The Income Tax Appellate Tribunal (ITAT), Bengaluru Bench, has granted significant relief to the National Academy of RUDSETI in a dispute concerning tax exemption under Section 11 of the Income Tax Act for the Assessment Year 2018-19.
The charitable trust, registered under Section 12AA of the Income Tax Act, had challenged an order passed by the National Faceless Appeal Centre (NFAC), Delhi, on July 5, 2024.
Genuine Form 10 error cannot deny exemption
The dispute arose after the trust declared an accumulation of ₹1.44 crore in its income tax return but failed to mention the amount in Form 10, which is required for claiming accumulation benefits under Section 11(2).
The trust later rectified the omission by filing a revised Form 10 before completion of the assessment proceedings. However, tax authorities rejected the claim and added the accumulated amount to the trust’s taxable income.
After examining the matter, the ITAT observed that the omission was a genuine and inadvertent error. The tribunal noted that the accumulation details were already disclosed in the income tax return and audit report.
Since the revised Form 10 was filed before the assessment was completed, the tribunal held that denying the exemption was unjustified and directed deletion of the addition.
Anonymous donation addition sent back for review
The case also involved an addition of ₹52.31 lakh treated as anonymous donations under Section 115BBC of the Income Tax Act.
The trust argued that the amount represented excess income and unspent grants received from the Ministry of Rural Development and that complete donor information was available.
The tribunal found that detailed records relating to the donations existed and required proper verification. Consequently, it set aside the addition and remanded the matter to the tax authorities for fresh examination of documents and explanations submitted by the trust.
With this, the ITAT partly allowed the appeal filed by the assessee