Form 9A Not Mandatory for AY 2015-16; Option Exercised in Audit Report (Form 10B) is Sufficient.

Issue

Whether the requirement to file Form 9A (for exercising the option of deemed application of income) is applicable for Assessment Year 2015-16, and whether the denial of exemption for non-filing/late filing of this form is valid when the assessee had already disclosed the option in their Audit Report (Form 10B) and Income Tax Return.

Facts

The Grant: The assessee-trust received a grant just eight days before the end of the financial year. Consequently, it could not fully utilize the amount within that short period but utilized it in the subsequent financial year (FY 2015-16).
The Compliance: The assessee filed its Audit Report in Form 10B and its Income Tax Return within the extended due date.
Exercising the Option: The assessee clearly specified the option to “deem the income as applied” (under Clause (2) of Explanation to Section 11(1)) in the Audit Report and also disclosed it in Clause 9(iv) of Part B–TI of the return.
The Confusion: The Finance Act, 2015 introduced the mandatory filing of Form 9A effectively from 01-04-2016 (AY 2016-17).
CIT(E)’s Action: The assessee filed Form 9A in 2023 out of abundant caution. The Commissioner (Exemptions) rejected the application for condonation of delay, holding that Form 9A was required to be filed manually for AY 2015-16, and consequently denied the accumulation/deemed application benefit.

Decision

The High Court ruled in favour of the assessee.
No Prescribed Format for AY 2015-16: The Court noted that the statutory requirement for filing Form 9A was introduced by the Finance Act, 2015, with effect from 01-04-2016. Therefore, for the relevant Assessment Year (2015-16), there was no prescribed format (like Form 9A) for exercising the option under Explanation 2 to Section 11(1).
Foundation Laid: The assessee had validly exercised the option by explicitly stating it in the Audit Report (Form 10B) and the Return of Income, both of which were filed on time.
Delay Irrelevant: Since there was no legal requirement to file Form 9A for that year, the question of “delay” in filing it does not arise. The CIT(E)’s order refusing condonation proceeded on an incorrect legal premise and was set aside.

Key Takeaways

Prospective Application of Rules: Procedural amendments, such as the introduction of specific forms (Form 9A/Form 10), generally apply from the date notified (AY 2016-17 in this case) and are not retrospective unless specified.
Declaration in ITR Suffices: For years prior to the mandatory electronic forms, a clear declaration of intent to accumulate or deem income as applied in the Income Tax Return or Audit Report constitutes a valid exercise of the option.
Deemed Application vs. Accumulation: This case reinforces that “Deemed Application” (spending in the immediate next year due to late receipt or other reasons) is distinct from 5-year “Accumulation,” though procedural rigor has increased for both over time.

HIGH COURT OF BOMBAY

Swasth Foundation

Commissioner of Income-tax (Exemptions)^*

B. P. COLABAWALLA and AMIT S. JAMSANDEKAR, JJ.

WRIT PETITION (L) NO. 28779 OF 2025

NOVEMBER 11, 2025

Aditya Chitale and Sumedh Rikar, Advs. for the Petitioner. Prathamesh P. Bhosle, Adv. for the Respondent.

ORDER

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. 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 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 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 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 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 v. Commissioner of Income-tax (Exemption) (Bombay)/[Writ Petition (L) No. 23591 of 2025 dated 22^nd 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 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 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.

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.