CENTRE FOR EQUITY AND QUALITY IN UNIVERSAL EDUCATION ,MUMBAI V. INCOME TAX OFFICER (EXEMPTION) 1 (2), MUMBAI, MUMBAI

ITA 264/MUM/2026

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The case involves the Centre for Equity and Quality in Universal Education, a company registered under section 8 of the Companies Act and section 12A of the Income Tax Act, 1961, which appealed against the order of the Learned CIT(A) dismissing their appeal on the grounds of a rejected condonation application for delay in filing Form 10. The assessee had declared a NIL income for the Assessment Year 2017-18, claiming exemption under section 11 of the Act, but was assessed a total income of Rs. 11,54,257 due to disallowance of accumulation under section 11(2). The Tribunal considered precedents and the specific circumstances of the case, including the timely utilization of funds and the availability of Form 10 during the assessment proceedings, leading to the decision in favor of the assessee.

• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Mumbai
• Assessment Year: 2017-2018
• Appeal Filed On: 12-01-2026
• Other Referred Cases: Praja Sahitee Samsta vs. ADIT, CIT vs. Spic Educational Foundation
• Laws Referred To: Income Tax Act, 1961, Companies Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADITYA RAI
• Assessee Lawyers: MEHUL SHAH
• Keywords: Condonation of delay; Competent authority
• Section: 142(1); 11; 12A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “J-SMC” BENCH : MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER ITA No. 264/Mum/2026 Assessment Year : 2017-18 Centre for Equity and Quality in Universal Education, 402, Tagore Avenue, Tagore Road, Santacruz West Mumbai-400054. PAN : AAFCC0128D vs. Income Tax Officer (Exemption)-1(2), 6th Floor, MTNL Building, Cumballa Hill, Pedder Road, Mumbai-400026. (Appellant) (Respondent) For Assessee : Shri Mehul Shah For Revenue : Shri Aditya Rai, Sr.DR Date of Hearing : 05-03-2026 Date of Pronouncement : 23-03-2026 O R D E R PER VIKRAM SINGH YADAV, A.M : This is an appeal filed by the assessee against the order of the Learned ADDL/JCIT(A)-9, Delhi [„Ld.CIT(A)‟], dated 30-12-2025, pertaining to Assessment Year (AY) 2017-18. 2. During the course of hearing, the Ld.AR submitted that the assessee is a company registered u/s. 8 of Companies Act as well as obtained registration u/s. 12A of the Income Tax Act, 1961 („the Act‟) with the following objects: Printed from counselvise.com 2 ITA No. 264/Mum/2026 a) To design, implement, manage, support and guide programs, with the Government, private institutions, other agencies, or independently, that contribute to furthering the right of children and youth to equitable and quality education, particularly those belonging to disadvantaged communities, girl children, and children with special needs. b) To establish, run, and manage educational institutions with objective of modeling best practices in imparting quality, equitable and inclusive education. c) To support, guide, and further governance reform within the Government or private educational set up in order to enhance the efficiency and effectiveness of delivery or equitable, quality education for children and youth. 3. It was submitted that during the year under consideration, the assessee filed its return of income, declaring NIL income, claiming exemption u/s. 11 of the Act. The AO completed the assessment proceedings assessing the total income at Rs. 11,54,257/- by disallowing amount set apart on account of short spending pursuant to section 11 as fell short of 85% of total receipts. Since the accumulation was to be spent in the subsequent year, the assessee filed Form-9A with the AO before the due date of filing return. The accumulation was shown in column No. 4 (vi) of the Return of Income at page No. 5 pursuant to clause (2) of Explanation 1 to section 11 (1) of the Act. There was no specific column in the return of income to disclose setting apart of accumulation pursuant to clause (2) of Explanation 1 to section 11 (1) of the Act. Therefore, the same was placed by the return filing software in Schedule I: Details of amounts accumulated/set apart within the meaning of section 11(2) on page No. 10 of return of income. During the course of assessment proceedings, the AO Printed from counselvise.com 3 ITA No. 264/Mum/2026 sent various notices u/s. 142(1) of the Act which was duly responded and submissions were made. The assessee explained to the AO that the amount of Rs. 11,54,256/- set apart was for the objects of the Trust which was actually spent in the subsequent year ended 31st March, 2018. The AO was submitted computation of total income for AY. 2018-19, demonstrating that the amount was spent in the previous year relevant to AY. 2018-19. The AO stated that the accumulation was made u/s. 11(2) and, therefore, the correct Form to be filed was Form 10. The assessee submitted that since a form is always prescribed for Information; and so long as information is gathered from the relevant document, the \"form no.\" does not matter. However, in order to buy peace of mind, the assessee filed Form 10 along with application before the Director of Income-tax (Exemption) for condonation of delay dated 5th December, 2019 with a copy of condonation prayer to the AO. Learned Commissioner of Income- tax issued notice for condonation application and in response, the Ld.AR appeared and submitted that the application was complete in itself explaining entire facts and circumstances of the case and it satisfied all the necessary conditions for seeking condonation of delay and our reference was drawn to submissions dated 19/07/2021. However, it seems that the proceedings were not recorded and application for condonation was summarily rejected. It was submitted that all these facts were reiterated before the Ld.CIT(A) as well., however, the Ld.CIT(A) dismissed the appeal of the assessee stating that since application for condonation of delay in filing Form No. 10 was rejected, the AO was correct in disallowing the accumulation. 