Salwan Education Trust Vs DCIT (Exemption) (ITAT Delhi)
Form-10 Is Not a Straitjacket: Education Trust’s Accumulation Can Be Applied Across Objects—ITAT Delhi Grants Full Relief
Assessee-Trust, registered u/s 12A & engaged solely in running educational institutions since 1950, had accumulated funds u/s 11(2) by filing Form-10 for AY 2013-14 for construction of school buildings at Gurgaon & Tronica City. In AY 2018-19, AO held that part of accumulated amount of ₹3,94,60,633/- was not utilised strictly for the specific purpose mentioned in Form-10 & since no fresh permission was sought from AO to deploy funds for other purposes, brought ₹2,63,76,431/- to tax u/s 11(3). CIT(A) NFAC sustained the action holding that absence of intimation/application to AO was fatal.
Tribunal reversed the lower authorities. ITAT noted that Trust’s only object was promotion of education & entire revenue & capital expenditure of ₹5.47 crore was incurred for running schools, which is undeniably charitable. Relying on DIT(E) vs Daulat Ram Educational Society (278 ITR 260), Bochasanwasi Shri Akshar Purshottam Public Charitable Trust (SC) & Gokul Education Foundation (SC), Tribunal held that section 11(2) does not prohibit plurality of purposes, so long as expenditure is within charitable objects of Trust. Mere procedural or technical defect in Form-10 or non-intimation to AO cannot defeat substantive exemption when application of income is otherwise established.
