Dr. Ernest Borges Memorial Fund Vs ITO (Exemption) (ITAT Mumbai)
The appeal was filed by Dr. Ernest Borges Memorial Fund against the order dated 21.01.2026 passed by the Commissioner of Income Tax (Appeals) under section 250 of the Income Tax Act, 1961 for A.Y. 2016-17. The assessee had filed its original return declaring nil total income after claiming exemption under section 11. It subsequently revised the return and claimed deemed application of income of Rs.31,22,955/- by exercising the option under clause (2) of the Explanation to section 11(1) read with Rule 17 of the Income-tax Rules, 1962.
The return was selected for complete scrutiny under CASS. The Assessing Officer noted that the assessee had also claimed accumulation of income of Rs.1,06,79,808/- under section 11(2). According to the AO, Form No.10 was mandatory for claiming accumulation under section 11(2), while Form No.9A was required for exercising the option of deemed application. Since the prescribed Form No.9A had not been filed within the stipulated period, the AO denied the deemed application claim of Rs.31,22,955/- and added the amount to the assessee’s total income.
Before the Commissioner (Appeals), the assessee stated that its application for condonation of delay in filing Form No.9A was pending before the PCIT (Exemptions) under section 119(2)(b). Referring to CBDT Circular No.7/2018 dated 20.12.2018, the Commissioner directed the AO to consider the order passed on the condonation application and allow the deemed application claim if the delay was condoned, or sustain the disallowance if the application was rejected. The PCIT (Exemptions) subsequently rejected the condonation application.
