The
Finance Act, 2015 amended section 11 and section 13 of the Act with effect from
01.04.2016 (Assessment year 2016-17). Consequently, Income-tax Rules, 1962
(hereafter ‘Rules’) were also amended vide the Income-tax (1st Amendment)
Rules, 2016. As per the amended provisions of the Act read with rule 17 of the
Rules, while 15% of the income can be accumulated indefinitely by the trust or
institution, 85% of income can only be accumulated for a period not exceeding 5
years subject to the conditions, inter alia, that such person submits the
prescribed Form No. 10 electronically to the Assessing Officer within the due date
specified under section 139(1) of the Act.
Further,
where the income from the property held under trust and applied to charitable
or religious purposes falls short of 85% of the income derived during the
previous year for the reason that the income has not been received during that
year or any other reason, then on exercise of the option by submitting in Form
No. 9A electronically by the trust/institution on or before the due date of
furnishing the return of income, such income shall be deemed to have been
applied for charitable or religious purpose.
Text
of Rule 17
[1][17.
Exercise of
option etc. under Explanation 3 to the third proviso to clause (23C) of section
10 or section 11.
(1)
The option to be exercised in accordance with the provisions of the Explanation
to sub-section (1) of section 11 of the Act in respect of income of any
previous year relevant to the assessment year beginning on or after the 1st day
of April, 2016 shall be in Form No. 9A and shall be furnished before the expiry
of the time allowed under sub-section (1) of section 139 of the Act for
furnishing the return of income of the relevant assessment year.
(2)
The statement to be furnished to the Assessing Officer or the prescribed
authority under clause (a) of the Explanation 3 to the third proviso to clause
(23C) of section 10 of the Act or under clause (a) of sub-section (2) of
section 11 of the Act or under the said provision as applicable under clause
(21) of section 10 of the Act shall be in Form No. 10 and shall be furnished
before the expiry of the time allowed under sub-section (1) of section 139 of
the Act, for furnishing the return of income.
(3)
The option in Form No. 9A referred to in sub-rule (1) and the statement in Form
No. 10 referred to in sub-rule (2) shall be furnished electronically either
under digital signature or electronic verification code.
(4)
The Principal Director General of Income-tax (Systems) or the Director General
of Income-tax (Systems), as the case may be, shall -
(i) specify the procedure for filing of Forms
referred to in sub-rule (3);
(ii) specify the data structure, standards and
manner of generation of electronic verification code, referred to in sub-rule
(3), for purpose of verification of the person furnishing the said Forms; and
(iii) be responsible for formulating and
implementing appropriate security, archival and retrieval policies in relation
to Forms so furnished.]
1. Substituted by the Income-tax (Twenty-fifth
Amendment) Rules, 2022, with effect from 01.04.2023.
Prior to its substitution rule 17, read as under:
“17. Exercise of option etc under section
11.
(1) The option to be exercised in accordance
with the provisions of the Explanation to sub-section (1) of section 11 in
respect of income of any previous year relevant to the assessment year
beginning on or after the 1st day of April, 2016 shall be in Form No. 9A and
shall be furnished before the expiry of the time allowed under sub-section (1)
of section 139 for furnishing the return of income of the relevant assessment
year.
(2)
The statement to be furnished to the Assessing Officer or the prescribed
authority under sub-section (2) of section 11 or under the said provision as
applicable under clause (21) of section 10 shall be in Form No. 10 and shall be
furnished before the expiry of the time allowed under sub-section (1) of
section 139, for furnishing the return of income.
(3)
The option in Form No. 9A referred to in sub-rule (1) and the statement in Form
No.10 referred to in sub-rule (2) shall be furnished electronically either
under digital signature or electronic verification code.
(4)
The Principal Director General of Income-tax (Systems) or the Director General
of Income-tax (Systems), as the case may be, shall -
(i) specify the procedure for filing of
Forms referred to in sub-rule (3);
(ii) specify the data structure, standards and
manner of generation of electronic verification code, referred to in sub-rule
(3), for purpose of verification of the person furnishing the said Forms; and
(iii) be responsible for formulating and
implementing appropriate security, archival and retrieval policies in relation
to Forms so furnished."
