Ramkrishna Bajaj Charitable Trust Vs DCIT (ITAT Mumbai)
Dividend Exemption Can’t Be Denied Merely Because Trust Violated s.11(5): ITAT Mumbai Allows s.10(34) Relief to Charitable Trust
ITAT Mumbai (D Bench) in Ramkrishna Bajaj Charitable Trust vs DCIT (ITA No. 6544/Mum/2025, AY 2013-14, order dated 24.12.2025) has held that dividend income exempt u/s 10(34) cannot be taxed merely because the charitable trust violated s.11(5) r.w.s. 13(1)(d) by holding shares as investments. The Tribunal ruled that income which is excluded at source under Chapter III (s.10) never enters the computation under s.11, and therefore cannot be brought to tax u/s 164(2).
The Assessee-trust, though registered u/s 12A, had consciously not claimed exemption u/s 11 & 12 for the year, admitting violation of prescribed investment norms. The AO taxed dividend income of ₹2.99 crore at Maximum Marginal Rate by invoking s.164(2), a view affirmed by CIT(A). Reversing this, ITAT relied heavily on Bombay HC judgment in DIT(E) vs Jasubhai Foundation and a series of Bajaj Group trust rulings, holding that s.10 exemptions are income-specific, while s.11 is application-based, and one does not override the other for AYs prior to insertion of s.11(7).
The Tribunal further held that amendment inserting s.11(7) w.e.f. AY 2015-16 is prospective, and hence irrelevant for AY 2013-14. Consequently, dividend income remained fully exempt u/s 10(34).
On donations, ITAT directed allowance of deduction u/s 80GGA r.w.s. 35AC, following Tata Education Trust line of decisions, even where claims were made through computation due to return-form limitations, subject to factual verification.
On rate of tax, ITAT held that once dividend itself is exempt, the question of MMR does not arise; even otherwise, a charitable trust not claiming s.11 benefits is taxable at normal slab rates as an AOP, in line with CBDT Circular No. 320 dated 11-01-1982.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
