ST. GREGORIOS EDUCATION AND MEDICAL TRUST ,MUMBAI V. DCIT EXEMTION , MUMBAI

ITA 1432/MUM/2025

AI Insights

The case involves St. Gregorios Education and Medical Trust, a registered public charitable trust, which appealed against the order of the Commissioner of Income-tax (Appeals) rejecting their claim for deduction under Section 11(2) of the Income Tax Act due to a delayed filing of Form 10B. The trust argued that the delay was caused by health issues of the senior citizen managing the accounts, which was uncontrollable and justified. The Income Tax Appellate Tribunal, Mumbai, after considering the precedents and the circumstances presented, decided in favor of the trust, allowing the appeal and directing the Assessing Officer to accept the delayed form.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633211 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2022-2023
• Other Referred Cases: Archana Foundation v. ADIT [2025] 174 taxmann.com 490 (Mumbai - Trib.), Commissioner of Income-tax v. Nagpur Hotel Owners' Association, Institution of Civil Engineers Society v. ACIT (Exemptions), Commissioner of Income-tax-III, Pune v. Sakal Relief Fund, Shree Dadar Jain v. Income-tax Officer (E), Mumbai, Commissioner of Income-tax v. Moti Ram Gopi Chand Charitable Trust
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KANTI DUTTA
• Assessee Lawyers: PRASHANT GHUMARE
• Keywords: Condonation of delay; Set aside; Charitable institution; Benefit of exemption
• Section: 119(2)(b); 10B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G”, MUMBAI BEFOR SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND MS. PADMAVATHY S, ACCOUNTANT MEMBER ITA No. 1432/Mum/2025 (Assessment year: 2022-23) St. Gregorios Education and Medical Trust, Mumbai St. Gregorios Nagar, Behind Bank of Baroda, V N Purab Marg, Chembur, MumbI-400 071 PAN: AACTS0996H vs DCIT Exemption/DCIT, CPC- Bangaluru 608, 6th Floor, Cumballa Hills, Peddar Road, Mumbai, Pin-400026 APPELLANT RESPONDENT Assessee by : Shri Prashant Ghumare Respondent by : Shri Arun Kanti Dutta CIT-DR Date of hearing : 09/06/2025 Date of pronouncement : 10/06/2025 O R D E R PER ANIKESH BANERJEE, J.M: The instant appeal of the assessee was filed against the order of the Learned Commissioner of Income-tax (Appeal) / Addl / JCIT(A)-2, Ludhiana [in short, ‘Ld.CIT(A)’] the order passed under section 250 of the Income tax Act, 1961 (in short, ‘the Act’) for A.Y 2022-23, date of order 30/12/2024. The impugned 2 ITA No.1432/Mum/2025 St. Gregorios Education & Medical Trust order emanated from the order of the CPC, Bengaluru (for brevity the “Ld. AO”), passed under section 143(1) of the Actdate of order 08/03/2023. 2. The brief facts of the case are that the assessee is a registered public charitable trust and registered under section 12AB of the Act and under the Maharastra Public Trust Act, 1950. The assessee is engaging in furtherance of the education object and running “St. Gregorios High School” at Chembur. During the impugned assessment year, the assessee filed the return on 07/11/2022decalring total income amount to Rs. 5,65,824/-. The assessee claimed deduction under section 11(2) of the Act related its income over expenditure. Due to delay in filing ROI and Form 10B, the Ld. AO rejected the deduction claimed U/s 11(2)& 11(1)(d) of the Act, determined the total income amount to Rs.19,70,86,888/- and the tax liability was computed amount to Rs.11,03,99,990/-during the processing of return under section 143(1) of the Act.The extended due date for e-filing of Form- 10B being Audit Report U/s 12A(1)(6) of the Act for AY 2022-23 was 07/10/2022 and the assessee has e-filed Form No-10B issued by the Chartered Accountant on 07/11/2022 which is delayed by 31days. Being aggrieved on the assessment order, the assessee filed an appeal before the Ld.CIT(A). In an alternative remedy, the assessee filed a petition under section 119(2)(b) for condonation of delay in filing Form 10B considering the CBDT circular No.02/2020 dated 03/01/2020 before the Ld. Commissioner of Income tax (Exemption), Mumbai [in short, the “Ld. CIT(E)”]. The assessee has taken plea that the person who is handling the accounts and accounting matter is a senior citizen and was suffering in health issues during the months of August & September 2022 could not attend to work on regular basis. Due to this there is delay in finalizing the accounts. It is placed 3 ITA No.1432/Mum/2025 St. Gregorios Education & Medical Trust that Form-10B was e-filed on 07/11/2022 before filing of ROI for alleged assessment year that was e-filed on extended due date. Finally, the Ld. CIT(E) rejected the petition for condonation of delay by an order dated 30/01/2025.So, the assessee has no other option to challenge the order of the Ld.CIT(A) dated 30/12/2024 before us as alternative remedy. 3. During the argument before the bench, the Ld.AR submitted that the assessee has filed the alleged form with a delay of 31 days and the reason for the same was well explained before the Ld. CIT(A). But the Ld. CIT(A) rejected the petition on the ground of jurisdiction for condonation of delay of Form-10B. 4. The Ld.DR argued and fully relied on the orders of the revenue authorities on the record. 