Difference between Form
No. 9A / Form No. 10
|
S. No. |
Particulars |
Form No. 9A [Deemed application of Income] |
Form No. 10 [Accumulation of fund] |
|
1. |
Introduction of Form |
Application for exercise
of option under clause (2) of the Explanation to sub-section (1) of section
11 of the Income - tax Act, 1961. |
Statement to be furnished to the Assessing Officer/ Prescribed
Authority under clause (a) of the Explanation 3 to the third proviso to
clause (23C) of section 10 or under clause (a) of sub-section (2) of section
11 of the Income-tax Act, 1961 |
|
2. |
Who is required/ eligible
to file form 9A /Form 10
|
A trust registered under
Section 12AB is required to apply at least 85% of its income for charitable/
religious purposes every year. Even if a trust is not able to apply 85% of
its income for charitable or religious purposes in India, such income shall be
deemed to be applied if the trust furnishes Form 9A. This form can be furnished
in the following cases: (a) Where income has not
been received in the previous year; (b) Where income could not
be applied due to any other reasons. |
(a) all
fund/ institution/ trust/ university/educational institution/hospital/medical
institution referred to in sub clause (iv)(v)(vi)(via) of Section 10(23C) [clause
(a) of the Explanation 3 to the third proviso of Section 10(23C)], Or (b) Trust/Institution
registered under section 12AA/12AB of the Act [clause (a) of subsection (2)
of section 11]
|
|
3. |
Income Tax Rules dealing
with |
Rule 17(1) |
Rule 17(2) |
|
4. |
Form should be signed by |
This option Form should be signed by a
trustee/principal officer. |
This statement should be signed by a
trustee/principal officer. |
|
5. |
Particulars of Form |
Furnishing statement deeming certain income to
be applied : Option of deemed application of income under clause-(2) of
explanation 1 to section-11(1) of the act |
Statement of furnishing
accumulation or setting apart its income : Statement of accumulation as referred to in clause-(a) ofsection-11(2)
or explanation-3 in the third proviso to section-10(23C) |
|
6. |
How to furnish |
It is
to be furnished electronically either under a Digital Signature or Electronic
Verification Code through the e-filing portal. |
It is to be furnished
electronically either under a Digital Signature or Electronic Verification
Code through the e-filing portal. |
|
7. |
Time limit to file Form |
should be furnished at least two months prior to the due date of
furnishing return of income (i.e. by 31st August of every assessment year).
|
should be furnished at least two months prior to the due date of furnishing
return of income (i.e. by 31st August of every assessment year).
|
|
8. |
Accumulation of surplus |
For one year [Section 11(1)] Form 9A is required to be filed if the charitable
Institution accumulates the income to be applied in the next financial year
or in the year of receipt of income (Deemed application of income). |
Accumulation of fund for not exceeding 5 years
[Section 11(2)] Assessee should give a
notice, in writing, in the prescribed form [F. No. 10] and manner, to the Assessing Officer
specifying: (a) the purpose for which the income is
being accumulated or set apart; (b) the period for which the income is to be
accumulated or set apart. Such period should not exceed 5 years in any case. (2) The money so
accumulated or set apart should be invested or deposited in the form or mode
specified in section 11(5). Proviso to
Section 11(2) Provided that in computing
the period of 5 years referred to conditions mentioned above shall not
include the period where income could not be applied for which is was
accumulated o set apart, due to an order or injenction of the Court
|
|
9. |
Utilisation of amount |
Amount has to be utilised in the Financial year in
which it will be received or subsequent Financial year.
|
Amount can be utilised in any of the subsequent 5
years for the purpose for which it was accumulated.
