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Facts
The assessee-trust, registered under sections 12A and 80G of the Income-tax Act, received a donation of Rs. 33 lakhs. The Assessing Officer treated this donation as income, citing that grants received by charitable trusts are considered income as per Section 2(24) of the Act, and the assessee had failed to file Form 10 for accumulation of income within the stipulated time.
Held
The Tribunal noted that the assessee had filed an application for condonation of delay in filing Form 10 with the CIT(E), which was allowed. Since the delay was condoned, the Assessing Officer was directed to consider the Form 10 and the assessee's claim for exemption under Section 11 of the Act.
Key Issues
Whether the donation received by the assessee-trust can be treated as income without considering the condonation of delay in filing Form 10 for accumulation?
Sections Cited
2(24), 11(1), 11(2), 12A, 80G
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “H (SMC
Before: SHRI OM PRAKASH KANT & SHRI SUNIL KUMAR SINGH
This appeal by the assessee is directed against order dated 21.03.2024 passed by the Ld. Commissioner of Income-tax (Appeals)- National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following ground:
The Ld. NFAC Officer erred in confirming addition of donation of INR 33 lakh received on 31 March 2017 even though the revised/corrected Form 10 accumulating the though the revised/corrected Form 10 accumulating the though the revised/corrected Form 10 accumulating the amount of INR 35 Lakh was duly submitted to the Ld. amount of INR 35 Lakh was duly submitted to the Ld. amount of INR 35 Lakh was duly submitted to the Ld. CIT along with request for condonation of delay which is CIT along with request for condonation of delay which is CIT along with request for condonation of delay which is still pending. still pending.
Briefly stated facts of the case are that the assessee Briefly stated facts of the case are that the assessee Briefly stated facts of the case are that the assessee-trust is registered with the Director of Income with the Director of Income-tax (Exemption), Mumbai u/s tax (Exemption), Mumbai u/s 12A of the Income-tax Act, 1961 (in short ‘the Act’) vide Registration tax Act, 1961 (in short ‘the Act’) vide Registration tax Act, 1961 (in short ‘the Act’) vide Registration No. 42655 and u/s 80G of the Act. The Trust is also registered with No. 42655 and u/s 80G of the Act. The Trust is also registered with No. 42655 and u/s 80G of the Act. The Trust is also registered with the Charity Commissioner, Mumbai. The main object of the Trust is the Charity Commissioner, Mumbai. The main object of the Tru the Charity Commissioner, Mumbai. The main object of the Tru to advance education to advance education to the children in improvised areas by the children in improvised areas by building and funding and or managing of educational institutions building and funding and or managing of educational institutions building and funding and or managing of educational institutions and/or facilities in India and to promote and/or establish and/or and/or facilities in India and to promote and/or establish and/or and/or facilities in India and to promote and/or establish and/or conduct higher secondary and university education in different conduct higher secondary and university education in differ conduct higher secondary and university education in differ Trust filed its original return of income on faculties. The assessee faculties. The assessee-Trust filed its original return of income on -. The return of 29.10.2017 declaring total income of Rs.2,17,030/ 29.10.2017 declaring total income of Rs.2,17,030/- income filed by the assessee was selected for scrutiny and statutory income filed by the assessee was selected for scrutiny and statutory income filed by the assessee was selected for scrutiny and statutory notices under the Act were issued and complied w notices under the Act were issued and complied with. The Assessing ith. The Assessing Officer noticed that the assessee received an amount of Rs.33 lakhs Officer noticed that the assessee received an amount of Rs.33 lakhs Officer noticed that the assessee received an amount of Rs.33 lakhs during the year as donation which was not considered as income of during the year as donation which was not considered as income of during the year as donation which was not considered as income of the Trust but instead instead , the same was taken directly to the audited the same was taken directly to the audited balance sheet as unutilized grant. T balance sheet as unutilized grant. The Assessing Officer noted that he Assessing Officer noted that as per the provisions of section 2(24) of the Act the grants received as per the provisions of section 2(24) of the Act the grants received as per the provisions of section 2(24) of the Act the grants received by charitable trust are in the nature of are in the nature of its income. According to the its income. According to the Ld. Assessing Officer if the Ld. Assessing Officer if the said donation was to be taken as said donation was to be taken as deemed application as deemed application as per Explanation-2 to section 11(1) of the Act, 2 to section 11(1) of the Act, then the assessee was required to file prescribed form the assessee was required to file prescribed form the assessee was required to file prescribed form for accumulation of income accumulation of income mandatorily. However, assessee has filed mandatorily. However, assessee has filed the prescribed Form No. 10 Form No. 10 for the purpose of accumulation of for the purpose of accumulation of income u/s 11(2) of the income u/s 11(2) of the Act only on 31.10.2017. Accordingly, only on 31.10.2017. Accordingly, The AO held the amount of Rs.33 lakhs received by the Trust as income the amount of Rs.33 lakhs received by the Trust as income the amount of Rs.33 lakhs received by the Trust as income of the assessee.