4. In the above factual matrix, it was submitted that the assessee has duly made a disclosure in the return of income in terms of section 11(2) of the Act. Further, during the course of assessment proceedings, the Printed from counselvise.com 4 ITA No. 264/Mum/2026 assessee submitted that it has duly filed Form-9A along with return of income and the accumulation of the funds has been done to be spent in the next year and the assessee has actually spent funds in the next year as can be seen from the computation of total income for the subsequent AY. 2018-19 and which has been accepted by the AO, without any adverse findings. In any case, it was submitted that the assessee has filed Form- 10 during the course of assessment proceedings and as per the settled legal proposition as upheld by the various Co-ordinate Benches so long as requisite information and Form-10 is available on record before the AO, the assessee could not be denied the benefit of accumulation in terms of section 11(2) of the Act. In this regard, our reference was drawn to the decision of the Co-ordinate Bench of the Tribunal in the case of Praja Sahitee Samsta vs. ADIT, in ITA No. 1511/Hyd/2013, dt. 12-11-2014, wherein the assessment was reopened for disallowance of assessee‟s claim of exemption u/s. 11 for non-furnishing of Form-10 and where the assessee became aware of it and filed Form-10 before the AO in the re- assessment proceedings, the same was allowed by the Co-ordinate Bench of the Tribunal and the AO was directed to accept Form-10 and allow the benefit in terms of section 11(2) r.w. Rule 17. It was submitted that though the said decision is in the context of reopening, but the legal proposition that so long as Form-10 was available before the AO filed during the course of assessment proceedings, the same should have been considered by the AO, applies equally in the instant case. Further reliance was also placed on the decision of the Hon‟ble Madras High Court in the case of CIT vs. Spic Educational Foundation, Tax Appeal No. 1593 of 2008, dt. 12-12-2018, wherein it was held that the requirement of filing Form-10 at the time of assessment is only directory and if it would suffice if the same were filed at the stage of appeal, so long as all relevant information in support of the claim for accumulation is furnished by the assessee Printed from counselvise.com 5 ITA No. 264/Mum/2026 along with the claim for consideration by the assessing authority. It was submitted that in the said case, Form-10 was filed before the Ld.CIT(A) and the facts of the present case are on better footing where Form-10 has been filed during the course of assessment proceedings itself. It was accordingly submitted that necessary declaration in Form-10 may therefore be accepted and the assessee be allowed the benefit of accumulation in terms of section 11(2) of the Act and the addition so made by the AO and confirmed by the Ld.CIT(A) be directed to be deleted. 5. Per contra, the Ld. DR submitted that in the present case no valid Form-10 was filed within due date, Form-10 filed later is subject to condonation, but condonation has not been granted by the competent authority. Therefore, the AO was correct in disallowing the accumulation. The assessee's contention that the money was utilized in the next year is irrelevant unless Form-10 has been validly filed and accepted. Utilization cannot cure the statutory defect of not filing Form-10 within time. The CBDT circular extending time limit was issued after completion of assessment and does not automatically regularize Form-10 unless the competent authority passes a condonation order. He accordingly supported the order so passed by the Ld. CIT(A). 6. We have heard the rival contentions and perused the material available on record. It is not in dispute that the assessee has made the necessary declaration in its return of income in terms of accumulation u/s 11(2) of Rs 11,54,256/- and Form 10 has been duly filed during the course of assessment proceedings. Therefore, the necessary declaration and requisite form was available with the AO well before the completion of the assessment proceedings and in such a situation, we find that the assessee deserve the necessary relief in terms of claim of accumulation u/s 11(2) of Printed from counselvise.com 6 ITA No. 264/Mum/2026 the Act. The fact that the funds have subsequently been utilized for educational purposes in very next financial year as demonstrated by the return of income for assessment year 2018-19 further lends credence to the declaration so made by the assessee for the instant assessment year 2017-18. The decision of the Madras High Court in the case of Spic Educational Foundation (supra) supports the case of the assessee. In light of the same, we hereby direct the AO to allow the claim of accumulation so made by the assessee in terms of section 11(2) and the addition so made is hereby directed to be deleted. 7. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 23-03-2026 Sd/- Sd/- [MS. KAVITHA RAJAGOPAL] [VIKRAM SINGH YADAV] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 23-03-2026 TNMM Printed from counselvise.com 7 ITA No. 264/Mum/2026 Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai Printed from counselvise.com "