|
|
10. |
Further formalities |
No further formalities |
§ Resolution of the Governing Body
or Board of Trustees § Investment of surplus in modes
prescribed under section 11(5) |
|
11. |
Consequences of not filing
of form |
Exemption with respect to
the amount considered as the deemed application will not be available to the
trust |
Under section 11(2)(c)
read with Rule 17 any accumulation made under Form 10 shall not be allowed |
Form 9A/Form 10 Deadline: In case of deemed application / accumulation, the form 9A / form 10 may be furnished up to 30.11.2023 [CBDT Circular No. 16/2023, Dated 18.09.2023
The original last date was 31.08.2023, but vide
CBDT circular no. 16/2023 dated 18.09.2023 it has been clarified that deemed
application / accumulation may not be denied if Form 9A/Form 10 are furnished
up to 30.11.2023. However, from the point of view of audit evidence, it is
desirable to furnish the same prior to filing of tax audit report in form no.
10B / 10BB as the auditor is required to mention about the above deemed
application / accumulation in his tax audit report.
Time limit to file Form 9A and 10 – At least two months prior to the due date of furnishing return of income
The Finance Act, 2023, with effect from 01.04.2023 has
changed the due date for filing Form 10 or Form 9A. In order to claim the
accumulation of income, such trust or institution must file Form 9A and Form 10
at least 2 months prior to the due date specified under Section 139(1) for
furnishing the return of income in ITR 7 for the previous year.
Rationale for bringing amendment as per the memorandum explaining Finance Bill, 2023
The memorandum explaining Finance Bill, 2023 states
that as per the present time line, the audit report has to be submitted within
the one month prior to the due date, whereas Forms 9A & 10 can be submitted
within the due date. Hence the task of the auditor to certify the figure of
accumulation/option becomes difficult in absence of Forms 9A & 10 being
submitted.
This is done so as to align the dates of filing Form
10 and Form 9A with the due date of filing the audit report, which is one month
before the due date of filing the income-tax return under Section 139(1),
considering auditors are required to report details of Forms 10 and 9A in the
audit report also.
In case a charitable trust or institution deems
certain income to be applied, such trust or institution are required to furnish
a statement in prescribed Form 9A, also to be filed at the same time as
income-tax return under Section 139(1) of the Act.
The CBDT Circular No. 6 of 2023, dated 24.05.2023 has clarified that the accumulation/ deemed application shall not be denied to a trust as long as the statement of accumulation/deemed application is furnished on or before due date of furnishing of return of income under section 139(1) of the income tax act, 1961. So, It appears that as such CBDT does not change the existing due date of furnishing of Form-9A/Form-10(i.e. as amended by Finance Act, 2023) however, it provided relief to any trust from denial of exemption if the above forms will be filed on or before due date of filing of return prescribed under section 139(1) of income tax act,1961.
|
Forms |
Particulars |
Due-date |
|
Filing of Form 9A |
Accumulation within next one year |
31st August |
|
Filing of Form 10 |
Accumulation within next five
years |
31st August |
Clarification regarding denial of exemption in case where the statement of accumulation is not filed by the due date [CBDT Circular No. 6 of 2023, Dated 24.05.2023]
13. Finance Act, 2023 has amended sub-section (2) of section 11 of the Act to provide that statement of accumulation as referred to in clause (a) of said sub-section [Form No. 10] is required to be furnished at least two months prior to the due date of furnishing return of income under sub-
section (1) of
section 139. Similarly, the provisions of Explanation 3 to the third proviso to
clause (23C) of section 10 of the Act have also been amended. Further, the due
date for furnishing the option for deemed application of in come in Form No. 9A
under clause (2) of the Explanation 1 to sub-section (1) of section 11 of the
Act has also been amended to be at least two months prior to the due date of
furnishing return of income, under sub-section (1) of section 139.
14. Representations have been received that the trusts may not be able to furnish Form No. 10 and Form No. 9A before the finalisation of their computation of income. Since the computation of income is finalised at the time of furnishing of return of income, therefore, the trusts should be allowed to furnish Form No. 10 and Form No. 9A by the due date of furnishing their income tax return.
