TaxTMI 
TaxTMI 
TaxTMI 
2016 (11) TMI 656
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.... Act. 3. Brief facts are the assessee a trust is registered under section 12A of the Income Tax Act, 1961 (for short "the Act"). For the assessment year under consideration, the assessee filed its return of income on 9th August 2011, declaring total income of Rs. 78,210. During the assessment proceedings, the Assessing Officer on verifying the financial statement of the assessee, along with the return of income noticed that the assessee has claimed accumulation of fund at Rs. 95 under section 11(2) of the Act. The Assessing Officer, therefore, issued a show cause notice to the assessee to explain why exemption claimed under section 11 of the Act on the accumulated fund amounting to Rs. 95 lakh set apart for utilisation in future should not....
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.... the view of the Assessing Officer held that as the assessee has not specified in Form no.10, any concrete project or purpose for which the accumulated fund was set apart no exemption can be allowed to the assessee. 5. Learned Authorised Representative submitted, one of the main object of the trust is to construct Mahajan Wadi, Hostels, Shelters, etc., for the members and needy students of Daiwadnya Samaj. He submitted, the surplus funds available with the trust which could not be applied for the objects during the relevant previous year was accumulated and set apart for the purpose of achieving the object of the trust. He submitted, in Form no.10, submitted along with return of income and the accompanying resolution of the trust, the purp....
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....specified purpose after the expiry of five years and if he finds that it was not utilised for the specified purpose then only he can disallow assessee's claim. Thus, he submitted, the Assessing Officer cannot disallow assessee's claim in the first year itself. In support of his contention, learned Authorised Representative relied upon the following decisions:- i) Shri Ram Nagar Trust no.1 v/s DDIT, ITA no.2150/Mum./2015 dated 31.5.2016; ii) DIT (E) v/s Envisions, [2015] 58 taxmann.com 184 (Kar.); iii) DIT(E) v/s NBIE Welfare Society, [2015], 370 ITR 490 (Del.); iv) CIT v/s National Institute and Financial Management, [2010] 322 ITR 694 (P&H); v) DIT v/s Mitsui & Co., Environmental, [2008] 167 taxmann.com 43 (Del.); and vi) Bharat....
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....ned in clause (a) & (b) which provides that the trust submits in writing before the Assessing Officer the purpose for which the income is accumulated or set apart and the period for which the income is to be accumulated shall not exceed five years. The second condition is the fund accumulated or set apart has to be invested or deposited in any of the mode specified in sub-section (5) of section 11. Keeping in view the aforesaid statutory provisions if we examine the facts of the present case, it is to be noticed that the assessee has accumulated funds of Rs. 95 lakh which has been set apart for utilisation in the objects of the trust in subsequent years. In compliance to the provisions of section 11(2)(a), assessee along with return of inco....
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....nt of the samaj, to build and renovate vachanalaya / library, providing shelter to make temporary provisions of residence for those who come to Mumbai from their villages. Thus, the purpose for which the accumulated fund is set apart as mentioned in Form no.10 as well as resolution of the trust if read in conjunction with the objects set out in the trust deed clearly demonstrate that the purpose of utilisation of accumulated fund is for achieving the objects of the trust. It has been submitted before us by the learned Authorised Representative that the building used as hostel for outstation student is in a dilapidated condition, therefore, a project is under way to re-construct / re-develop the building. In this context, certain inspection ....
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.... vague or unspecified. Therefore, the Hon'ble High Court upheld assessee's claim of exemption under section 11(2). If we consider the facts of the present case in the light of the aforesaid judicial precedents it emerges that assessee's case stands in a better footing. As we have already noted, in Form no.10, as well as resolution of the trust, the assessee has specifically mentioned the purpose of utilization of fund in construction / re-development of buildings / properties of the trust. Thus, the purpose of utilization is in consonance with the objects of the trust. That being the case, assessee's claim cannot be disallowed. We also find merit in the submission of the assessee that disallowances envisaged on account of non-utilisatio....