TaxTMI 
TaxTMI 
2025 (12) TMI 1098
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....s registered u/s. 12A of the Income Tax Act. During the assessment proceedings, the assessee submitted that the object of the Trust is to provide quality education and knowledge to children. The assessee further submitted that the trust runs 12 schools and that all the accounts of the schools and trust are audited. The assessee also submitted the Balance Sheet, Income & Expenditure accounts, Receipt & Payment accounts of the trust and the schools along with consolidated sheet showing receipts, expenditure on revenue and capital account. 2.2 From the return of income and the details submitted, the AO noted that the trust had offered gross receipts of Rs 111,22,43,804/- and had shown that an amount of Rs. 83,03,53,058/- was applied as revenue account and an amount of Rs. 5,47,45,585/-was applied towards capital account. The AO further noted that during the year, the assessee had set apart a sum of Rs. 6,03,08,590/- as deemed application as per clause (2) of explanation to section u/s. 11(1) of the Income Tax Act. 2.3. The AO noted that the gross receipts of the assessee trust excluding the amount of Rs. 3,94,60,633/- (which was considered separately by him) was Rs. 107,27,83, 1....
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....to file an application before the assessing officer to allow to apply such income for other charitable or religious purpose in India in conformity with the objects of the Trust. The AO further noted that the assessee had not filed any evidence to show that such an application was filed before the assessing officer and it was clear from the assessee's submission that the amount was not spent for the specified purpose as in Form 10. The AO further noted that the assessee trust itself has submitted that the amount of Rs. 3,94,60,633/- was unspent and added to the total receipts and therefore, the assessee's submission vide letter dated 23.02.2021 that the amount of Rs. 3,94,60,633/- was spent was an after thought. The AO observed that if the amount set apart was spent/utilised by the specific purpose, the assessee trust while filing the return would not have stated that the amount was unspent. The AO further noted that even though the assessee trust had incurred capital expenditure of Rs. 5,47,45,585/-, but the same was not utilised for the purpose for which the amount was set apart u/s. 11(2) for A.Y. 2013-14. The AO in view of the facts, as noted that since the assessee had ....
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....e highly competitive world. .................... In para 4 of the draft order, it has been mentioned that 'utlisation of surplus accumulated during an earlier year has been shown as Zero. This was because the total unadjusted accumulated amount was added to their total revenue and was deemed to be utilised as per the consolidated sheet showing audited accounts of each school. The reference to point 8(B) of schedule EC has been wrongly made, since point 8(B) is not available in the return form. It is submitted that the presentation could have been erroneous while filling up ITR-7, which has undergone significant changes to reflect the details correctly. But the income must be assessed as per the facts of the case, which have been submitted and reflected in the charts above. In view of the same it is requested that the income may kindly be assessed based on the facts of the case of the assessee, as stated herein. (emphasis supplied) 2.7. The AO considered the above submissions of the assessee and noted that in the Form 10 for A.Y. 2013-14 the amount of Rs. 4,44,60,633/- was accumulated (which included an amount of Rs. 3,94,60,633/-) for the purpos....
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....84,202/- which was utilized for the purpose of accumulation was allowed as application and the balance amount of Rs. 2,63,76,431/-(Rs.3,94,60,633/- (-) Rs. 1,30,84,202/-) being not utilised during the year for the purpose for which it was accumulated was brought to tax u/s. 11(3) of the Income Tax Act. 3. Aggrieved by the said order, the assessee filed an appeal before the Ld. CIT(A). 3.1. Before the Ld. CIT(A), the assessee reiterating its submissions made during the assessment proceedings also relied upon the decision of the Hon'ble Delhi High Court in the case of Director of Income Tax (Exemption) vs. Daulat Ram, Education Society [2005] 278 ITR 260, which held that so long as one or more of the purposes specified by the assessee finds place in the objects for which the society had been incorporated, and so long as said purpose are charitable in character, the benefit admissible u/s. 11 must flow to the assessee. However, the Ld. CIT(A) did not agree with the same and observed that in the instant case, during the assessment proceedings, the appellant had to file an application before the Assessing Officer to allow to apply such income for other charitable or religious purp....