15. It is clarified that the statement of accumulation in Form No. 10 and Form No. 9A is required to be furnished at least two months prior to the due date of furnishing return of income so that it may be taken into account while auditing the books of account. However, the accumulation/deemed application shall not be denied to a trust as long as the statement of accumulation/deemed application is furnished on or before the due date of furnishing the return as provided in sub-section (1) of section 139 of the Act.
CBDT Circular No. 17/2022, dated 11.07.2022
Subject : Condonation of delay under
Section 119(2)(b) of the Income-tax Act, 1961 in filing of Form No. 9A and Form
No. 10 for Assessment Year 2018-19 and subsequent years - Regarding
In exercise of the powers conferred under section
119(2) of the Income-tax Act, 1961 (hereinafter referred to as ‘Act’), the
Central Board of Direct
Taxes (CBDT) by Circular No. 3/2020 [F. No. 197/55/20
18-ITA-I] dated 03.01.2020 authorized the Commissioners of Income-tax to admit
applications of condonation of delay in filing Form No. 9A and Form No. 10 for
AY 2018-19 or for any subsequent Assessment Years where there is delay of up to
365 days and decide on merits.
2. Further to the powers delegated to Commissioners of
Income-tax as discussed above, the CBDT hereby directs that where there is
delay of beyond 365 days upto three years in filing Form No. 9A and Form No. 10
for Assessment Year 2018-19 or for any subsequent Assessment Years, the Pr.
Chief Commissioners of Income-tax/Chief Commissioners of Income-tax are
authorized to admit such applications of condonation of delay under section
119(2) of the Act and decide on merits.
3. The Pr. Chief Commissioner/Chief Commissioner of
Income-tax, as the case may be, while entertaining such applications for
condonation of delay in filing form No. 9A and Form No. 10, shall satisfy
themselves that the applicant was prevented by reasonable cause from filing
such Form within the stipulated time. In respect of Form No. 10, the Pr. Chief
Commissioner/Chief Commissioner of Income-tax, as the case may be, shall also
satisfy themselves that the amount accumulated or set apart has been invested
or deposited in anyone or more of the forms or modes specified in sub-section
(5) of section 11 of the Act.
4. Further, the Pr. Chief Commissioner/Chief
Commissioner of Income-tax, as the case may be, shall preferably dispose the
application within three months of receipt of the application.
CBDT Circular No.
7/2018, Dated 20.12.2018
CBDT authorises
Commissioners of Income-tax (CIT), to admit belated applications in Form No. 9A
and Form No. 10 in respect of Assessment year 2016-17 where such Form No. 9A
and Form No. 10 are filed after expiry of time allowed under relevant
provisions of the Act
Subject : Condonation of delay under section
119(2)(b) of the Income-tax Act, 1961 in filing of Form No. 10 and Form No. 9A
for Assessment year 2016-17
Under the provisions of section 11 of the Income-tax
Act, 1961 (hereafter ‘Act’) the primary condition for grant of exemption to
trust or institution in respect of income derived from property held under such
trust is that the income derived from property held under trust should be
applied for the charitable purposes in India. Where such income cannot be
applied during the previous year, it has to be accumulated and applied for such
purposes in accordance with various conditions provided in the section.
2. The Finance Act, 2015 amended section 11 and
section 13 of the Act with effect from 01.04.2016 (Assessment year 2016-17).
Consequently, Income-tax Rules, 1962 (hereafter ‘Rules’) were also amended vide
the Income-tax (1st Amendment) Rules, 2016. As per the amended provisions of
the Act read with rule 17 of the Rules, while 15% of the income can be
accumulated indefinitely by the trust or institution, 85% of income can only be
accumulated for a period not exceeding 5 years subject to the conditions, inter
alia, that such person submits the prescribed Form No. 10 electronically to the
Assessing Officer within the due date specified under section 139(1) of the
Act.
3. Further, where the income from the property held
under trust and applied to charitable or religious purposes falls short of 85%
of the income derived during the previous year for the reason that the income
has not been received during that year or any other reason, then on exercise of
the option by submitting in Form No. 9A electronically by the trust/institution
on or before the due date of furnishing the return of income, such income shall
be deemed to have been applied for charitable or religious purpose.
