TaxTMI 
TaxTMI 
2015 (9) TMI 658
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....part of income accumulated u/s. 11(2) of the Act. (c) Interest charged u/s. 234A and 234D of the Act. 3. The facts relating to the case are stated in brief. The assessee is a public charitable institution and its main objective is to provide medical aid, education and carry on other public charitable activities. It was registered u/s. 12A of the Act. It filed its return of income for the year under consideration declaring a loss of Rs. 9631/- on 25-10-2004 and the same was processed u/s. 143(1) of the Act. Subsequently, the Assessing officer re-opened the assessment on 03/04/2006 by issuing notice u/s. 148 of the Act. In response thereto, the assessee filed its return of income declaring Nil income. 4. The Assessing officer noticed that ....
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....t of the current year's income. Accordingly, he took the view that the first three deposits aggregating to Rs. 11,45,752/- cannot be considered to be deposits made in terms of section 11(2)(b) of the Act, since they have not been made out of current year's income. Accordingly, the Assessing officer restricted the deduction u/s. 11(2) of the Act to Rs. 20.00 lakhs and thus determined the total income of the assessee at Rs. 10,53,240/-. 6. In the appeal filed by the assessee, the Ld. CIT(A) confirmed the validity of the re-opening of the assessment and also confirmed the disallowance of partof deduction claimed u/s. 11(2) of the Act. Aggrieved, the assessee has filed this appeal before us. 7. The Ld. Counsel appearing for the assessee submi....
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....liance on the decision of the Tribunal in the case of Ollur Sadhu Samrakshna Sangham, cited supra, since the facts prevailing in that case are totally different. Inviting our attention to the decision rendered by the Tribunal in the above cited case, the Ld. DR submitted that the assessee therein had invested in the earlier years in Kisan vikas Patras. The interest income accrued in the Kisan Vikas Patras Scheme shall be repaid only on maturity along with the principal amount. However, the above said assessee was following mercantile system of accounting and hence, the interest accrued on KVP was taken as its income every year. Considering these peculiar facts, the Ld. CIT(A) has held that the accrued interest in Kisan Vikas Patras can be c....
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....ly considering the objective behind each of the provision. If the assessee decides to accumulate a portion of income, then it has to pass a resolution to that effect specifying the purpose of accumulation. Then the assessee should give a notice in prescribed form to the assessing officer. A further condition that is imposed is that the money so accumulated or set apart is invested or deposited in the forms or modes specified in sec. 11(5) of the Act. Obviously, the objective behind insisting for deposit of the money so accumulated or set apart is only to ensure that the assessee utilizes the said money only for the purpose of achieving the objective for which the income was accumulated. There will not be any check if the assessee is not man....
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....eclose the existing deposit and thereafter make a new deposit, thus losing considerable amount towards loss of interest/penalty. The same would be very much technical in nature. Hence, in our considered view, the earmarking of existing bank fixed deposits, which is free from any lien, towards the income accumulated u/s 11(2) of the Act during the year under consideration would be sufficient compliance with the provisions of sec. 11(2)(b) of the Act, since the accumulated income is represented by the corresponding deposit/investment. 14. In view of the foregoing discussions, we set aside the order of Ld CIT(A) on this issue and direct the assessing officer to delete the disallowance of income accumulated u/s 11(2) of the Act. 15. With rega....