5. During the course of arguments before the Bench, the Ld. AR submitted that the reason for the delay in filing the return had been duly explained before the revenue authorities. It was contended that the individual responsible for managing the accounts and related financial matters is a senior citizen who was suffering from health issues during the months of August and September 2022, due to which he was unable to attend to work on a regular basis. Consequently, there was a delay in filing Form 10B. The Ld. AR respectfully submitted that the issue is squarely covered by the decision of the Co-ordinate Bench of the Mumbai Bench ‘J(SMC)’ in the case of Archana Foundation v. ADIT [2025] 174 taxmann.com 490 (Mumbai - Trib.), order dated 06.05.2025. The relevant portion of paragraph 5 of the said order is extracted below: — “5. During the argument before the bench, the Ld.AR further mentioned that this reason for delay in filing return was duly explained before the revenue authority. The trustees are senior 4 ITA No.1432/Mum/2025 St. Gregorios Education & Medical Trust citizens and not very much conversant with the digital filing compliance, etc. So once the requirement of filing form 9 was that the signatory’s Adhaar should be linked with the digital signature, but the trustee was unable to comply with the requirement due to its inability. The Ld. AR respectfully stated that the issue is squarely covered by the order of the co-ordinate bench, Mumbai Bench ‘SMC’ for A.Y. 2017-18 in assessee’s own case bearing ITA No.1431/Mum/2021, date of order 05/09/2022. The relevant paragraphs 9 to 11 are extracted below:- “9. To arrive at this conclusion we found support from various judicial pronouncements as mentioned below: “*2001+ 114 Taxman 255 (SC)/*2001+ Commissioner of Income-tax v. Nagpur Hotel Owners’ Association It is abundantly clear from the wordings of sub-section (2) of section 11 that it is mandatory for the person claiming the benefit of section 11 to intimate to the assessing authority the particulars required, under rule 17 in Form No. 10. If during the assessment proceedings the Assessing Officer does not have the necessary information, the question of excluding such income from assessment does not arise at all. As a matter of fact, the benefit of excluding this particular part of the income from the net of taxation arises from section 11 and is subject to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time it completes the assessment. In the absence of any such information, it will not be possible for the assessing authority to give the assessee the benefit of such exclusion and once the assessment is so completed, it would be futile to find fault with the assessing authority for having included such income in the assessable income of the assessee. Therefore, even assuming that there is no valid limitation prescribed under the Act and the Rules, even then it is reasonable to presume that the intimation required under section 11 has to be furnished before the assessing authority completes the concerned assessment because such requirement is mandatory and without the particulars of the income, the assessing authority cannot entertain the claim of the assessee under section 11. Therefore, compliance of the requirement of the Act will have to be any time before the assessment proceedings. Further, any claim for giving the benefit of section 11 on the basis of information supplied subsequent to the completion of assessment would mean that the assessment will have to be reopened. The Act does not contemplate such reopening of the assessment. In the instant case, it was evident from the records of the case that the respondent did not furnish the required information till after the assessments for the relevant years were completed. In the light of the above, the stand of the revenue that the High Court erred in answering the question in favour of the assessee was correct, and that finding was to be reversed. 5 ITA No.1432/Mum/2025 St. Gregorios Education & Medical Trust [2021] 130 taxmann.com 506 (Chandigarh - Trib.) Institution of Civil Engineers Society v. ACIT (Exemptions) [2017] 81 taxmann.com 396 (Bombay) Commissioner of Income-tax-III, Pune v. Sakal Relief Fund Section 11 of the Income-tax Act, 1961 read with rule 17 of the Income-tax Rules, 1962 - Charitable or religious trust - Exemption of income from property held under (Accumulation of income) - Assessment years 2000-01 and 2001-02 - Whether for excluding an income of a charitable trust from net of taxation under section 11, intimation in Form 10 was to be filed with Assessing Officer before completion of assessment proceedings - Held, yes - Whether even if Form 10 was filed during re-assessment by assessee-trust, benefit of accumulation under section 11(2) was available because such filing would be considered within time allowed for furnishing return of income under section 139(4) - Held, yes [Paras 12 & 13][In favour of assessee] [2019] 111 taxmann.com 272 (Mumbai - Trib.) Shree Dadar Jain v. Income-tax Officer (E), Mumbai Income-tax Act, 1961, read with rule 17 of the Income-tax Rules, 1962 - Charitable or religious trust - Exemption of income from property held under (Accumulation