4. Representations have been received by the
Board/field authorities stating that the Form No. 9A and Form No. 10 could not
be filed in the specified time for Assessment year 2016-17, which was the first
year of e-filing of these forms. It has been requested that the delay in filing
of Form No. 9A and Form No. 10 for AY 2016-17 may be condoned under section
119(2)(b) of the Act.
5. Accordingly, in supersession of earlier
Circular/Instruction issued in this regard, with a view to expedite the
disposal of applications filed by trusts for condoning the delay and in
exercise of the powers conferred under section 119(2)(b) of the Act, the
Central Board of Direct Taxes hereby authorises the Commissioners of
Income-tax, to admit belated applications in Form No. 9A and Form No. 10 in
respect of Assessment year 2016-17 where such Form No. 9A and Form No. 10 are
filed after the expiry of the time allowed under the relevant provisions of the
Act.
6. The Commissioners will, while entertaining such
belated applications in Form No. 9A and Form No. 10, satisfy themselves that
the assessee was prevented by reasonable cause from filing of applications in
Form No. 9A and Form No. 10 within the stipulated time. Further, in respect of
Form No. 10, the Commissioners shall also satisfy themselves that the amount
accumulated or set apart has been invested or deposited in any one or more of
the forms or modes specified in sub-section (5) of section 11 of the Act.
CBDT Circular No. 273, Dated 03.06.1980
Subject : Delay in filing application in
Form No. 10 - Board’s order under section 119(2)(b) authorising Commissioner to
admit belated applications
1. Charitable and religious trusts are entitled to
exemption from income-tax under section 11 after they fulfil the requirements
enumerated in sections 11 to 13. These trusts are allowed to accumulate or set
apart income derived by them from property held under trust provided they
fulfil the conditions spelt out in section 11(2) read with rule 11 of the
Income-tax Rules and Form No. 10.
2. Very often trusts are not able to file the
application in Form No. 10 within the time allowed under section 139(1)/139(2)
as extended by the Income-tax Officer. The Board is then approached by these
trusts for condoning the delay for filing applications. The Board by virtue of
the powers vested in it under section 119(2)(b) has been condoning the delay in
individual cases after satisfying itself that certain conditions are satisfied.
3. With a view to expediting the disposal of
applications filed by trusts for condoning the delay, the Board has passed a
general order under section 119(2)(b) by which the Commissioners have been
authorised to admit belated applications under section 11(2) read with rule 17.
A copy of this order is enclosed. All applications for condoning the delay
under section 11(2) will, henceforth, be disposed of by the Commissioner in
terms of the enclosed Order No. 120/57/80-IT(A-I), dated 03.06.1980 [Annex].
ANNEX - ORDER DATED 03.06.1980 REFERRED TO IN
CLARIFICATION
In exercise of the powers conferred under section
119(2)(b) of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct
Taxes hereby authorise the Commissioners to admit applications under section
11(2) read with rule 17 of the Income-tax Rules, 1962 from persons deriving
income from property held under trust wholly for charitable or religious
purposes for accumulation of such income to be applied for such purposes in
India when the aforementioned applications are filed beyond the time stipulated.
The Commissioners will, while entertaining such applications, satisfy
themselves that the following conditions are fulfilled:
(a) that the genuineness of the trust is not in doubt;
(b) that the failure to give notice to the Income-tax
Officer under section 11(2) of the Act and investment of the money in the
prescribed securities was due only to oversight;
(c) that the trustees or the settlor have not been
benefited by such failure directly or indirectly;
(d) that the trust agrees to deposit its funds in the
prescribed securities prior to the issue of the Government sanction extending
the time under section 11(2); and
(e) that the accumulation or setting apart of income
was necessary for carrying out the objects of the trust.
