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Facts
An Educational Trust declared Nil income, claiming exemption under Section 11. Due to a clerical error, Form 10 showed Rs. 3,75,000/- instead of Rs. 3.75 crores for accumulation. The CPC denied the exemption under Section 143(1) and rejected the rectification petition due to belated filing of Form 10.
Held
The CIT(A) allowed the assessee's appeal, holding that the revised Form 10, rectifying a typographical error, should be considered for accumulation under Section 11(2) and 11(5). The ITAT upheld the CIT(A)'s decision, dismissing the Revenue's appeal, affirming that exemption cannot be denied due to wrong details in the original audit report if verifiable.
Key Issues
Whether a revised Form 10, rectifying a typographical error regarding accumulated funds, can be considered for claiming exemption under Section 11(2) of the Income Tax Act, even if filed belatedly, when the assessee's intention and investment mode are verifiable.
Sections Cited
11, 11(2), 11(5), 143(1), 154, 11(2)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: Shri T.R. Senthil Kumar & Shri Narendra Prasad Sinha
Assessee Represented: Shri Mehul K Patel, A.R. Revenue Represented: Shri Hargovind Singh, Sr.D.R. Date of hearing : 24-06-2025 Date of pronouncement : 26-06-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
This appeal is filed by the Revenue as against the appellate order dated 30.01.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the rectification order passed under section 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2022-23.
Brief facts of the case is that the assessee is an Educational Trust filed its Return of Income for the Asst. Year 2022-23 on 03- 10-2022 declaring Nil income after claiming exemption u/s. 11 of A.Y. 2022-23 Page No 2 ITO Vs. MML Choudhry Charitable & Education Trust the Act. The assessee Trust made investment of Rs. 2.75 crores in fixed deposit with Axis Bank in the specified mode. However in Form No. 10 filed on 22.09.2022, the figure of Rs. 3,75,000/- was mentioned by clerical error. The Return of Income was processed u/s. 143(1) of the Act on 07-11-2022 denying exemption u/s. 11 of the Act.
It is thereafter, the assessee filed Revised Audit Report in Form No. 10 on 01-07-2023. The assessee Trust also passed a resolution to accumulate an amount of Rs.3.75 crores for the purpose of acquisition of land and construction of new school building. Thus the assessee filed Rectification Petition to rectify the mistake of Rs. 3.75 Lakhs which is a typographical error. However the CPC rejected the Rectification Petition on the ground that Form No. 10 was filed belatedly.
Aggrieved against the same, the assessee filed an appeal before Ld. CIT(A) who deleted the addition made by the CPC and allowed the appeal in favour of the assessee by observing as follows:
“…7.3.1. The claim of the appellant is considered and on verification of the same it is seen that the appellant has intended to set part Rs. 3,75,00 000/- for purpose of acquisition of lands and construction of new school building. The appellant has also stated that for that purpose Rs 2,75,00,000/- was kept in fixed deposits of Axis Bank in specified mode. As such, it can be seen that the set apart of income is as per the provisions of the Act However the same was wrongly filed in the original audit report filed by the appellant. The appellant is claimed the same to be typographical error and contended that the revised audit report to be considered in view of facts of the case in support the appellant has relied upon the decision of Han’ble ITAT Kolkata Bench in the case of Crawley & Ray Founders Engineers Pvt. Ltd. vs DCIT CPC (ITA No 246/Kol/2022) wherein the appellant's appeal is allowed by rectifying the typographical A.Y. 2022-23 Page No 3 ITO Vs. MML Choudhry Charitable & Education Trust error filed in original audit report filed since the contention of appellant is verifiable from documentary evidence. The same has been perused and seen that facts of the instant case are also identical to the facts of the case law relied upon The appellant had set apart Rs. 3,75,00,000/- for specific purposes, which can be verifiable from Trust Board resolution and ITR filed However the amount was entered as Rs 3,75,000/ which amounts as a typographical error. 7.3.1.1. The reliance is placed on the decision of Hon'ble ITAT MUMBAI BENCH 'F' in the case of Deputy Commissioner of Income-tax (Exemption)-2(1) vs Vile Parle Mahila Sangh (2024) 166 taxmann com 737 (Mumbai Trib 1/2024] 209 ITD 587 (Mumbai) Trib (10-09-2024) wherein it was held that as "Where assessee-trust had claimed to have accumulated certain amount during year for purpose of building funds since period of accumulation was stated to be ending an 31-3-2018 vide resolution dated 29-3-2018 and in order to rectify said mistake revised form 10 was filed by assessee stating period of accumulation to be 31-3-2023 since assessee's claim was under section 11(2) and not under section 11 revised Form 10 should be considered for determining accumulated funds available with assessee under section 11(2) In the present case too, the appellant has accumulated certain amount during year for acquisition of lands and construction of new school buildings The appellant has claimed the same as exemption u/s 11(2) after depositing the amount u/s 11(5) of the IT Act. He same can be seen from revised audit report filed By applying the ration of decision the appellant s contention is to be accepted. 