of income) - Assessment year 2014-15 - Assessee a religious trust claimed deduction under section 11(2), amounting to Rs. 6.50 crores - Assessing Officer denied deduction so claimed on ground that assessee had not filed Form No. 10 for accumulation of income electronically alongwith resolution of Trustee - However, all requirements for claiming accumulation of income as stipulated under section 11(2) were satisfied except that Form No. 10 was not submitted before stipulated time as provided under section 139(1) but same was filed in physical mode before completion of assessment proceedings and there was no dispute between rival parties as to genuineness of deduction so claimed - It was also undisputed that purpose of accumulation of income under section 11(2) was to purchase property for furtherance of activities and objects of assessee, and assessee had invested said accumulation of income in one mode prescribed under section 11(5) by taking FDR's with banks - Moreover, assessee did purchase property in immediately succeeding financial year and aforesaid accumulation of income under section 11(2) stood applied in immediately succeeding year for purposes of objects and activities of assessee trust - Whether therefore, assessee would be entitled to deduction under section 11(2) as claimed - Held, yes [Para 8.19] [In favour of assessee]. [2014] 49 taxmann.com 315 (Allahabad) Commissioner of Income-tax v. Moti Ram Gopi Chand Charitable Trust Section 11 of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under (Accumulation of income) - Assessment year 2008-09 - Whether benefit of exemption under section 11 is available on setting apart of 85 per cent amount to be spent in next year before assessment is complete - Held, yes - Whether even when a request by way of letter, which complies with requirement and furnishes all information required in Form 10 was made available on record and there was sufficient proof before Assessing Officer that amount was not 6 ITA No.1432/Mum/2025 St. Gregorios Education & Medical Trust only kept apart but was also spent in next year, exemption was to be granted - Held, yes [Paras 9 and 11] [In favour of assessee+” 10. Keeping in view the facts of the case and judicial pronouncements by the Honorable Apex Court, Honorable Jurisdictional High court and coordinated bench of ITAT, we are inclined to allow the appeal of the assessee. It is hereby directed to the authorities below for deletion of addition made in the guise of withdrawal of exemption u/s. 11(1) of the Act. 11. In the result, appeal filed by the assessee is allowed.” 5.1. In our considered opinion, the explanation provided by the assessee for the delay of 18 days in filing the ITR and the requisite reports is found to be reasonable and satisfactorily justified. In this regard, we place reliance on the decision of the Coordinate Bench of the ITAT, Mumbai in ITA No. 1431/Mum/2021 (supra). Accordingly, the impugned appellate order is set aside, and the matter is remanded to the file of the Ld. Assessing Officer for the purpose of allowing the assessee's claim for deduction under Section 11(2) of the Act, after due verification of the relevant forms filed along with the ITR. The grounds raised by the assessee are allowed. Consequently, the addition of Rs. 56,42,973/- made by the Learned Assessing Officer stands deleted.” 6. We have heard the rival submissions and perused the material available on record. It is observed that the assessee filed Form 10B with a delay of 31 days, although the ROI was filed within the extended due date. It is a settled position in law that where the assessee has satisfactorily explained the reason for the delay and has complied with the other procedural requirements for claiming exemption, the benefit should not be denied on mere technical grounds. In the present case, during the processing of the return under section 143(1) of the Act, the said form was already available on record, and the Assessing Officer could have easily verified the applicability of the provisions of section 11 of the Act. The delay in filing Form 10B is merely procedural in nature, and the assessee has otherwise fulfilled the substantive conditions.In view of the above, and respectfully following the decision of the Co-ordinate Bench of the ITAT, Mumbai, 7 ITA No.1432/Mum/2025 St. Gregorios Education & Medical Trust we direct the Ld. AO to condone the delay of 31 days and to accept Form 10B after carrying out necessary verification in accordance with law. The assessee shall be entitled to the benefit under section 11 of the Act upon due satisfaction of the conditions prescribed for claiming such exemption. Accordingly, the ground raised by the assessee is allowed. 7. In the result, the appeal of the assessee bearing ITA No.1432/Mum/2025 is allowed. Order pronounced in the open court on 10th day of June 2025. Sd/- sd/- (MS. PADMAVATHY S) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,दिन ांक/Dated: 10/06/2025 Pavanan Copy of the Order forwarded to: 1. अपील र्थी/The Appellant , 2. प्रदिव िी/ The Respondent. 3. आयकरआयुक्त CIT 4. दवभ गीयप्रदिदनदि, आय.अपी.अदि., मुबांई/DR, ITAT, Mumbai 5. ग र्डफ इल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, Mumbai "