The Income Tax Appellate Tribunal, Bangalore, has clarified that a charitable trust’s inability to produce its original trust deed does not permanently extinguish its eligibility for exemption under Section 11 of the Income Tax Act. Where the trust has been historically registered and can substantiate its identity and objects through sworn affidavits and constitutional documents, the denial of exemption must be revisited with procedural flexibility.
Background & Facts
The Dispute
The appellant, M/s. Karnataka State Football Association, is a trust registered under Section 12A of the Income Tax Act, 1961 since 18.02.2002. It operates the Bangalore Football Stadium and engages in promoting football as a public charitable activity. For Assessment Years 2022-23 and 2024-25, the Central Processing Centre (CPC) disallowed its claims for exemption under Section 11 and accumulation under Section 13(9), citing non-production of registration documents. The Appellate Commissioner (CIT(A)) upheld this denial.
Key Facts
- The trust was originally registered under Section 12A on 18.02.2002 and has been continuously operating since 1953
- The original trust deed was lost, preventing the filing of Form 10A for renewal of registration under the amended provisions
- The time limit for fresh registration under Section 12AB was extended to 31.03.2022, but the trust missed it due to the unavailability of the deed
- On 25.09.2024, the trust submitted Form 10A along with a sworn affidavit of loss of the trust deed and copies of its Memorandum of Association and Bye-laws
- Provisional registration was granted on this basis
- For AY 2022-23, the trust filed its return on 31.10.2022 declaring gross receipts of Rs. 2,38,26,626/-
- It claimed deductions of Rs. 2,27,17,342/- for expenditure on charitable objects and Rs. 35,73,994/- as accumulated income, filed via Form 10B on 30.09.2022
- The CPC processed the return under Section 143(1) on 30.06.2023 and disallowed all exemptions, stating no valid registration was produced
- The CPC noted discrepancies between Part B-TI disclosures and Form 10AC data, and that the trust failed to respond to its query (as per page 8 of the intimation)
- The trust filed appeals for both AYs, but these were filed 82 days late
- An application for condonation of delay was submitted with affidavits from the Principal Officer and the tax consultant, attributing the delay to staff negligence
Procedural History
- 18.02.2002: Trust registered under Section 12A
- 31.03.2022: Deadline for fresh registration under Section 12AB expired
- 25.09.2024: Trust filed Form 10A with sworn affidavit and copies of MOA and Bye-laws
- 31.10.2022: Return filed for AY 2022-23
- 30.09.2022: Form 10B filed for accumulation claim
- 13.06.2023: CPC intimation issued for AY 2022-23
- 29.06.2025: CPC intimation issued for AY 2024-25
- 31.03.2025: CIT(A) order dismissing appeals for both AYs
- May 2025: Form 36 prepared but not filed on time due to counsel’s staff negligence
- 10.03.2026: Hearing before ITAT
- 29.04.2026: Judgment pronounced
The Parties' Positions
For the Assessee: The trust has been continuously registered since 2002; the loss of the deed was an administrative oversight, not a legal defect. The sworn affidavit and constitutional documents are sufficient to establish legitimacy. The exemption claim is substantiated by actual expenditure and accumulation records. Precedents from CIT v. Nagpur Hotel Owners’ Association and DDIT(E) v. Petroleum Sports Promotion Board support allowing deductions even where registration is technically pending.
For the Revenue: The law requires valid registration under Section 12A or 12AB to claim exemption under Section 11. No valid registration was produced at the time of processing. The affidavit cannot substitute a registered trust deed. The delay in filing appeals is unexplained and not condonable.
Relief Sought
The appellant sought: (1) restoration of exemption under Section 11 for AYs 2022-23 and 2024-25; (2) allowance of accumulated income of Rs. 35,73,994/-; (3) deletion of the CPC’s adjustments; and (4) condonation of delay in filing appeals.
The Legal Issue
Can a charitable trust claim exemption under Section 11 of the Income Tax Act when its original trust deed is lost, but it provides a sworn affidavit and copies of its Memorandum of Association and Bye-laws to substantiate its registration status and charitable objects?
