Medak Catholic Mission Vs ITO (ITAT Hyderabad)
The ITAT Hyderabad allowed the assessee’s appeal against the CIT(A), NFAC, Delhi order dated 30 May 2025 for AY 2018-19. Medak Catholic Mission, a Charitable & Religious Trust registered under Section 12A, had filed its return on 21 September 2018 declaring nil income after claiming exemption under Section 11. It had filed Form No.10 and accumulated unspent income of Rs.1,51,01,831 under Section 11(2) for maintenance of priests/preachers/religious functionaries, construction of buildings and construction/maintenance of places of worship. During scrutiny, the AO rejected accumulation of Rs.30 lakh relating to maintenance of priests/preachers/religious functionaries, holding that the purpose was general and represented routine salary and allowance payments rather than a specific purpose under Section 11(2). The AO accepted the remaining accumulation of Rs.1,21,01,831 and also made protective additions relating to earlier accumulations of Rs.20 lakh for AY 2014-15, Rs.37,23,254 for AY 2016-17 and Rs.20 lakh for AY 2017-18. The total income was consequently determined at Rs.1,07,23,250. The CIT(A) sustained the additions, relying on CIT v. Hotel & Restaurant Association and CIT v. Nagpur Hotel Owners Association, and held that Section 11(2) accumulation should be for a definite purpose linked to capital expenditure or long-term projects rather than routine payments.
