant on the e-Filing portal, the accumulation was made to maintain, repair, renovate the Jimoodhar of Temple and Uppasaraya and repair for garage. However, during the course of assessment proceedings, the appellant stated that the accumulation of income was done for the purpose of acquiring a suitable property in the vicinity of the temple and that the trust could not find the same near its existing temple.During the course of appellate proceedings, the appellant had submitted that during the year under consideration, trust had accumulated an amount of Rs.76,00,000/- and had also e- filed form 10 within the prescribed time. It was further argued that the said amounts had been invested in Fixed Deposits with scheduled banks and units of mutual funds as prescribed in section 11(5) of the Act and the detail of which are as under: Mode of investment Date of investment Amount Investment in fix deposit with 05.04.2018 25,00,000/- HDFC Bank Investment in fix deposit with 10.04.2018 6,00,000/- Shree Tardeo Jain Swetamber Murti Pujak Sangh HDFC Bank Investment in fix deposit with 05.04.2019 35,00,000/- HDFC Bank Units of Mutual funds 15.02.2020 10,00,000/- Total 76,00,000/- These contentions of the appellant have been duly examined and are found to be devoid of merit for the reasons discussed below. Firstly, the trust was established to maintain, repair, renovate the Jimoodhar of Temple and Uppasaraya and repair for garage, but the appellant in its submission made during the course of assessment proceedings had clearly stated that the accumulation of income by trust was meant for acquiring a suitable property in the vicinity of the temple, which is not the objective of the trust for which the trust was established. Thus, the claim of the appellant stands unsubstantiated. Secondly, the contention that the funds of Rs.76,00,000/- had been invested in Fixed Deposits with scheduled banks and units of mutual funds as prescribed in section 11(5) of the Act is not acceptable because of the fact that the amount so claimed by the appellant had been invested during the FY 2018-19 & FY 2019-20 and the same has nothing to do with the proceedings related to the FY 2017-18 relevant to AY 2018-19, which is quite clear from the table above. The appellant can not be given any benefit in the present AY as no such investments are made during this year so as to fall within the purview of Section 11(5) of the Income Tax Act, 1961. In view of the foregoing discussions, it is held that the benefit of exemptionunder sections 11 and 12 was rightly denied by the AO. The appellant has failed to substantiate its claim of having applied the surplus for charitable purposes or complied with other preconditions under section 11(1)(a) or 11(2) of the Act. No infirmity is found in the conclusions drawn by the Assessing Officer.”
The Ld. AR further argued and contended that the same issue was duly decided by the Coordinate Bench of ITAT, Mumbai ‘G’ Bench in case of Senior Citizen Santacruz (Paschim) Sanstha vs CIT(A) in date of pronouncement 19.01.2026. the relevant paragraphs 5 and 5.1 are reproduced as below:
Shree Tardeo Jain Swetamber Murti Pujak Sangh “5. Admittedly, there is no dispute in respect of the amount that has been accumulated by assessee u/s 11(2) of the Act. The only reason to deny the claim is that in Form10, assessee did not specifically mention the purpose for which the accumulation of funds was made. Instead assessee mentioned it as a general purpose of "charitable in nature". Undoubtedly, the purpose for which income is being accumulated or set apparat is one of the requirement which must be satisfied by assessee before availing the benefit u/s 11(2) of the Act. However, that by itself would not mean any inaccuracy or lack of fulfillment of the declaration in Form 10. Moreso, when Ld.AO during assessment proceedings called for relevant information in respect of which the accumulation of unutilized funds were set apart and assessee had provided all relevant information to substantiate the purposes. 5.1. In the present fact of the case, Ld.AO was very much aware of the reasons and the purpose for which the funds were set apart by assessee which was accepted by him during assessment proceedings and has not been found to be false declaration or information provided by assessee therein. In any event, the accumulation of funds cannot travel beyond the objects of assessee. The decisions relied on by Ld.AR reproduced hereinabove categorically deals with such circumstances. We place reliance on the decision of Hon'ble Gujarat High Court in the case of CIT(Exemptions) vs. Bochasanwasi Shri Akshar Purshottam Public Charitable Charitable turst (supra) and Hon'ble Telangana and Andhra Pradesh High Court in the case of Samaj Seva Nidhi vs. ACIT (supra) in support of the same. We, therefore, direct Ld.AO to consider the claim of assessee based on the above discussion and having regards to the ratio laid down by the decisions referred to hereinabove.”
We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessee is a registered trust and had duly filed Form No. 10 within the prescribed time, specifying the purposes for which the income was accumulated. The accumulation of income to the extent of Rs. 50,64,903/- is also not in dispute. On perusal of the details of investments, we find that the assessee has invested the accumulated funds in fixed deposits with HDFC Bank, which is a permissible mode of investment under section 11(5) of the Act. Accordingly, the objection raised by the Ld. CIT(A) regarding violation of section 11(5) is found to be without any basis. With regard to the alleged mismatch between the purposes of accumulation and the objects of the trust, we Shree Tardeo Jain Swetamber Murti Pujak Sangh find that the purposes stated in Form No. 10, namely repair, renovation, and maintenance of temple premises, Upashraya, and related structures, are well within the religious and charitable objects of the assessee-trust. The reliance placed by the Ld. CIT(A) on certain statements made during the course of assessment proceedings, without appreciating the overall factual matrix and documentary evidences placed on record, is not justified. In this regard, we find merit in the contention of the Ld. AR and respectfully follow the decision of the Coordinate Bench of the ITAT, Mumbai in the case of Senior Citizen Santacruz (Paschim) Sanstha (supra), wherein it has been held that minor variations or general descriptions in Form No. 10 cannot be a ground to deny the benefit under section 11(2), so long as the purpose remains within the objects of the trust. Further, as regards the timing of investments, we find that the provisions of section 11(2) read with section 11(5) do not mandate a rigid interpretation so as to deny the claim merely on account of minor timing differences, particularly when the investments are made in close proximity to the end of the financial year and are otherwise compliant with the statutory requirements. However, for the sake of completeness and verification of factual accuracy, particularly with respect to the exact dates of investments aggregating to Rs. 75,00,000/-, we deem it appropriate, in the interest of justice, to restore this limited aspect to the file of the Ld. AO. The Ld. AO is directed to verify the dates of investments and grant the benefit of accumulation under section 11(2) in accordance with law, after affording a reasonable opportunity of being heard to the assessee. Accordingly, the appeal of the assessee is allowed for statistical purposes in terms indicated hereinabove. Needless to say, the assessee shall be at