Bombay High Court
Swasth Foundation And Anr vs The Commissioner Of Income Tax ... on 11 November, 2025
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
2025:BHC-OS:20844-DB
10.wpl.28779.25.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 28779 OF 2025
Swasth Foundation & Anr .. Petitioners
Versus
The Commissioner of Income Tax
(Exemptions) & Ors .. Respondents
Mr.Aditya Chitale, with Mr. Sumedh Rikar i/b MNSQ Legal,
Advocates for the Petitioners.
Mr. Prathamesh P. Bhosle, Advocates for the Respondents.
Digitally signed
ANJALI by ANJALI
CORAM: B. P. COLABAWALLA &
TUSHAR ASWALE
TUSHAR
ASWALE Date: 2025.11.13
14:22:08 +0530
AMIT S. JAMSANDEKAR, JJ.
DATE: NOVEMBER 11, 2025
P. C.
1. Rule. Respondents waive service. With the consent of the parties,
Rule made returnable forthwith and heard finally.
2. The present matter relates to A.Y. 2015-16. The above Writ
Petition challenges the impugned order dated 12.03.2025 passed by
Respondent No.1 for A.Y. 2015-16 under Section 119(2)(b) of the Income Tax
Act, 1961 (for short "the Act") rejecting the Petitioner's application dated
16.11.2023. Respondent No.1, by the impugned order, has held that even
though the mandatory electronic filing of Form No.9A started from A.Y.
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2016-17 onwards, the Petitioner was still required to file Form No.9A
manually (for A.Y. 2015-16) regarding the option to be exercised in clause (2)
of the Explanation to Section 11 (1). By the impugned order, Respondent No.1
also refused to condone the delay in filing Form No.9A. Consequently, the
accumulation claimed by the Petitioner under clause (2) of the explanation to
Section 11(1) of the Act has been denied to the Petitioner.
3. The Petitioner is a registered charitable trust and is engaged in
operating low cost health centers in the slums of Mumbai and providing low
cost doctor consultation, drugs, diagnostics, etc.
4. For the Assessment Year 2015 -16 (F.Y. 2014-15), on 23.03.2015
the Petitioner received a grant of Rs.2,47,66,000/- from Jamsetji Tata Trust
towards implementation of the project titled "Low-Cost Primary Health
Centers in Urban Slums". The said amount was received by the Petitioner just
8 days before the ending of the Financial Year 2014-15. It is the case of the
Petitioner that the said amount could not be entirely utilized by the Petitioner
towards its charitable activities within the short span of 8 days before the end
of F.Y. 2014-15. It is also the case of the Petitioner that, as a result, it could
fully utilize the said amount only in the subsequent F.Y. 2015-16 towards its
charitable activities. The Petitioner has stated in the Petition and also have
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filed an additional affidavit dated 25.09.2025 affirming utilization of the said
amount towards its charitable activities during the F.Y. 2015-16.
5. It is also the case of the Petitioner that under clause (2) of the
Explanation to sub-section (1) of Section 11 as it stood during F.Y. 2014-15
(i.e. A.Y. 2015-16) the Petitioner was required to exercise the option with a
mere writing / intimation before the expiry of time allowed under Section
139(1) for furnishing return of income deemed to have been applied for
charitable purpose. It is the further case of the Petitioner that there was no
prescribed format for filing the said written intimation regarding exercising
of the option referred to above. It is also the case of the Petitioner that as the
Section 11(1) of the Act existed for F.Y. 2014-15 [i.e. A.Y. 2015-16], it had filed
the said written intimation on 12.09.2015 at 04:50:56 p.m., by filing its audit
report in Form No. 10B. Under the said Form No. 10B, the Petitioner had
exercised its option under clause (2) of the Explanation to Section 11(1) and
informed the I.T. Department that the amount deemed to have been applied
for charitable activities during F.Y. 2014-15 is Rs.2,21,56,903/-. As mandated
by law, the said written intimation was filed within time, before the Petitioner
filed its return of income for A.Y. 2015-16 later on the same day on
12.09.2015. It is the case of the Petitioner that an Assessment Order under
Section 143(3) dated 21.12.2017 was passed by the Respondent No.2 wrongly
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holding that the Petitioner had filed its return of income for A.Y. 2015-16
beyond the due date on 30.11.2015, whereas the Petitioner had actually filed
its return of income before the due date. According to the Petitioner, the said
order also wrongly held that the Petitioner had not furnished any explanation
in writing that it was exercising its option under Clause (2) of the Explanation
to Section 11(1) before filing its return of income. Therefore, a demand for
Rs.98,04,430/- was raised upon the Petitioner vide the said Assessment
Order dated 21.12.2017. The Petitioner challenged the said order before the
CIT (Appeals) which Appeal was dismissed on 29.06.2023. The same was
challenged by the Petitioner before the Learned ITAT, which by its order
dated 30.04.2024 held that the entire assessment of the Petitioner was based
on a wrong assumption of facts that the Petitioner had filed its return of
income for A.Y. 2015-16 beyond the due date. Hence, a denovo assessment
was ordered by the Learned ITAT. The said de novo assessment is presently
on-going.
6. It is also the case of the Petitioner that Section 11 of the Income
Tax Act was amended vide Finance Act, 2015 w.e.f. 1st day of April, 2016
under which amendment, a prescribed format was introduced in the statute
for the first time w.e.f. 01.04.2016. The said prescribed format is Form No.
9A under the IT Rules. It is the case of the Petitioner that the return of
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income in the present case pertains to an earlier period, i.e. F.Y. 2014-15
during which the prescribed format, i.e. Form 9A did not exist in the statute.
