ITAT Mumbai deletes Rs. 57 lakh tax addition, says Form 10BB valid for trusts below Rs. 5 crore
MUMBAI (India CSR): In a significant judgment for charitable organisations, the Income Tax Appellate Tribunal (ITAT) Mumbai has ruled in favour of Yuvak Pratishthan, a 45-year-old registered trust, deleting a Rs. 57.21 lakh addition made by the tax department under Section 115BBI of the Income Tax Act, 1961.
The two-member bench comprising Justice (Retd.) C.V. Bhadang and Accountant Member Padmavathy S observed that the trust’s total income from its charitable activities was Rs,. 2.98 crore — below the Rs. 5 crore threshold prescribed under Rule 17B. Therefore, the tribunal held that the trust was right in filing its audit report in Form 10BB, not Form 10B.
The case arose after a clerical error in the trust’s Form 10B led the Central Processing Centre (CPC) to wrongly add Rs. 57.21 lakh as extra income. Despite the trust filing a revised audit report to correct the figure, the First Appellate Authority (FAA) dismissed it on technical grounds.
The tribunal found that mentioning Rs. 57.21 lakh as deemed income was merely an “arithmetical error,” as the trust had already declared and paid tax on Rs. 2.06 crore of unutilized accumulation.
“The FAA is not correct in confirming the addition made by CPC. The same is to be deleted,” the Tribunal said in its order pronounced on October 22, 20251761209131-CNCDpm-1-TO.
The ruling is expected to bring clarity to charitable trusts and NGOs regarding audit form filing and income declaration thresholds.
Yuvak Pratishthan, established in 1980 and registered under the Charity Commissioner of Mumbai, had declared Rs. 2.06 crore as deemed income under Section 11(3) and paid tax accordingly. However, a processing error led the Central Processing Centre (CPC) to add Rs. 57.21 lakh more, interpreting the trust’s Form 10B figures incorrectly. After the trust filed a corrected Form 10B, the appellate authority refused to accept it, leading to the appeal before ITAT. The tribunal has now directed deletion of the addition, terming the CPC’s adjustment and the FAA’s reasoning “unsustainable.”
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