My trust never filed the accumulation notice for the year. Can I file it now, after the assessment was completed, and still get the exemption?
No. The Supreme Court held that the notice under section 11(2) must reach the Assessing Officer before he completes the assessment. The requirement is mandatory, and without the particulars the officer cannot know what income is being accumulated or for what purpose, so he cannot exclude it. Even if no valid time limit had been prescribed by the rules, it is reasonable to presume that compliance must come at some point before the assessment proceedings end. Allowing the notice afterwards would mean reopening the assessment, which the Act does not contemplate.
Decided by the Supreme Court (Supreme Court of India - Y.K. Sabharwal, S.P. Bharucha and N. Santosh Hegde JJ; judgment by Santosh Hegde J) on 2000-12-13, reported as AIR 2001 SC 294; 2001 (2) SCC 128; 2000 AIR SCW 4493; 2001 Tax LR 339; (2000) 8 SCALE 250; (2001) 114 Taxman 255; (2001) 247 ITR 201. It bears on section 11(2), section 11(1), section 11 of the Income Tax Act 1961, in Charitable Trusts & Exemption and Capital Gains Exemptions matters.
This is the decision that fixes the outer limit for a section 11(2) accumulation notice, and it does so without deciding whether the six-month limit in Form 10 was validly prescribed. That is what makes it so hard to answer. The High Court had struck down the Form 10 time limit as beyond the rule-making power, and the Supreme Court simply left that question unanswered: even on the assumption that the Form's limitation is bad, the notice still cannot come after the assessment. So a trust cannot escape by attacking the rule. The reasoning is functional rather than technical - the exemption is conditional, and an officer who has never been told the purpose and period of accumulation has nothing to act on - and the same logic is what later disputes about condonation and delayed filing have to work around.
Binding on every court and authority in India.
Read aloud by your device. Press again to stop.
The assessee was an association of hotel owners registered under the Societies Registration Act 1860, whose object was to coordinate the activities of hotel owners and help them in their business. It filed returns for assessment years 1974-75 and 1975-76 in February 1977, claiming exemption under section 11 on the footing that its income was for charitable purposes. The Income Tax Officer refused the claim on two grounds: that the association was not registered with the Commissioner under section 12(a), and that no notice of accumulation under section 11(2) had been given. The appellate authority found the registration ground wrong and remanded. On remand the assessing authority held the objects were not charitable but profit-making, and that the assessee had not applied for accumulation within the time specified in rule 17, and assessed the whole income. The first appellate authority confirmed. The Tribunal held the objects were charitable and that the time limit in rule 17 could not be insisted on, since the rules could not fix a time limit for an application under section 11(2). Two questions were referred to the High Court, which on 15 October 1992 held that rule 17 itself prescribed no time limit, that the six-month period appeared only in paragraph 2 of Form 10, that the Act conferred no rule-making authority to fix such a period, and that the limitation in the form was therefore beyond the delegated authority and illegal. The Revenue appealed. The assessee, though served, was unrepresented and placed ex parte.
The appeals were allowed. The first question, whether Form 10 under rule 17 could be filed even after the assessment is completed, was answered in the negative and against the assessee, reversing the High Court. The intimation required by section 11(2) is mandatory and must be furnished before the assessing authority completes the assessment concerned. In this case the assessee did not furnish the required information until after the assessments for the relevant years were completed, so the benefit of section 11(2) was not available for those years. The Court expressly did not decide the second question, whether the rules could fix a time limit for filing Form 10, holding that on its answer to the first question that question did not arise.
Chapter III lists the income that does not form part of total income, and section 11(1)(a) excludes income from property held under trust to the extent applied to charitable or religious purposes in India, and accumulated income within the limit then prescribed. Section 11(2)(a) requires the person claiming the benefit to specify, by notice in writing given to the Assessing Officer in the prescribed manner, the purpose for which the income is being accumulated or set apart and the period of accumulation, which may not exceed the statutory maximum. From that wording the Court held the intimation mandatory. The exemption is not free-standing: it arises from section 11 and is subject to the conditions in it, so if the Assessing Officer does not have the necessary information during the assessment proceedings the question of excluding the income does not arise at all. It would be futile to blame him for assessing income he had no basis to exclude. The Court therefore reasoned that even assuming no valid limitation had been prescribed under the Act or the rules, it is reasonable to presume the intimation must be furnished before the assessment is completed, because without those particulars the claim cannot be entertained. There was a second reason. To act on information supplied after the assessment was over would require the assessment order to be reopened, and the Act does not contemplate reopening for that purpose.
