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Facts
The assessee, a charitable religious institution registered under Section 12AA, filed its return for AY 2014-15. The CPC, processing the return under Section 143(1), disallowed accumulated income of Rs. 33,61,981/- under Section 11 because Form 10 for accumulation was filed belatedly on 18/03/2016, exceeding the due date under Section 139(1). The CIT(A) confirmed this disallowance.
Held
The Tribunal held that the time limit for filing Form 10 (and Form 10B) for accumulation of income under Section 11(2) is directory, not mandatory. Citing previous judgments, the Tribunal directed the CPC to amend the intimation to allow the accumulated income, thereby reversing the disallowance.
Key Issues
Whether the time limit prescribed in Section 139(1) for filing Form 10 for accumulation of income under Section 11(2) is mandatory or directory, and if belated filing should lead to disallowance.
Sections Cited
12AA, 143(1), 11, 139(1), 11(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
This appeal filed by the assessee is directed against the order of the ADDL/JCIT(A)-2, Noida [CIT(A)] dated 31.03.2025 for Assessment Year (AY) 2014-15.
Brief facts of the case are that the assessee is a charitable religious institution, duly registered u/s. 12AA of the Income Tax Act, 1961 (for short, ‘the Act’). The return of income for the A.Y. 2014-15 was filed on 18/03/2016 declaring income of St. Francis Xaviers Forane Church Rs.50,46,417/-. The said return of income was processed by CPC u/s. 143(1) of the Act vide intimation dated 24/10/2016 by disallowing accumulated income of Rs. 33,61,981/- u/s. 11 of the Act.
Being aggrieved by the said intimation, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO by holding that Form No. 10 for accumulation, only filed on 18/03/2016 and was not filed within the time limit prescribed in section 139(1) of the Act.
Being aggrieved, the assessee is in appeal before the Tribunal in the present appeal.
It is submitted that filing of Form 10 within the due date prescribed u/s. 139(1) of the Act is only directory and not mandatory. Therefore, accumulated income u/s. 11(2) of the Act cannot be disallowed. In support of his contention, the following reliance have been placed:
(i) M/s. Kalyan Educational Society vs. ACIT [2023 (8) TMI 1336 – ITAT, Kolkata] (ii) M/s. Shree Swami Samarth Seva Kendra vs. ITO [2023 (11) TMI 397 – ITAT, Mumbai] (iii) CIT vs. Nagpur Hotel Owners Association [2000 (12) TMI 99 – SC]
I consider the rival submissions and perused the material on record.
The CPC while processing return of income had denied the claim of the assessee for accumulation of income u/s. 11(2) of the Act on the ground that prescribed form i.e. Form 10 was not filed within the due date prescribed in section 139(1) of the Act. Undisputedly, the audit report along with return of income is filed belatedly. It is a settled position of law that time limit for filing of Form 10 & 10B are directory in nature and, therefore I direct the CPC to amend the intimation by allowing the accumulation income.
In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 31st July, 2025.