Academy for Technical & Management Excellence Vs DCIT (ITAT Bangalore)
Mere Filing of Form 10 Cannot Create Taxable Income: Bangalore ITAT Deletes ₹2 Crore Addition Against Educational Trust
The Bangalore ITAT held that merely because a charitable trust filed Form No. 10 for accumulation under section 11(2), it cannot be presumed that the trust earned undisclosed income of ₹2 crore. In the absence of any evidence showing actual receipt of such income, the addition was unsustainable.
The assessee-trust, which runs educational institutions, had filed its return claiming exemption under section 11. During assessment, the Assessing Officer noticed that Form No. 10 had been filed showing accumulation of ₹2 crore for construction and expansion of educational buildings up to 31.03.2023. Since the trust later stated that no such accumulation had actually arisen during the year, the AO concluded that the trust must have received an unaccounted donation of ₹2 crore and added the amount as income. The AO also treated ₹88.51 lakh representing opening capital work-in-progress as shortfall in application of income and denied the claim of excess application of earlier years.
The Tribunal observed that filing Form No. 10 may have been done out of abundant caution, but such filing by itself does not establish that the trust earned ₹2 crore of undisclosed income. Since neither the AO nor the CIT(A) possessed any evidence showing receipt of such income outside the books, the addition was based purely on presumption and was directed to be deleted.
On the issue of capital work-in-progress, the Tribunal accepted the trust’s contention that the opening WIP of ₹88.51 lakh had never been claimed as application of income. The trust had claimed application only when the corresponding capital assets were completed and capitalised. Accordingly, the addition relating to opening WIP was also deleted.
As regards the claim of excess application of earlier years amounting to ₹27.44 crore, the Tribunal upheld the CIT(A)’s direction to the Assessing Officer to verify the claim and grant the benefit if found correct.
Accordingly, the trust succeeded on the principal issues and the appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. ITA No. 7/Bang/2026 is filed by Academy for Technical & Management Excellence (the assessee/appellant) for assessment year 2018 – 19 against the appellate order passed by the National Faceless Appeal Centre Delhi (the learned CIT – A) dated 16 December 2025 wherein the appeal filed by the assessee against the assessment order passed under section 143 (3) r.w.s. 143 (3)(3A) & 143(3B) of the Income Tax Act, 1961 [the Act] was partly allowed.