it is reasonable to presume that the intimation required under Section 11 has to be furnished before the assessing authority completes the concerned assessment because such requirement is mandatory.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppNo. The Supreme Court held that the notice under section 11(2) must reach the Assessing Officer before he completes the assessment. The requirement is mandatory, and without the particulars the officer cannot know what income is being accumulated or for what purpose, so he cannot exclude it. Even if no valid time limit had been prescribed by the rules, it is reasonable to presume that compliance must come at some point before the assessment proceedings end. Allowing the notice afterwards would mean reopening the assessment, which the Act does not contemplate. This was decided by the Supreme Court (Supreme Court of India - Y.K. Sabharwal, S.P. Bharucha and N. Santosh Hegde JJ; judgment by Santosh Hegde J) and bears on section 11(2), section 11(1), section 11 of the Income Tax Act 1961. It is reported as AIR 2001 SC 294; 2001 (2) SCC 128; 2000 AIR SCW 4493; 2001 Tax LR 339; (2000) 8 SCALE 250; (2001) 114 Taxman 255; (2001) 247 ITR 201. This is the decision that fixes the outer limit for a section 11(2) accumulation notice, and it does so without deciding whether the six-month limit in Form 10 was validly prescribed. That is what makes it so hard to answer. The High Court had struck down the Form 10 time limit as beyond the rule-making power, and the Supreme Court simply left that question unanswered: even on the assumption that the Form's limitation is bad, the notice still cannot come after the assessment. So a trust cannot escape by attacking the rule. The reasoning is functional rather than technical - the exemption is conditional, and an officer who has never been told the purpose and period of accumulation has nothing to act on - and the same logic is what later disputes about condonation and delayed filing have to work around. If it applies to you, the first step is this: File the accumulation notice for the year before the assessment is completed, and treat completion, not any rule-based date, as the outer limit you cannot cross.
The assessee was an association of hotel owners registered under the Societies Registration Act 1860, whose object was to coordinate the activities of hotel owners and help them in their business. It filed returns for assessment years 1974-75 and 1975-76 in February 1977, claiming exemption under section 11 on the footing that its income was for charitable purposes. The Income Tax Officer refused the claim on two grounds: that the association was not registered with the Commissioner under section 12(a), and that no notice of accumulation under section 11(2) had been given. The appellate authority found the registration ground wrong and remanded. On remand the assessing authority held the objects were not charitable but profit-making, and that the assessee had not applied for accumulation within the time specified in rule 17, and assessed the whole income. The first appellate authority confirmed. The Tribunal held the objects were charitable and that the time limit in rule 17 could not be insisted on, since the rules could not fix a time limit for an application under section 11(2). Two questions were referred to the High Court, which on 15 October 1992 held that rule 17 itself prescribed no time limit, that the six-month period appeared only in paragraph 2 of Form 10, that the Act conferred no rule-making authority to fix such a period, and that the limitation in the form was therefore beyond the delegated authority and illegal. The Revenue appealed. The assessee, though served, was unrepresented and placed ex parte. The matter was decided on 2000-12-13 by the Supreme Court (Supreme Court of India - Y.K. Sabharwal, S.P. Bharucha and N. Santosh Hegde JJ; judgment by Santosh Hegde J). On those facts the Supreme Court held as follows. The appeals were allowed. The first question, whether Form 10 under rule 17 could be filed even after the assessment is completed, was answered in the negative and against the assessee, reversing the High Court. The intimation required by section 11(2) is mandatory and must be furnished before the assessing authority completes the assessment concerned. In this case the assessee did not furnish the required information until after the assessments for the relevant years were completed, so the benefit of section 11(2) was not available for those years. The Court expressly did not decide the second question, whether the rules could fix a time limit for filing Form 10, holding that on its answer to the first question that question did not arise.
Chapter III lists the income that does not form part of total income, and section 11(1)(a) excludes income from property held under trust to the extent applied to charitable or religious purposes in India, and accumulated income within the limit then prescribed. Section 11(2)(a) requires the person claiming the benefit to specify, by notice in writing given to the Assessing Officer in the prescribed manner, the purpose for which the income is being accumulated or set apart and the period of accumulation, which may not exceed the statutory maximum. From that wording the Court held the intimation mandatory. The exemption is not free-standing: it arises from section 11 and is subject to the conditions in it, so if the Assessing Officer does not have the necessary information during the assessment proceedings the question of excluding the income does not arise at all. It would be futile to blame him for assessing income he had no basis to exclude. The Court therefore reasoned that even assuming no valid limitation had been prescribed under the Act or the rules, it is reasonable to presume the intimation must be furnished before the assessment is completed, because without those particulars the claim cannot be entertained. There was a second reason. To act on information supplied after the assessment was over would require the assessment order to be reopened, and the Act does not contemplate reopening for that purpose. In the words reproduced by the source cited on this page: "it is reasonable to presume that the intimation required under Section 11 has to be furnished before the assessing authority completes the concerned assessment because such requirement is mandatory."