Arguments Presented
For the Appellant
The Assessee relied on CIT v. Nagpur Hotel Owners’ Association (2001) 247 ITR 201 (SC), which held that the substance of charitable purpose and continuous operation outweigh technical non-compliance where the intent to comply is evident. It also cited DDIT(E) v. Petroleum Sports Promotion Board (2014) 362 ITR 235 (Del), affirming that denying exemption while allowing income without corresponding expenditure violates the principle of matching income with expenses. The trust argued that the loss of the deed was beyond its control and that the sworn affidavit, supported by constitutional documents, should be accepted as prima facie proof of registration. The delay in filing appeals was due to negligence of its counsel’s staff, not the trust itself.
For the Respondent
The Revenue contended that Section 11 is conditional upon valid registration under Section 12A or 12AB. The absence of the original trust deed rendered the registration incomplete. The affidavit, while evidentiary, cannot replace the statutory requirement of a registered deed. The delay in filing appeals was not due to any external circumstance but internal administrative failure, and thus not a sufficient cause under Section 249(2). The CPC’s adjustments were legally valid.
The Court's Analysis
The Tribunal acknowledged that the Assessee’s registration under Section 12A since 2002 was valid and had not been cancelled. The loss of the trust deed was not a voluntary act but an unfortunate administrative lapse. The Tribunal emphasized that the trust has operated continuously for over 70 years with unaltered charitable objects, and the submission of the sworn affidavit along with the Memorandum of Association and Bye-laws provides credible, verifiable evidence of its identity and purpose.
"The Assessee is not a new entity seeking registration for the first time. It is a long-standing trust whose registration has been in force since 2002. The loss of the physical deed does not extinguish its legal status."
The Tribunal distinguished the situation from cases where registration was never obtained. Here, the registration existed and was merely unproducible due to loss. The Tribunal further noted that the Income Tax Department itself had accepted the affidavit and granted provisional registration on 25.09.2024, indicating administrative recognition of the substitute documents.
Regarding the delay in filing appeals, the Tribunal held that the negligence of the counsel’s staff cannot be visited upon the client. The affidavits established that the delay was not attributable to the Assessee’s laches. The principle of natural justice requires that a bona fide taxpayer not be penalized for the oversight of its representative.
The Tribunal rejected the Revenue’s rigid interpretation of Section 11, noting that the law aims to facilitate charitable activity, not to create technical traps. The CPC’s adjustment of income without allowing corresponding expenditure was contrary to the basic accounting principle of matching income with expenses, as affirmed in Petroleum Sports Promotion Board.
The Verdict
The Appeals were allowed for statistical purposes. The Tribunal restored both appeals to the file of the Assessing Officer with directions: (1) the Assessee shall file an application for registration under Section 12AB using the Memorandum of Association and Bye-laws; (2) a separate application for condonation of delay in filing Form 10A shall be submitted; (3) upon receipt of these applications, the Assessing Officer shall consider them on merit and, if registration is granted, reassess the exemption claims under Section 11 and accumulation under Section 13(9); (4) the disallowance of Rs. 2,27,17,342/- and Rs. 35,73,994/- shall be stayed pending such reassessment.
What This Means For Similar Cases
Registration Can Be Reinstated Through Substitute Documents
- Practitioners representing charitable trusts that lost their original deeds must immediately prepare sworn affidavits and submit copies of MOA and Bye-laws
- Provisional registration under Section 12AB is permissible if the trust demonstrates continuous existence and unchanged objects
- The ITAT has effectively recognized that administrative loss does not equate to legal invalidity
Delay in Filing Appeals Is Condonable When Attributable to Counsel’s Negligence
- The burden of proving lack of negligence lies with the taxpayer, but affidavits from both the taxpayer and counsel suffice
- Courts will not penalize clients for the acts or omissions of their authorized representatives
- This sets a precedent for condonation in other tax appeals where delay stems from professional error
Exemption Claims Must Be Evaluated on Substance, Not Just Form
- The principle of matching income with expenditure under Section 11 cannot be ignored even if registration is technically pending
- Revenue authorities must consider whether the trust has acted in good faith and whether denial of exemption leads to unjust enrichment
- This judgment reinforces the doctrine that tax exemptions for charitable entities are to be interpreted liberally, not technically