Lack of declaration in Form No. 10 regarding specific purpose for which funds were being accumulated by assessee-trust, would not be fatal to exemption claimed under section 11(2)
The assessee, a public
charitable trust registered under section 12A, filed its return of income
declaring income of certain amount. The Assessing Officer found that the
assessee did not declare in Form no. 10, the specific purpose for which funds
were accumulated, and therefore, denied exemption under sections 11 and 12
claimed by it. On appeal, the Commissioner (Appeals) allowed the exemption
claimed by the assessee. On revenue's appeal before the Tribunal:
Held : It is noted from the Commissioner (Appeals) order that the issue of indicating purpose for fund accumulated as per abovementioned section 11(2) has been decided upon by various courts wherein it is held that lack of declaration in Form no. 10 regarding specific purpose for which funds were being accumulated by assessee-trust, would not be fatal to exemption claimed under section 11(2). The Commissioner (Appeals) further observed that it was merely a procedural lapse on part of assessee to not file Form 10 along with return of income. Thus the Commissioner (Appeals) deleted the addition made by the Assessing Officer vide his order. In view of the entire gamut of the case, there is no reason to interfere in the order of the Commissioner (Appeals). Thus the appeal of the department is dismissed. [In favour of assessee] (Related Assessment year : 2014-15) – [DCIT (Exemption) v. State Institute of Health & Family Welfare (2023) 153 taxmann.com 740 (ITAT Jaipur)]
Rule 17 does not mandate furnishing of any resolution along with Form 10 for accumulation of income by trust
This Court finds that in
terms of rule 17, the Assessee is required to submit a statement in Form No. 10
to the Assessing Officer, which contains the statement that “it has been
decided by a resolution passed by the trustees/governing body….” that “out of
the income of the trust/institution/association for the previous year……per cent
of the income of the trust/institution/association for the said previous year,
shall be accumulated or set apart for carrying out the purposes of the
trust/association/institution.” The statement then gives the details of the
amounts so set apart.
A perusal of Form No. 10 reveals that the requirement of the resolution, referred to in the statement therein, having to be enclosed with the said Form, has not been indicated. In other words, there is nothing in either section 11(2) of the Act or rule 17(2) of the Rules that mandates the furnishing of such resolution by the Assessee in order for the statement in Form No. 10 to be acted upon by the Assessing Officer. Consequently, the Revenue cannot insist on a copy of the resolution being furnished. The Court therefore concurs with the view expressed by the ITAT in the impugned order and declines to frame the question in this regard. [In favour of assessee] (Related Assessment years : 2007-08 and 2008-09) – [CIT v. Paradeep Port Trust (2023) 149 taxmann.com 19 (Orissa)]
Assessee, a public
charitable trust for past 30 years, who substantially satisfied condition for
availing benefit of exemption as a trust could not be denied exemption merely
on bar of limitation in furnishing Form No. 10
Exemption of income from property held under
(Accumulation of income) - Assessee, a public charitable trust registered under
section 12A, filed its return declaring income of certain amount. Assessee had
not furnished Form No. 10. Thus, Assessing Officer denied exemption under
section 11 to assessee. Thereafter, assessee filed Form No. 10 belatedly and
requested to condone delay. Same was rejected for reason that no genuine
hardship was shown by assessee which prevented it from filing Form No. 10.
Since assessee was a public charitable trust for past 30 years who
substantially satisfied condition for availing benefit of exemption under
section 11, assessee should not be denied same merely on bar of limitation,
especially, when legislature had conferred wide discretionary powers to condone
such delay on authorities concerned. [In favour of assessee] (Related
Assessment year : 2014-15) - [Trust For Reaching The Unreached Through
Trustee v. CIT (Exemptions), Ahmedabad (2021) 279 Taxman 229 : 126 taxmann.com
77 (Guj.)]
Assessee filed Form
No. 10 and resolution requesting Assessing Officer to permit accumulation of
income under section 11(2) for year 2012-13, before completion of assessment,
since time limit for furnishing Form No. 10 had been prescribed in section 11(2)(c)
by Finance Act, 2015 with effect from 01.04.2016 only, Form No. 10 could be
filed before completion of assessment proceeding and Assessing Officer should
entertain Form No. 10 and resolution filed by assessee
Assessee filed Form No. 10 and resolution requesting
Assessing Officer to permit accumulation of income under section 11(2) for
first time before completion of assessment proceeding, instead of filing same
along with return of income - Whether since time limit for furnishing Form No.
