Assessee Hira Foundation Trust, Bangalore Income Tax Officer, (Exemptions), Circle- 1, Bangalore

Last updated: 04 December 2020

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The Hira Foundation Trust appealed the denial of a £75 lakh deduction claimed for accumulated income for the 2014-15 assessment year. The deduction was rejected because the trust failed to submit the required Form 10 by the due date. Although the form was eventually filed late, the tax authorities maintained that the omission meant the deduction could not be allowed.

Court :
ITAT Bangalore

Brief :
The assessee has filed this appeal challenging the order dated 28.2.2020 passed by Ld. CIT(A)-14, Bengaluru and it relates to the assessment year 2014-15. The grounds urged by the assessee relate to denial of deduction claimed u/s 11(2) of the Income-tax Act,1961 ['the Act' for short] relating to accumulation of income.

Citation :
ITA No.406/Bang/2020

IN THE INCOME TAX APPELLATE TRIBUNAL
“B’’BENCH: BANGALORE
BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER
AND
SHRI B.R. BASKARAN, ACCOUNTANT MEMBER
ITA No.406/Bang/2020
AssessmentYear:2014-15

M/s. Hira Foundation Trust
No.9, Ex-Servicemen Colony
R.T. Nagar
Bengaluru-560 032
PAN NO :AAATH3070R
APPELLANT

Vs.

ITO (Exemptions)
Circle-1
Bengaluru
RESPONDENT

Appellant by : Shri Raghavendra R. Chakravarthy,A.R.
Respondent by : Shri Priyadarshi Mishra, D.R.

Date of Hearing : 09.11.2020
Date of Pronouncement : 01.12.2020

O R D E R

PER B.R. BASKARAN, ACCOUNTANT MEMBER:

The assessee has filed this appeal challenging the order dated 28.2.2020 passed by Ld. CIT(A)-14, Bengaluru and it relates to the assessment year 2014-15. The grounds urged by the assessee relate to denial of deduction claimed u/s 11(2) of the Income-tax Act,1961 ['the Act' for short] relating to accumulation of income.

2. The assessee is a charitable trust and it filed its return of income for the year under consideration declaring Nil income. In the return of income, the assessee claimed deduction of Rs.75 lakhs u/s 11(2) of the Act on the plea that it has accumulated its income in terms of section 11(2) of the Act for application in future.However, the assessee did not furnish Form No.10, the statutory form prescribed for reporting about accumulation of income. This form is required to be furnished for claiming the above said deduction. Hence, in the absence of Form No.10, the claim of accumulation of Rs.75 lakhs was rejected while processing the return of income u/s 143(1) of the Act and a tax demand of Rs.32.59 lakhs was raised upon the assessee.

3. The assessee challenged the above said action by filing the appeal before Ld. CIT(A). It was submitted that the prescribed form No.10 was filed on 30.1.2020, much beyond the due date for filing the same and also after completion of assessment proceedings. Accordingly, it was pleaded before Ld CIT(A) that the deduction towards accumulation of income should be allowed. The Ld. CIT(A), however, rejected the contentions of the assessee with the following observations:

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FAQ :

The appeal concerned the denial of a £75 lakh deduction claimed by the Hira Foundation Trust for income accumulated for future application.

The deduction was denied because the Hira Foundation Trust did not furnish the mandatory Form 10, which is required to report the accumulation of income, by the statutory due date.

The Hira Foundation Trust filed Form 10 on 30 January 2020, which was significantly after the due date and after the assessment proceedings had concluded.

Upon processing the return, a tax demand of £32.59 lakhs was raised because the claim for accumulation of £75 lakhs was rejected due to the absence of Form 10.