Leapforword Vs ITO (ITAT Mumbai)
Vague Purpose in Form 10? ITAT Gives Trust a Second Chance
In this case, the assessee trust claimed accumulation of ₹25 lakh under Section 11(2), but in Form 10 the purpose was merely stated as “Social”, without any specific clarity. The AO rejected the claim on the ground that the purpose of accumulation must be precise and not vague. This view was upheld by the CIT(A).
Before the ITAT, the assessee argued that the funds were actually utilized for its charitable objects in subsequent years and sought an opportunity to substantiate the same. However, the Tribunal noted that neither Form 10 nor the board resolution clearly specified the purpose of accumulation, which is a mandatory requirement under Section 11(2).
Considering the assessee’s claim of actual utilization and relying on judicial precedent, the ITAT restored the matter back to the AO for fresh verification. The AO was directed to examine the actual utilization and allow the assessee to furnish detailed explanations and supporting evidence. The appeal was thus allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee filed against the order of Ld. CIT(A) ADDL/JCIT(A)-2, Chennai [for brevity the “Ld. CIT(A)”] order passed under section 250 of the Income Tax Act 1961 [for brevity ‘the Act’] order passed for the Assessment Year 2017-18, date of order 02.01.2026. The impugned order emanated from the order of the Ld. Income Tax Officer, Exemption Ward 1(4), Mumbai order passed under section 143(3) of the Act, date of order 18.12.2019.