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....e sum of Rs. 3,94,60,633 being the total amount of accumulation to be applied had already been included in the return of income filed for the assessment year under reference. 2. The CIT(Appeals) has erred in not appreciating the fact that the only object of the Trust is to run the schools under its aegis and the accumulated amounts have been spent of construction, repairs to assets and for running expenses of the schools. 3. The CIT(Appeals) has while agreeing to the application of the accumulation, has dismissed the appeal on the only ground that the application to the objects of the trust was not intimated to the Assessing Officer." 5. Before us, the assessee has filed a brief Synopsis which is reproduced as under: 1. The appellant is an educational society engaged in the field of education since 1950 and enjoy registration u/s. 11 of the Income Tax Act as a charitable institution and runs several schools in Delhi, Gurgaon and Tronica City (UP). 2. The appellant filed Form no 10 for A.Y.2013-14 setting apart Rs. 4,44,60,333/- to be applied for construction of school buildings at Gurgaon and Tronica City Schools. 3. Out of the afores....
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....ation towards acquisition of funds of trust and each of the school/educational institution run by yet during the financial year ended 31.03.2018.' In column 8 of the chart showing 'Add utilization towards assets for Educational Purposes' an amount of Rs. 5,47,45,585/- was shown as spent by the assessee in respect of the 13 schools run by it, which includes a sum of Rs. 2,10,80,474/- and Rs. 66,99,132/- spent towards the assets for educational purposes in respect of Salwan Public School, Gurgaon, Sector-15(II) and Salwan Public School, Trans Delhi, Signature City Loni, Ghaziabad, which was mentioned in form no. 10 for application of surplus funds arising out of assessment year 2013-14. The Ld. AR further relied upon the decision of the Hon'ble Apex Court in the case of Director of Income Tax (Exemption) vs. Daulat Ram Educational Society reported in [2006] 156 Taxman 399 (Del. HC) to submit that section 11(2) of the Act did not prohibit to plurality of purposes if they were specified for the specified objects and charitable in nature. The Ld. AR further submitted that the Form No.10 filed by the assessee mentioning only buildings for two schools will not disentitle the assessee from....
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....y which was the sole object of the assessee trust which was running several schools. In this regard, the reliance by the assessee to the decision of the Hon'ble Apex Court in the case of Director of Income Tax (Exemption) vs. Daulat Ram Education Society (supra) supports of the case of the assessee that so long the expenses are incurred for the objects of the trust and which are charitable in character, the benefit admissible u/s. 11 of the Act must flow to the assessee. The decision in the said case of the Hon'ble Apex Court is reproduced as under: "1. Heard For the reasons stated in the application which is supported by an affidavit, the delay in filing of this appeal is condoned and the application disposed of 2. The only question which the revenue proposes to raise for the determination of this court is whether the Income-tax Appellate Tribunal was correct in law in granting exemption under section 11 of the Income-tax Act despite the fact that the assessee had not mentioned any specific purpose for accumulation of its income in Form No. 10 submitted by it. 3. Mr. Jolly, learned counsel for the revenue argued that the purposes specified in Form No. 10....
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....ed as under : 1.) Commissioner of Income Tax (exemptions) Vs Bochasanwasi Shri Akshar Purshottam Public Cable Trust (supra) "Section 11 of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under (Accumulation of fund) - Assessment year 2008-09 High Court by impugned order held that lack of declaration in Form No. 10 regarding specific purpose for which funds were being accumulated by assessee-trust, would not be fatal to exemption claimed under section 11(2) - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [Para 8] [In favour of assessee]" 2.) Commissioner of Income Tax Vs Gokula Education Foundation "Section 11 of the Income-tax Act, 1961, read with rule 17 of the Income-tax Rules, 1962 - Charitable or religious trust - Exemption of income from property held under (Accumulation of income) - Assessment years 2009-10 and 2010-11 - High Court by impugned order held that as long as objects of trust were charitable in character and purpose or purposes mentioned in Form No. 10 were for achieving objects of trust, merely because details were not furnished, asse....