Bombay High Court Condones 260-Day Delay By Cine Artist Welfare Trust In Claiming Tax Exemption On ₹70 Lakh

The Bombay High Court has condoned a 260-day delay by Cine Artist Welfare Trust in filing Form 10 (a form required to claim tax benefits on income set aside for future use) under the Income Tax Act, 1961. The court observed that denying the tax exemption could deplete the trust's funds and affect its charitable activities.

A Division Bench of Justice B.P. Colabawalla and Justice Farhan P. Dubash set aside the Income Tax Department's order rejecting the trust's request to condone the delay. It directed the department to reconsider the trust's claim to accumulate ₹70 lakh for Assessment Year 2019-20.

The court observed, "It is further noted that the denial of exemption under Section 11 has resulted in a huge tax liability, which, in turn, would significantly dilute the corpus of the Trust and cause genuine hardship, thereby affecting its ability to carry out its charitable activities. The provisions for condonation of delay are intended to mitigate such hardships where the default is not wilful."

Cine Artist Welfare Trust is a charitable organisation that provides financial assistance and scholarships to film artists and their dependents. It also supports medical and educational institutions for their benefit. The trust is registered under the Bombay Public Trust Act, 1950, and received registration under Section 12A of the Income Tax Act in 1991.

The trust had sought permission to set aside ₹70 lakh under Section 11(2) of the Income Tax Act. Although it disclosed the amount in its original return and audit report, it inadvertently failed to file Form 10, which was required to support the claim.

The trust uploaded the form in July 2020 and sought condonation of the delay. The court noted that the claim had been made from the outset and that Form 10 was filed before the department issued its intimation denying the claim in December 2020.

The department also questioned whether the funds were invested in permitted modes. Rejecting this objection, the court noted that the department's own order recorded fixed deposit certificates from Bank of Maharashtra and Central Bank of India.

The court held that denying the exemption would cause hardship and condoned the delay. It set aside the rejection order and directed the department to reprocess the return and consider the ₹70 lakh claim in accordance with law.

For Petitioner: Advocate Dharan V. Gandhi

For Income Tax Dept: Advocate Pritish Chatterjee