It was decided by the Supreme Court on 2000-12-13 and is reported as AIR 2001 SC 294; 2001 (2) SCC 128; 2000 AIR SCW 4493; 2001 Tax LR 339; (2000) 8 SCALE 250; (2001) 114 Taxman 255; (2001) 247 ITR 201. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 11(2), section 11(1), section 11, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The appeals were allowed. The first question, whether Form 10 under rule 17 could be filed even after the assessment is completed, was answered in the negative and against the assessee, reversing the High Court. The intimation required by section 11(2) is mandatory and must be furnished before the assessing authority completes the assessment concerned. In this case the assessee did not furnish the required information until after the assessments for the relevant years were completed, so the benefit of section 11(2) was not available for those years. The Court expressly did not decide the second question, whether the rules could fix a time limit for filing Form 10, holding that on its answer to the first question that question did not arise. It arises in Charitable Trusts & Exemption and Capital Gains Exemptions matters, on section 11(2), section 11(1), section 11 of the Income Tax Act 1961, and was decided by Supreme Court of India - Y.K. Sabharwal, S.P. Bharucha and N. Santosh Hegde JJ; judgment by Santosh Hegde J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. State the purpose of accumulation and the period, which must not exceed the statutory maximum, since those are the particulars the section requires and the officer is entitled to have. If the notice is late but the assessment is still pending, file it at once and put it on record in the assessment proceedings rather than saving it for appeal. Do not build a case on the invalidity of the time limit in the form; that argument was left open here and would not have saved this assessee anyway. Where the notice was genuinely filed in time, prove the filing, because on this reasoning everything turns on what the Assessing Officer had before him when he completed the assessment.
Still good law. A citator search returns 201 later decisions citing this judgment. It is applied constantly and recently: by the Lucknow Tribunal in DCIT v U.P. Awas Evam Vikas Parishad (28 February 2025), by the Pune Tribunal in ACIT v Nanded Sikh Gurudwara Sachkhand Board (26 May 2025), and by the Mumbai Tribunal in Shree Dadar Jain Paushadhshala Trust v ITO (19 August 2019), which reads it as holding that there is substantial compliance if Form 10 reaches the Assessing Officer before the assessment is completed. The Rajkot Tribunal put it the same way in Kandla Dock Labour Board v ITO (12 December 2008). Nothing overruling or doubting it was found. The judgment quotes section 11 as it stood for 1974-75 and 1975-76, including the accumulation limit then in force, so the current text of section 11(2) and the rules on Form 10 and Form 10B must be applied to the year in hand. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The Court left the second referred question undecided, so this judgment says nothing about whether a time limit may validly be prescribed by rule or form for a section 11(2) notice, and the High Court's holding that the six-month limit in Form 10 was beyond the delegated power stands neither approved nor overruled. It also does not deal with the charitable character of the association's objects, which the Tribunal had decided in its favour and which was not in issue in these appeals. The harvested page gives the bench twice and inconsistently, once as two judges and once as three, so the composition should be checked against the report at (2001) 247 ITR 201. The assessee was unrepresented, so the Court heard only the Revenue. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeals were allowed. The first question, whether Form 10 under rule 17 could be filed even after the assessment is completed, was answered in the negative and against the assessee, reversing the High Court. The intimation required by section 11(2) is mandatory and must be furnished before the assessing authority completes the assessment concerned. In this case the assessee did not furnish the required information until after the assessments for the relevant years were completed, so the benefit of section 11(2) was not available for those years. The Court expressly did not decide the second question, whether the rules could fix a time limit for filing Form 10, holding that on its answer to the first question that question did not arise.
TaxSphere, “CIT v Nagpur Hotel Owners Association”, https://taxnotice.vittsphere.com/caselaw/case/cit-v-nagpur-hotel-owners-association-form-10-timing/ (validity last checked 2026-08-29)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
My trust filed Form 10 only after the scrutiny notice came — 338 days after the due date. The Commissioner refused to condone under s.119(2)(b). Is that the end of the accumulation claim?
Our Form 10B is years late. Who can condone the delay, and how long do I have to apply?
The Commissioner rejected my condonation application for late Form 9A for an old year. Was Form 9A even required then?
The CIT(E) refused my Form 10AB because the memorandum says the objects may be carried out in India 'and elsewhere'. Is a possible application of funds outside India a ground to refuse registration?
