JM Financial Foundation Vs ITO (ITAT Mumbai)
ITAT Mumbai on CSR Funds & Form 10: Substantive Justice Prevails Over Procedural Lapse
Mumbai ITAT “F” Bench, in JM Financial Foundation v. ITO (Exemptions) (ITA Nos. 6557 & 6558/Mum/2025, AYs 2017-18 & 2018-19; order dated 29.12.2025), has set aside the NFAC orders and remitted the matter back to the AO for fresh consideration of CSR funds received by a charitable trust and the consequential requirement of filing Form 10.
The Assessee-trust, registered u/s 12A, acted as an implementing agency for CSR activities of group companies and received substantial CSR contributions which were earmarked, restricted and subject to donor directions, monitoring and possible refund if unutilised. The AO treated unspent CSR funds as income u/s 11 and denied exemption, inter alia, due to non-filing/delayed filing of Form 10. The NFAC upheld the reassessment and additions.
The Tribunal admitted additional grounds and Form 10 (for AY 2018-19) and noted that the CSR funds constituted “tied-up grants” with specific directions and fiduciary obligations, and that the Assessee was under a bona fide belief that such funds did not partake the character of income freely available for application. While holding that filing of Form 10 is not a mere formality, the Tribunal emphasised that non-filing in the given facts was not culpable negligence and that substantial justice must prevail over technicalities. Relying on settled principles (including NTPC, Jute Corporation, Katiji), the Tribunal directed that delay in filing Form 10 for AY 2018-19 be pursued before CBDT for condonation, and thereafter the AO shall examine the claim in accordance with law.
For AY 2017-18, where Form 10 and Board Resolution were already filed before CIT(A), the AO was directed to consider the same afresh. Both years were remanded with a direction to grant due opportunity to the Assessee. Appeals were thus partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