In any case, it is also the case of the Petitioner that on 12.09.2015 it had
exercised its option under Clause (2) of the Explanation to Section 11(1) by
filing the necessary written intimation to the I.T. Department. However, by
way of abundant caution, the Petitioner had exercised the option referred to
in clause (2) of the Explanation to sub-section (1) of Section 11 of the Act by
filing Form No.9A on 30.09.2023 as by then the said prescribed format for
exercising the said option, i.e. Form No. 9A was already in place. By the
impugned order dated 12.03.2025 Respondent No.1 has rejected the said
application of the Petitioner by holding that the Petitioner was unable to
show the reasonable cause for delay in filing Form No. 9A. Respondent No.1
has also given an incorrect finding in the impugned order that Form No.9A
was required to be filed manually for A.Y. 2015-16. In the meanwhile, the
denovo assessment proceedings have now commenced against the Petitioner
pursuant to the said order dated 30.04.2024 passed by the Learned ITAT and
there is every likelihood of a huge demand being raised by the Revenue as
raised vide earlier assessment order dated 21.12.2017. The Petitioner has
accordingly filed the above Petition.
7. We have heard Mr. Chitale for the Petitioner and Mr. Bhosle for
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the Revenue at some length. We have also perused the materials placed on
record.
8. Admittedly, the Petitioner had filed its return of income for the
concerned A.Y. 2015-16 within the specified extended due date, i.e.
30.10.2015. In clause 9(iv) of Part B - TI of the return of income, the
Petitioner specified that it had exercised its option for Rs.2,21,56,903/- under
Clause (2) of the Explanation to Section 11(1). Also the Petitioner had filed its
audit report in Form No.10B before filing its return of income wherein the
Petitioner had specified that it had exercised its option for Rs.2,21,56,903/-
under Clause (2) of the Explanation to Section 11(1). Hence, we are of the
view that there is sufficient material on record to demonstrate that the
Petitioner had clearly expressed its intention to accumulate its income of
Rs.2,21,56,903/- under Section 11(1) of the Act.
9. As held by this Court in a matter pertaining to Form No. 10, it
was held in para 23 of the judgment in the matter of KSB Care Charitable
Trust vs. CIT (Exemption), Mumbai & Ors. [Writ Petition (L) No.
23591 of 2025 dated 22nd September, 2025] that the benefit of
accumulation under Clause (2) of the Explanation to Section 11(1) of the Act
ought not to be denied to the Petitioner when the entire accumulated
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amount has actually been applied for charitable purposes well within the time
allowed under the Act and the activities of the Petitioner therein are genuine.
In the present case also, the Petitioner herein has actually applied the entire
accumulated amount for charitable purposes in the immediately next F.Y.
2015-16.
10. Both parties have also drawn our attention to the CBDT Circular
No. 19 of 2015 dated 27th November, 2015 titled as "Explanatory Notes to
the Provisions of the Finance Act, 2015" wherein it is stated that there was no
standard format for exercising the option for the purpose of clause (2) of the
Explanation to sub-section (1) of Section 11 of the Act for assessment years
prior to Assessment Year 2016-17 and that the amendment to Section 11 of
the IT Act vide Finance Act, 2015 was made applicable from A.Y. 2016-17
onwards.
11. In any case, the Petitioner was not required to file the said Form
No. 9A for A.Y. 2015-16 for exercising the option referred to in clause (2) of
the Explanation to sub-section (1) of Section 11 of the Act as the requirement
for filing of the said Form No. 9A was introduced into the statute vide
Finance Act, 2015 w.e.f. 1st day of April, 2016. However, the present Petition
pertains to the earlier year, i.e. A.Y. 2015-16. For A.Y. 2015-16, there was no
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prescribed format for exercising the option. We find that the law as it stood
during the relevant period, i.e. A.Y. 2015-16, the Petitioner has laid the
necessary foundation for exercising the option by stating so in their audit
report in Form No. 10B as well as in their return of income which were filed
within time.
12. We find that the impugned order has incorrectly held that Form
No.9A was required to be filed manually for A.Y. 2015-16. We find that if the
reliefs are not granted to the Petitioner, there will be genuine hardship to the
Petitioner, inasmuch as the Petitioner would be saddled with a huge demand
as raised in the earlier round of assessment proceedings even though it has
substantially complied with the requirements of clause (2) of the Explanation
to Section 11(1) of the Act.
13. In view of the foregoing discussion, we quash and set aside the
impugned order dated 12.03.2025 passed by Respondent No.1 as there was
no requirement to file Form No.9A for A.Y. 2015-16 and therefore it cannot
be said that the Petitioner had delayed the filing of Form No.9A. This is
simply because the Petitioner had exercised the option referred to in clause
(2) of the Explanation to sub-section (1) of Section 11 of the Act within time,
as per the law prevalent during A. Y. 2015-16.
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14. Accordingly, we direct that the Respondents shall once again
process the Petitioner's return of income for A.Y. 2015-16 in the currently on
going de novo assessment proceedings in accordance with law by giving effect
to this order on the basis that the Petitioner has exercised the option under
clause (2) of the Explanation to sub-section (1) of Section 11 of the Act within
time.
15. Rule is made absolute in the aforesaid terms and the Writ
Petition is also disposed of in terms thereof. However, there shall be no order
as to costs.
16. This order will be digitally signed by the Private
Secretary/Personal Assistant of this Court. All concerned will act on
production by fax or email of a digitally signed copy of this order.
[AMIT S. JAMSANDEKAR, J.] [B. P. COLABAWALLA, J.]
NOVEMBER 11, 2025
Aswale
