Friends Associates Charitable Trust Vs ITO (ITAT Delhi)
Summary: The Delhi ITAT considered whether a charitable trust could be denied its claim for accumulation of ₹13,95,124 under Section 11(2) merely because Form No. 10 was not filed within the prescribed time. The assessee, registered under Section 12A, had claimed the accumulation in its return for AY 2018-19 but, on the advice of a legal consultant, inadvertently filed Form No. 9A instead of Form No. 10. The delay and wrong filing had already been condoned by the CIT (Exemptions) under Section 119(2)(b). Although Form No. 10 was subsequently filed belatedly on 7 May 2026, after the NFAC order dated 10 March 2026, the Tribunal found that the accumulation claim had already been made in the income-tax return and audit report in Form 10B. It held that the non-filing of Form No. 10 within time, by itself, could not be the relevant factor for denying the claim under Section 11(2), particularly when the earlier wrong filing and delay had been condoned. The Tribunal restored the appeal to the Assessing Officer for de novo adjudication in accordance with law and directed that the Revenue should not raise any objection regarding the belated filing of Form No. 10 and should adjudicate the issue purely on merits. The appeal was accordingly allowed for statistical purposes.
Delhi ITAT: Belated Form 10 Alone Cannot Defeat Trust’s Section 11(2) Exemption When Accumulation Was Claimed in Return and Form 10B
The Delhi ITAT held that a charitable trust’s claim for accumulation of ₹13,95,124 under Section 11(2) could not be denied merely because Form 10 was not filed within the prescribed time. The trust had inadvertently filed Form 9A instead of Form 10 on the advice of its consultant, and the delay and incorrect filing had already been condoned by the CIT(Exemptions) under Section 119(2)(b).
Although the trust filed Form 10 belatedly on 7 May 2026, after the NFAC’s order, the Tribunal observed that the accumulation claim had already been disclosed in the return of income and audit report in Form 10B. Therefore, delayed filing of the prescribed form could not, by itself, justify denial of the substantive exemption.
The matter was restored to the AO for de novo adjudication on merits, with an express direction that the Revenue shall not object to the belated filing of Form 10. The appeal was allowed for statistical purposes.
List of Cases Discussed / Relied Upon
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The appeal in ITA No.6252/Del/2026 for AY 2018-19, arises out of the order of the ld Jt. Commissioner of Income Tax (Appeals)- 6, Kolkata [hereinafter referred to as ‘ld. JCIT(A)’, in short] dated 10.03.2026 against the order of assessment passed u/s 143(1) of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 08.02.2020 by the Assessing Officer, CPC, Bengaluru (hereinafter referred to as ‘ld. AO’).
2. The only issue to be decided in this appeal is as to whether the learned claim of exemption under section 11 of the Act in the facts and circumstances of the instant case for non-filing of Form 10.
3. I have heard the rival submissions and perused the materials available on record. The Assessee is a charitable trust duly registered under Section 12A of the Act. In the return of income filed by the Assessee for assessment year 2018-19, the Assessee claimed deduction under Section 11(2) of the Act for accumulation of income of Rs. 13,95,124 for which the Assessee was required to file Form No. 10 on or before the due date of filing the return of income under Section 139(1) of the Act. The Assessee based on the advice of a legal consultant, inadvertently filed Form No. 9A instead of filing Form No. 10. This was condoned by Learned Commissioner of Income Tax (Exemptions), Delhi vide order under section 119(2)(b) of the Act dated 22 -11- 2021. Accordingly, this Tribunal in the first round of proceedings in ITA No 504/Del/2021 dated 22-11- 2022 had restored the appeal to the file of Learned CIT(A) for denovo adjudication in accordance with law. In the second round of proceedings, the Learned CITA found that it was not a case where Form No. 9A was required to be filed, but it was the case of filing of Form No.10. On that ground, the Learned NFAC dismissed the appeal for non- filing of Form No. 10. The order of Learned NFAC was passed on 10-03-2026.
4. It is not in dispute that Assessee had indeed filed Form No. 10 belatedly on 07-05- 2026, i.e. after the date of passing of order of learned NFAC. But I find that the same requires factual verification. Ultimately the action of the belated filing and wrong filing of prescribed form was already condoned by the Learned CIT (Exemptions) under section 119(2)(b) of the Act. Hence the Learned NFAC would not be justified in holding that the Form No. 10 was not filed by the Assessee in the instant case. Either way, it is only accumulation of income that is being sought by the Assessee trust in terms of section 11(2) of the Act. Considering the fact that the claim of accumulation of income was indeed made in the income tax return itself and in the audit report in Form 10B, the non- filing of Form 10 alone in time could not be the relevant factor in denying the claim of deduction under section 11(2) of the Act. Hence in the interest of substantial justice and fair play, I deem it fit and appropriate to restore this appeal to the file of the learned AO for denovo adjudication in accordance with law. I make it very clear that in the set aside assessment proceedings, the revenue shall not raise any objection with regard to the belated filing of Form No. 10 and purely adjudicate the issue on merits. Accordingly, the grounds raised by the Assessee are allowed for statistical purposes.
5. In the result, the appeal of the Assessee is allowed for statistical purposes.
Order pronounced in the open court on 25th -August-2026.
