2018 (8) TMI 2134

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....iled a NIL return of income on 15.09.2014. The AO issued an intimation u/s. 143(1) of the Act dated 14.01.2016 determining the total income at Rs.9,73,831. While processing the return u/s. 143(1) of the act, the AO disallowed the claim of assessee for exemption u/s. 11(2) of the Act for the reason of non-filing of Form 10. U/s. 11(2) of the Act, 85% of the income of a charitable trust has to be applied for charitable purposes. To the extent it is not so applied, assessee is entitled to accumulate income for application for charitable purposes in future. For this purpose, the assessee has to give a notice in Form 10 to the AO stating the purpose for which the income is accumulated, period for which the assessee seeks to accumulate, etc. Sinc....

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....11, it is necessary to intimate to the Assessing Authority, the particulars required, at any time during the assessment proceedings. The Assessee pointed out that the Hon'ble Gujarat High Court in the case of CIT vs Mayur Foundation (2005) 194 CTR Guj 197, 2005; 274 ITR 562 (Guj), has taken the view that application for accumulation of Income is entertained even during the course of appeal because the proceedings are meant to correctly assess the tax liability of an assessee. In the instant case, there is no assessment proceedings pending for the aforesaid AY and only an intimation U/s. 143(1) was served on the assessee which has to be rectified U/s. 154 of the Act. 4. The AO, however, rejected the claim of assessee observing as follows:- ....

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.... the said provision as applicable under clause (21) or clause (23) of section 10 shall be in Form No. 10 and shall be delivered before the expiry of the time allowed under sub-section (1) of section 139, for furnishing the return of income." From the provision of the above rule it is obvious that filing of Form 10 before the expiry of time for furnishing the return is mandatory for claiming the benefit of section 11(2) of the Act. As the appellant has failed to do that and there is no valid reason for the same I do not find any reason to interfere with the order 143(1) of the Act dated 14.01.2016 and subsequent order u/s 154 of the Act dated 18.11.2016 passed by the AO. The action of the AO is upheld and ground taken by the appellant fail....

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....allowed to accumulate upto 15% of the income of the previous year for application for charitable purpose in future. One of the condition to be fulfilled for getting the benefit of accumulating 15% of income of the previous year without applying the same for charitable purpose during the previous year but carrying it forward for application in future years for charitable purpose is to inform the AO in form No.10 as mandated by Rule 17 of the IT Rules, 1962. Such notice will have to be given on or before the due date specified for the Assessee u/s.139(1) of the Act. Admittedly the Assessee in the present case has not given such intimation to the AO. [Para 17] In CIT Vs. Nagpur Hotel Owner's Association [2001] 247 ITR 201 (SC), the Hon'ble S....