Non-specification of specific purpose in Form 10 and delay in its filing do not disentitle charitable trust to section 11(2) accumulation exemption if resolution specifies purpose and other compliances met.

आदेश/ORDER 

PER ASTHA CHANDRA, JM :

The above two appeals filed by the assessee are directed against the separate orders both dated 13.08.2025 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Years (“AYs”) 2017-18 and 2018-19. Since identical issues are involved in both the appeals, for the sake of convenience, these appeals were heard together and are being disposed of by this common order.

ITA No. 2147/PUN/2025, AY 2017-18

2. Briefly stated, the facts of the case are that the assessee is a charitable trust registered under the Bombay Public Trust Act, 1950. It is engaged in activities of providing hostel and medical facilities to needy students and awarding them scholarships. The assessee has been granted registration u/s 12A(a) of the Income Tax Act, 1961 (the “Act”) vide certificate dated 24.10.1974. It is also registered u/s 80G(5)(vi) of the Act effective from 28.11.2009. For AY 2017-18, the assessee filed its return of income on 25.07.2017 declaring total income at Rs. Nil. In its return of income, the assessee declared gross receipts of Rs.1,89,43,855/- and claimed expenditure of Rs.47,55,973/-. The assessee trust claimed exemption u/s 11(2) of the Act of Rs.1,11,00,000/-. The case of the assessee was selected for scrutiny under CASS for the reason “Form 10 filed after due date and Large amount accumulated or set apart u/s 11(2)”. Accordingly, statutory notice(s) u/s 143(2) and 142(1) of the Act along with questionnaire were duly issued and served upon the assessee. In response thereto, the assessee made requisite submissions online on e-assessment portal. The Ld. Assessing Officer (“AO”) disallowed the claim of the assessee u/s 11(2) of the Act of Rs.1,11,00,000/- on the ground that the assessee has failed to comply with any of the conditions laid down in clauses (a), (b) and (c) of section 11(2) of the Act and has also failed in filing Form 10 electronically as required under Rule 17(2) of the Income Tax Rules, 1962. The Ld. AO, therefore, completed the assessment rejecting the assessee’s claim of accumulation of Rs.1,11,00,000/- u/s 11(2) of the Act and added the same to the total income of the assessee vide his order passed u/s 143(3) of the Act dated 14.11.2019.

3. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A)/NFAC who dismissed the appeal of the assessee on the ground of non-compliance with the provisions of section 11(2)(a) of the Act and non- filing of Form 10B within the stipulated time by the assessee. The relevant observations and findings of the Ld. CIT(A)/NFAC are as under :

“6.2.2 As per above mentioned clause (a) of sec 11(2), the assessee shall furnish a statement in the prescribed form in the prescribed manner to AO stating the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed five years.

6.2.3 Thus, the accumulation of income is allowed only for the purpose stated, it means that there must be a specific purpose whereas in the case on hand, as noted by the AO in the assessment stating that accumulation of fund as one of its object is not a specific purpose as stated in provisions of sec 11(2)(a). therefore the claim of exemption u/s 11(2) (a) with such purpose is not eligible for exemption u/s 11(2).

6.2.4 Since, the appellant has failed to comply with provisions of sec