Charitable trust exemption preserved despite missing accumulation application, as later application of income cured the technical lapse.

A charitable trust's failure to file an accumulation application was treated as a technical defect where the income was spent in the immediately succeeding year, and the trust remained recognised as charitable. The analysis states that this omission did not amount to a substantive breach sufficient to deny exemption, and Section 13(1)(bb) was not applied to defeat the claim. The operative point is that exemption was preserved despite the procedural lapse because the funds were ultimately applied for charitable purposes.

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Issues: Whether the assessee charitable trust was entitled to exemption notwithstanding non-filing of an application for accumulation of income, and whether Section 13(1)(bb) denied such exemption.

Analysis: The income earned by way of interest was not utilised in the year of accrual, but the amount was in fact spent in the immediately succeeding year. The trust was recognised as charitable, and the omission to seek accumulation was treated as a technical defect rather than a substantive violation. In the circumstances, the applicability of Section 13(1)(bb) did not warrant denial of exemption.

Conclusion: The assessee was entitled to exemption and the departmental challenge failed.

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