Exemption u/s 11 cannot be Denied for Vague Charitable Purpose in Form 10 when Fund Utilisation Proven: ITAT [Read Order]
ITAT Mumbai held that substantive compliance prevails over procedural lapses when charitable application of funds is clearly established.
![Exemption u/s 11 cannot be Denied for Vague Charitable Purpose in Form 10 when Fund Utilisation Proven: ITAT [Read Order]](https://images.taxscan.in/h-upload/2026/04/03/2131537-exemption-u-s-11-cannot-be-denied-for-vague-charitable-purpose-in-form-10-when-fund-utilisation-proven-itat-site-imagejpg.webp "Exemption u/s 11 cannot be Denied for Vague Charitable Purpose in Form 10 when Fund Utilisation Proven: ITAT [Read Order]")
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) allowed the assessee's appeal and held that the Assessing Officer should grant exemption under Section 11(2) of Income Tax Act, 1961 as a vague mention in Form 10 cannot be the basis for denying the benefits of accumulation. Also Read:GST Not Includible in Presumptive Income u/s 44B: ITAT Deletes Addition on Shipping...
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) allowed the assessee's appeal and held that the Assessing Officer should grant exemption under Section 11(2) of Income Tax Act, 1961 as a vague mention in Form 10 cannot be the basis for denying the benefits of accumulation.
The assessee, Senior Citizen Santacruz (Paschim) Sanstha which is a registered charitable trust filed its return stating nil income for AY 2017-18 and claimed the accumulation of Rs. 70.37 lakhs under Section 11(2). The AO disallowed the claim on the ground that the assessee mentioned the purpose of accumulation in Form 10 as merely charitable purpose which was held to be vague and not specific.
It was the contention of the assessee that the accumulation was specifically for the maintenance and development of an eco-friendly crematorium and all the details were furnished during the course of the assessment proceedings.
Further, It was stated that the failure to disclose the details in Form No. 10 was bona fide and that the claim should not be defeated on this ground.
The Revenue, on the other hand, supported the stand of the lower authorities on the ground of the necessity to disclose the purpose of the accumulation.
The Tribunal comprising Beena Pillai (Judicial Member) and Girish Agrawal (Accountant Member) held that the failure to disclose the purpose of the accumulation in Form No. 10 as required under Section 11(2) cannot be the basis to reject the claim if the Assessing Officer is otherwise aware of the exact purpose of the accumulation on the basis of the material placed before him.
The Tribunal observed that the accumulation cannot be allowed to exceed the objects of the trust, and the assessee had substantiated the utilization of the funds. Thus, the bench held that procedural defaults should not be allowed to override substantive compliance.
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