Before the Ld. CIT(A), the assessee sought adjournment Before the Ld. CIT(A), the assessee sought adjournment Before the Ld. CIT(A), the assessee sought adjournment for the various notices issued. Therefore, the Ld. CIT(A) dismissed the various notices issued. Therefore, the Ld. CIT(A) dismissed the various notices issued. Therefore, the Ld. CIT(A) dismissed the appeal of the assessee for default on the part of the assessee ppeal of the assessee for default on the part of the assessee ppeal of the assessee for default on the part of the assessee without deciding the issue on merit. without deciding the issue on merit.
Before us, the Ld. counsel for the assessee submitted that for Before us, the Ld. counsel for the assessee submitted that for Before us, the Ld. counsel for the assessee submitted that for delay in filing the Form No. 10 delay in filing the Form No. 10, the assessee filed d an application before the Ld. Commissioner of Income ommissioner of Income-tax(Exemption xemption)[ in short ‘the ld CIT(E)’] under under relevant circular No. 3/2020 dated 03.01.2020 No. 3/2020 dated 03.01.2020 issued by the Central Board of Direct Taxes (CBDT) and the ld issued by the Central Board of Direct Taxes (CBDT) issued by the Central Board of Direct Taxes (CBDT) CIT(E) has condoned the said delay in filing the form no 10 vide his CIT(E) has condoned the said delay in filing the form no 10 vide his CIT(E) has condoned the said delay in filing the form no 10 vide his order dated 26/06/2024 ed 26/06/2024. Before us, the Ld. counsel for the . Before us, the Ld. counsel for the assessee has filed a copy of the assessee has filed a copy of the said order condoning the delay in order condoning the delay in filing the Form No. 10 by the assessee. We are of the opinion that filing the Form No. 10 by the assessee. We are of the opinion that filing the Form No. 10 by the assessee. We are of the opinion that once, the Ld. CIT(E) has condoned the delay once, the Ld. CIT(E) has condoned the delay in filing the form no. in filing the form no. 10, the Assessing Officer has to take into account the Form No. 10 he Assessing Officer has to take into account the Form No. 10 he Assessing Officer has to take into account the Form No. 10 filed by the assessee and consider d by the assessee and consider the claim of the assessee for the claim of the assessee for exemption u/s 11 of the Act in accordance with law. We accordingly exemption u/s 11 of the Act in accordance with law. exemption u/s 11 of the Act in accordance with law. restore the issue in dispute to the file of the assessing Officer for restore the issue in dispute to the file of the assessing Offi restore the issue in dispute to the file of the assessing Offi deciding in accordance with law. deciding in accordance with law. The sole ground raised by the The sole ground raised by the assessee is accordingly allowed for statistical purposes. assessee is accordingly allowed for statistical purposes. assessee is accordingly allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes. statistical purposes.