TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 295
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....ppeals) {CIT (A} and Assessing Officer (AO) has erred in holding that Form No.10 filed in respect of accumulation of income along with resolution was not in time as specified u/s.139(1) of the Income Tax Act. In doing so, both the CIT(A) as well as the AO have erred in not granting the appellant benefit of accumulation of income as contained in Section 11 (2) of the Income Tax Act. 2. On facts and in circumstances of the case and in law the Commissioner of Income Tax (Appeals) {CIT (A) and Assessing Officer (AO) has erred in holding that the resolution passed for accumulation of income permissible u/s 11(2) of the Income Tax Act suffered from absolute generality and complete lack of specific purpose. In doing so, both the CIT(A) as well as the AO have erred in not granting the appellant benefit of accumulation of income as contained in Section 11 (2) of the Income Tax Act. 3. On facts and in circumstances of the case and in law the Commissioner of Income Tax (Appeals) {CIT(A)} and Assessing Officer (AO) has erred in rejecting the appellant's plea for granting deduction of 15% of the gross total income u/s 11(1)(a)of the Income Tax Act. 4. On facts and in circumstances ....
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....urnished before the A.O. within the stipulated time i.e. before the expiry of the time limit prescribed u/s 139(1) of the Act, and the Resolution was passed on 24th September, 2010 that is after the end of the financial year and hence, therefore the AO observed that it is not a valid Resolution. The assessee-trust was show caused by the AO as to why this income of Rs. 1,89,10,525/- not be taxed as income of the assesseetrust for the year under assessment denying the benefit of accumulation u/s 11(2) of the Act. Further, the assessee-trust was asked to produce books of account including the ledger, cash book/bank book & trial balance etc. for the assessment year 2010-11 for verification. The assessee-trust was also asked to furnish the copies of all returns of income filed from the assessment year 2006-07 onwards along with all enclosures. The assessee-trust in reply submitted that the assessee-trust is in the process of building of hospital which is the major project taken up by the assessee-trust for which the money is being accumulated u/s 11(2) of the Act and in support the assesseetrust also enclosed the relevant documents to show the assessee-trust has started the basic activi....
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....ith respect to the project before the AO and also before the learned CIT(A). The assessee-trust submitted that the object clause of the assessee-trust was to conduct hospitals and extend medical facility to the needy and poor sections of the people and run educational institution for students by giving assistance to them. The copy of object clause of the Trust deed was submitted before the learned CIT(A). It was submitted that the assessee-trust had demonstrated the purpose of running of a hospital and medical educational institution at Jogeshwari. The assessee-trust submitted that the word 'Future Project' in the Resolution is necessarily and mandatorily to be linked with the future project of the assessee-trust , as also to the main objects of the assessee-trust. The assessee-trust has relied on the decision of Mitsui & Company Environment Trust, (2008)303 ITR 111 (Delhi HC) , Bhartiya Kalyan Pratishthan, (2007) 299 ITR 406 (Delhi) and M.P. Gandhi Trust,(2006) 8 SOT 808 (Mumbai) . The learned CIT(A) held that accumulation u/s 11(2) of the Act is subject to fulfillment of conditions specified u/s 11(2)(a) and 11(2)(b) of the Act. The condition u/s 11(2)(a) requires a notice in wr....
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....tinction for computation of income of the trust rather the capital receipt/corpus receipts are separately dealt under the provisions of section 11 & 12 of the Act itself, which also confirms that the capital receipts are also part of the income of the trust in the similar manner as are the expenditure on capital outlay treated as application of income under the same provisions. The learned CIT(A) held that the assessee-trust has correctly accounted the receipt of Rs. 2 crores which are of revenue nature as its income. The income for the purposes of Section 11 of the Act is to be computed in the commercial manner without classification under various heads. The learned CIT(A) relied on the decision in the case of CIT v. Rao Bahadur Calavala Cunnan Chetty Charities (Mad), (1982)135 ITR 485(Madras HC) and in the case of CIT v. Progamme for Community Organisation (1997) 228 ITR (Ker.) and held that the deductions under other machinery provisions under separate head of income are not available u/s 11, 12 and 13 of the Act and accordingly the appeal of the assessee-trust was dismissed by the learned CIT(A) vide orders dated 07-01- 2015. 7. Aggrieved by the orders dated 07-01-2015 of the ....
