Imperial College India Foundation Vs ITO Exem. Ward 1(3) (ITAT Mumbai)
ITAT Mumbai allowed a charitable trust’s claim under Section 11(2), ruling that a generic purpose in Form 10 is acceptable if supported by a specific Board Resolution for accumulation (e.g., scholarships) and the funds are later applied for that object.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, in the case of Imperial College India Foundation Vs. ITO Exem. Ward 1(3), addressed the critical requirement for charitable trusts to specify the purpose of accumulating income under Section 11(2) of the Income Tax Act, 1961. The dispute arose when the Assessing Officer (AO) disallowed an accumulated income of ₹62,28,989 because the purpose stated in Form 10 was deemed too generic (“towards the object of the trust”). The CIT(A) upheld the disallowance, stressing that the statutory Form 10 must contain a specific, clear purpose, arguing that a broad statement did not meet the requirement of Section 11(2).
The ITAT, however, found that while Form 10 used the generic phrase, it was supported by a specific Board Resolution dated September 20, 2016, which explicitly stated that the accumulated amount would be utilized for “providing scholarship (educational purpose).” This resolution clarified the trust’s specific intent. Relying on its own precedent in Bal Jeevan Trust V/s ITO, the Tribunal observed that the vagueness in Form 10 should not be fatal, particularly when the true intention is documented elsewhere and the funds are subsequently utilized for the trust’s educational objects. The assessee also contended that the entire accumulated amount had been spent for the stated purpose within the permissible five-year period.