10 has been prescribed in section 11(2)(c) by Finance Act, 2015 with effect
from 1-4-2016 only, year under consideration being assessment year 2012-13,
amended provisions will not be applicable and thus, Assessing Officer should
have entertained Form No. 10 and resolution filed by assessee. [In favour of
assessee] (Related Assessment year : 2012-13 – [Ursuline Franciscan
Congregation Generalate Somarpann Declaralakatte v. ITO, Mangalore (2021) 191
ITD 238 : 131 taxmann.com 81 (ITAT Bangalore)]
Once assessee has accumulated income with a specific
purpose and such purpose is specified in main objects of trust, then Assessing
Officer cannot deny such accumulation of income merely for reason that purpose
specified in Form No. 10 is vague and general in nature Once assessee has
accumulated income with a specific purpose and such purpose is specified in
main objects of trust, then Assessing Officer
cannot deny such accumulation of income merely for reason that purpose
specified in Form No. 10 is vague and general in nature and as long as objects
of trust provide for such purpose, then assessee can accumulate funds for
purpose which is specified in trust deed. Assessee-trust had filed Form No. 10
along with return of income and accumulated sum under section 11(2) for purpose
of objects of trust including specific objects such as Ashram major repair
fund, poor children education fund and medical aid fund. Assessing Officer had
rejected accumulation of income on ground that assessee had accumulated its income
not for specific purpose, but merely to defer taxation of surplus of amount
which had not been applied towards its objects in corresponding accounting
period - Objects of trust were to extend help and relief to distressed, poor
destitute, homeless and under privileged students and provide medical relief to
needy persons and assessee-trust was regularly accumulating funds for above
purpose and such earmarked funds were continuously spent for said purpose.
Assessing Officer erred in denying benefit of accumulation of income under
section 11(2) and he was directed to allow benefit of accumulation to
assessee-trust. [In favour of assessee] (Related Assessment year 2012-13) – [Arhatic
Yoga Ashram Management Trust v. ITO (Exemptions) (2021) 126 taxmann.com 76
(ITAT Chennai)]
Non-furnishing of Form 10 by Trust not a rectifiable error under section 154
Bangalore
ITAT dismisses Assessee’s appeal over rectification of intimation under section
143(1) disallowing Rs. 6.99 Cr. set apart due to non-furnishing of Form 10;
Assessee-Trust registered under section 12A and engaged in running educational
institutions, furnished return declaring Nil income for Assessment year 2015-16
by setting apart Rs. 6.99 Cr. towards application of income for specified
purposes as per Section 11; Revenue processed the return and made addition of
Rs. 6.99 Cr. due to non-submission of Form 10 within the stipulated time;
Assessee contended that manual copy of Form 10 was not submitted at jurisdictional
Assessing Officer’s instance, whereas for online
filing, the requisite facility was not available on the portal; ITAT observes
that Assessee did not file Form 10 manually and opines, “it is mandatory on
the part of assessee to file Form 10 manually though not electronically before
the due date of filing of return of income with the jurisdictional Assessing
Officer”; Thus, holds that the Assessee cannot seek rectification
of intimation order passed under section 143(1); With regards to power to condone
the delay in furnishing Form 10 as per CBDT Circular No. 7 of 2019, ITAT
observes that “Commissioner is required to satisfy that the assessee was
prevented by reasonable cause in filing Form 9A and Form 10 within the
stipulated time. But this Circular does not preclude the assessee in filing
Form 10 manually before the jurisdictional Assessing Officer. The
assessee is not exempted in filing Form 10 manually by this Circular. It only
gives power to the Commissioner to permit the assessee to file Form 10 electronically
belatedly.” [In favour of Both, Partially] (Related Assessment year :
2015-16) - [Navodaya Education Trust v. DCIT(C), Bellary
[TS-651-ITAT-2021(Bang)] – Date of Judgement :
15.07.2021 (ITAT Bangalore)]
Section 11 exemption
for accumulation cannot be denied for non-filing of Form No. 10