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....book , page 76-102. It was submitted that Urban Development Department , Mumbai has under the Maharashtra Regional and Town Planning Act,1966 has accorded approval for earmarking the land owned by the assessee-trust for 'Hospital and Medical Educational Institution' vide notification dated 08- 12-2008 by de-reserving the said land from 'No Development Zone'. It is the say of the learned counsel for the assessee-trust that the A.O. has disallowed accumulation of fund by the assessee-trust u/s 11(2) of the Act on three grounds viz. delay in filing Form 10, Resolution was passed after end of the assessment year and the resolution is general and vague which does not specify the specific purposes for which the funds are being accumulated. The learned CIT(A) upheld the additions to the income of Rs. 1,89,10,525/- of the assessee-trust on all the three grounds on which the AO made the additions. Since the appeal was withdrawn with the Additional Commissioner, Konkan Divisions for which payment of Rs. 2 crores was received in lieu of right to sue and hence the income is not chargeable to tax because it is a capital receipt on account of litigation being withdrawn as the right to sue is not....
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....TD 235 (Cochin),also decision in the case of CIT v. Nagpur Hotel Owners Association, [2001] 247 ITR 201 (SC), also decision in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC), also decision in the case of CIT v. Moti Ram Gopi Chand Charitable Trust, [2014] 360 ITR 598 (All.), also decision in the case of Association of Apex Society of Handloom v. ADIT(2013) 30 taxmann.com 22 (Del. HC) and also decision in the case of ACIT v. Stock Exchange , Ahmedabad (2012) 25 Taxmann.com 469(Guj.). 9. The ld. D.R., on the other hand, relied on the orders of authorities below and submitted that the assessee-trust has not filed Form 10 along with the return of income,the purposes of accumulation is vague and general and the resolution for accumulation of funds is passed after the closure of the financial year. 10. We have heard the rival contentions and also perused the material placed on record including the case laws relied upon by both the parties We have observed that the assessee-trust is registered as a charitable trust with DIT (E), Mumbai u/s 12A of the Act under registration No. TR/327 and with the Charity Commissioner, Mumbai vide registration No. E 3142 (Bom). The ass....
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....s that the accumulation of the funds u/s 11(2) of the Act can be made for achieving the objects of the trust and even there can be plurality of objects to be achieved are also allowed and there is no need to mention specific purposes. The assessee-trust contention is that the 'future project' referred to in the Resolution is for the hospital project being set-up by the assessee-trust on 10 acres of plot at Jogeshwari for which progress has been achieved by the assessee-trust. The assesseetrust relied upon the following decisions to support its contentions:- 1. Decision in the case of DIT v. Mitsui & Co. Environmental, (2008) 303 ITR111(Del. HC), 2. In the case of Bhartiya Kalyan Pratisthan v. DIT(E),(2007) 299 ITR 406 (Del. HC) 3. In the case of M.P. Gandhi Trust v. ADIT,(2006) 8 SOT 808 (Mum), 4. In the case of Shree Seetharaman Anjaneya Ved Kendra v. ADIT, (2002) 83 ITD 235 (Cochin) The assessee-trust has also belatedly furnished the Form 10 beyond the time limit stipulated under Rule 17 of Income Tax Rules, 1962 which was submitted during the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Act , however, before the completion of the asses....
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....ion of fund u/s 11(2) of the Act as the assessee-trust has demonstrated that it was in-fact in the process of setting up hospital on its 10 acre plot of land at Jogeshwari for which Maharashtra Government has allowed the earmarking of land for hospital project as set-out above for which accumulation of funds u/s 11(2) of the Act was proposed keeping in view preponderance of probabilities and human conduct and also it is well settled proposition of law that when technicalities are pitted against the substantial justice, the course which advances substantial justice is to be preferred .We are also conscious of the fact that exemption provisions are to be strictly construed to establish the entitlement of the tax-payer for the grant of exemption but once the tax-payer establishes its eligibility to falls within the exemption provision then it is to be liberally construed to grant full benefit as provided under the law. In our considered view, the assessee-trust has duly established its claim for eligibility for grant of the benefit of accumulation u/s 11(2) of the Act which cannot due to the reasons cited by the authorities below be denied to the assessee-trust. In our considered view....