IMC Trust Vs ITO Exemption (ITAT Mumbai)
ITAT Mumbai: Vague Purpose in Form 10 Can Jeopardize Sec 11(2) Claim-Matter Remanded for Verification
The Mumbai ITAT held that specific and concrete purpose is essential for accumulation under Section 11(2), and vague or generalized objects in Form 10 may lead to denial of exemption.
In this case, the charitable trust accumulated funds stating purposes such as conducting seminars, workshops, and promoting trade. The Assessing Officer and CIT(A) rejected the claim, holding that the purpose was not clearly specified and lacked precision, as required under law.
The Tribunal agreed that the purpose mentioned was not sufficiently specific and failed to meet statutory requirements. However, considering the assessee’s submission that funds were actually utilized for charitable purposes within the prescribed time, the ITAT took a balanced view.
Accordingly, the matter was restored to the AO for fresh verification, directing examination of actual utilization and allowing the assessee to substantiate the purpose with evidence. The appeal was thus allowed for statistical purposes, emphasizing that substance of utilization can be examined even if initial declaration lacks clarity.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee filed against the order of the Ld. Commissioner of Income Tax ADDL/JCIT-A, Thiruvanantpuram [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2016-17, date of order 18.11.2025. The impugned order emanated from the order of the Ld. Income Tax Officer (Exemption) Ward 1(3), Mumbai (for brevity the ‘Ld. AO’) order passed under section 143(3) of the Act, date of order 10.12.2018.