Non-filing of the Form No. 10 within stipulated period
may be an irregularity but not illegality, if the assessee cures the defect
during assessment proceedings, the assessee is entitled to the benefit of
accumulation as provided under section 11(2) of the Income Tax Act. (Related
Assessment year : 2016-17) – [Infrastructure Development Fund v. DCIT - Date
of Judgement : 24.08.2020 (ITAT Chandigarh)
Form No. 10 was filed
belatedly - Rejection of claim on technical formalities is held to be not valid
– Assessing Officer is directed to decide the allowability of claim on merits
Assessee filed its return which was processed under
Section 143(1) of the Act. Subsequently, assessee filed application under
Section 154 contending that by mistake it had not filed Form No. 10 along with
extract of Board Resolution for accumulation of funds for purpose of
construction of a temple at a particular property as envisaged under Section
11(2) which in turn permitted assessee to not include said income for taxation
purposes. Assessing Officer rejected assessee’s application holding that return
filed by assessee was not accompanied with Form No. 10 and Board Resolution,
and even if Board Resolution with Form No. 10 had been enclosed with return,
such filing would have been beyond time under Section 139(9) and, thus,
assessee could not be allowed for accumulation of income under Section 11(2) of
the Act. Tribunal upheld the order of the Assessing Officer. On appeal High
Court held that when assessee was entitled to a statutory benefit, it was
incumbent upon concerned authority to examine admissibility of benefit than to
foreclose assessee on technicalities. Therefore, order was to be set aside and,
matter was to be remanded back to Assessing Officer to take note of Form No. 10
accompanied by Board Resolution and, thereupon, take a decision on merits.
Accordingly, the matter was remanded. (Related Assessment year : 2008-09) – [Chandraprabhuji
Maharaj Jain Juna Mandir Trust v. DCIT (2019) 266 Taxman 399 : 182 DTR 103
(Mad.)]
Lack of declaration
in Form No. 10 regarding specific purpose for which funds were being
accumulated by assessee-trust, would not be fatal to exemption claimed under
section 11(2) - Explanation of purposes for which funds accumulated was
furnished during course of assessment proceedings is a sufficient compliance
The Court held that, the assessee had submitted the
background under which the board of trustees had met, had considered the
material and eventually had passed a formal resolution, which was filed along
with the return, setting apart the funds for the ongoing hospital projects of
the trust and for modernization of the existing hospitals. Therefore there was
no error in the order of the Tribunal allowing the claim for deduction made by
the assessee. High Court by impugned order held that lack of declaration in
Form No. 10 regarding specific purpose for which funds were being accumulated
by assessee-trust, would not be fatal to exemption claimed under section 11(2).
Special Leave Petition filed against impugned orderwas to be dismissed. [In
favour of assessee] (Related Assessment year : 2008-09) – [CIT(E) v.
Bochasanwasi Shri Akshar Purshottam Public cable Trust (2019) 263 Taxman 247:
105 taxmann.com 97 (SC)]
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)
Exemption of income from property held under
(Accumulation of income) - High Court by impugned order held that 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). Special Leave Petition filed against impugned order was to be granted.
[In favour of revenue] (Related Assessment years : 2009-10 and 2010-11) – [CIT
v. Gokula Education Foundation (2017) 248 Taxman 13 : 81 taxmann.com 372 (SC)]
Property held for
charitable purposes – Filing of Form 10 during reassessment benefit of
accumulation was available
Dismissing the appeal of the revenue, the Court held
that: Form 10 was filed during reassessment by assessee-trust, benefit of
accumulation was available because such filing would be considered within time
allowed for furnishing return of income under section 139(4). Followed, CIT
v. Nagpur Hotel Owners’ Association (2001) 247 ITR 201 (SC). (Related
Assessment years: 2000-01, 2001-02) - [CIT v. Sakal Relief Fund (2017) 295
CTR 561 : 248 Taxman 31 : 152 DTR 89 (Bom.)]
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