7.3.1.2. The reliance is also placed on the decision of Hon’ble Apex Court in the case of Commissioner of Income-tax vs Gokula Education Foundation (2017) 81 taxmann.com 372 (SC)/(2017) 248 Taxman 13 (SC) 01-05-2017 wherein it was held that as "As long as objects of trust were charitable in character and purpose or purposes mentioned in Form No 10 were for achieving objects of trust merely because details were not furnished assessee could not be denied benefit of exemption under section 11(2) By applying the facts of the case law it is held that the benefit of exemption under section 11(2) of the It Act shall not be denied due to wrong filing of details in original audit report. 7.4. From the perusal of the return of income filed by the appellant for the year under consideration we find that the assessee claimed to have accumulated Rs 25 crore under section 11(2) of the Act The aforesaid fact is further evident from Schedule-1 of the return, wherein the details of the amount accumulated/set apart within the meaning of section 11(2) of the A.Y. 2022-23 Page No 4 ITO Vs. MML Choudhry Charitable & Education Trust Act have been mentioned. Further we find from Form No 10 filed by the assessee on 01/07/2023 that the amount of accumulation was stated to be 3.75 crores. From the perusal of the aforesaid Form No 10 the aforesaid amount of Rs 3.75 crore was decided to be accumulated for carrying out the purposes of the trust vide resolution dated 21/09/2022. As regards to the return of income the assessee stated the accumulation of Rs 250,00,000 under section 11(2) of the Act in Part B-T1 of the return of income Even in revised Form No 10 the assessee's auditor stated the amount of Rs 3.75.00.000 for the purpose of accumulation under section 11(2) of the Act. Accordingly, it is opined that there are merits in appellant’s submissions in view of filing the revised Form No 10 on 01/07/2023 Therefore I am of the opinion that the revised Form No 10 should be considered for determining the accumulated funds available with the assessee under section 11(2) of the Act. Thus, from the aforesaid facts and circumstances, it is discernible that the assessee's claim was under section 11(2) of the Act. Further the mode of investment was also as per section 11(5) of the Act as the amount was deposited in scheduled banks or co-operative societies as per section 11(5) of the Act Accordingly the appellant's contention is accepted and the AO is directed to allow the exemption claimed u/s. 11(2) of the IT Act. As a result, Grounds Nos. 5 and 6 raised in the appeal are allowed.”
Aggrieved against the appellate order, the Revenue is in appeal before us raising the following Ground of Appeal:
1. Ld. CIT(A) has erred to appreciate the fact that the assessee filed revised Form 10 for the claim of accumulation u/s. 11(2) after the due date as specified in the Act. Therefore, the claim of assessee u/s. 11(2) is not allowable as per the provisions of section 11(2)(c) of the I.T. Act 1961.
We have heard the rival submissions and perused the materials available on record. It is undisputed fact that the assessee filed its original return along with Form No. 10 on 22-09-2022. After passing of the Intimation order u/s. 143(1) and denying exemption u/s. 11(2) of the Act, the assessee filed Revised Audit Report in Form No. 10 on 01-07-2023 rectifying the claim of exemption u/s. 11(2) of the Act. However the Ld. A.O. passed the rectification A.Y. 2022-23 Page No 5 ITO Vs. MML Choudhry Charitable & Education Trust order confirming the demand on the ground of Audit Report in Form No. 10 was filed belatedly.
6.1. Ld. CIT(A) considered the materials on record and also perused the Board resolution and ITR filed by the assessee wherein the assessee Trust intended to set-apart Rs. 3,75,00,000/- for the purpose of acquisition of lands and construction of new school building. Further the assessee Trust already made fixed deposits of Rs. 2,75,00,000/- with Axis Bank in specified mode. However in the original Audit Report in Form No. 10, there is some typographical error which was rectified by filing a Revised Audit Report on 01-07-2023. Therefore held that Revised Form No. 10 should be considered for determining accumulated funds available with the assessee u/s. 11(2) of the Act. Further the Board resolution passed for Investment also as per Section 11(5) of the Act, as the amount was deposited in fixed deposits with the bank accounts. Thus we do not find any infirmity in the order passed by the Ld. CIT(A) who has considered the issue in detail as well as Co- ordinate Benches decisions of the Calcutta and Mumbai Tribunal and Apex Court judgment. Thus the ground raised by the Revenue is devoid of merits and the same is liable to be dismissed.
In the result, the appeal filed by the Revenue is hereby Dismissed.