TaxTMI 
TaxTMI 
2026 (4) TMI 626
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....llows:- 3. It was submission that in the Form No.10 the purpose for which the amount was being accumulated or set apart was reported as "purpose of the trust". It was the submission that the AO held that the Form No.10 where it is mentioned that the "purpose of the trust" was not clear and there was no specific object mentioned by the assessee for accumulation and, therefore, denied the assessee the benefit of the accumulation and brought to tax the Rs. 15 crores, which had been accumulated. It was submission that the accumulation had been initially started during the assessment year 2009-10 and the assessment year 2018-19 was the last year of the said accumulation. It was submission that the Hon'ble Gujarat High Court in the case of CIT Vs. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust in Tax Appeal No.1260 and 1261 of the 2018, had under similar circumstances held that the assessee having made a clear statement of setting out the purpose for which income was being set apart, the disallowances of the accumulation was not permissible. The said decision of the Hon'ble Gujarat High Court is reported in 409 ITR 591 (Gujarat-HC) and the relevant observations of the Hon....
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...., passed the resolution to set apart such amount to finance future requirement of the trust's projects. The Assessing Officer having rejected assessee's explanation, disallowed claim of deduction filed under section 11(2). The Commissioner (Appeals) confirmed the view of the Assessing Officer. The Tribunal, however, taking a view that it was not mandatory to specify object in Form No. 10 for which funds were accumulated, set aside order passed by authorities below. On revenue's appeal: HELD Section 11(2) provides that eighty five per cent of the income which is not utilized by the Trust for charitable or religious purposes would not be included in the total income of the previous year of receipt of the income provided the conditions laid down in clauses (a) to (c) contained therein are satisfied. Clause (a) in particular, which is applicable, provides that such person furnishes the statement in the prescribed form and in prescribed manner to the Assessing Officer staying the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart which shall....
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....nt-assessee is a Public Charitable Trust. For the assessment year 2008-09, the assessee had filed the return of income claiming deduction of a sum of Rs. 3.60 crores under section 11(2) of the Income Tax Act, 1961. Assessing Officer questioned the assessee with respect to such claim prima facie believing that the assessee had not indicated the purpose for which the income was set apart which was one of the requirement of section 11 of the Act. He also referred to the declaration to be made by the assessee under Form 10 in support of such a claim in which also, according to him, there was no specification of the purpose. 5. The assessee appeared before the Assessing Officer and filed a detailed reply. The gist of the reply is that the assessee-Trust is engaged in providing medical facilities at various centers like Ahmedabad, Surat etc. At the time of setting apart of the funds, two hospital projects at Ahmedabad and Atladra were coming up and modern amenities were required to be provided in the existing hospitals. The board of the trustees therefore passed the resolution to set apart such amount to finance future requirement of the trust's projects. We may also note th....
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....umulate the funds for medical purpose that for the providing at various centers as evidence from its reply dated 07.05.2013 reproduced by the Assessing officer in this order. It is not the case of the Revenue that the said object from this trust deed not for the charitable purpose." 8. Section 11(2) of the Act provides that eighty five percent of the income which is not utilized by the Trust for charitable or religious purposes would not be included in the total income of the previous year of receipt of the income provided the conditions laid down in clause (a) to (c) contained therein are satisfied. Clause (a) in particular, which is applicable, provides that such person furnishes the statement in the prescribed form and in prescribed manner to the Assessing Officer staying the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart which shall in no case exceed five years. Undoubtedly therefore, the statement of purpose for which the income is being accumulated or set apart is one of the requirements which must be satisfied before the assessee can avail the benefit under sub-section (2) of secti....
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....n this year or in the earlier years or in the years in which the amount has been utilized. The impugned assessment year is 2018-19. Today, we are in 2026, till date no violation has been pointed out by the revenue nor is there an assessment order for any of the years, where a violation has been pointed out. It is also an admitted fact that the assessee continues to enjoy the benefit of the Section 12A of the Act and even the registration as a charitable trust has not been withdrawn. In these circumstances as it is noticed that the assessee continues to enjoy the benefit of a charitable trust and because no violation of section 11 or 13 of the Act has been pointed out nor brought out, as also in regard to the principles laid down by the Hon'ble Gujarat High Court in the case of Bochasanwasi Shri Akshar Purshottam Public Charitable Trust (supra), the disallowances of the accumulation and the consequential taxing of the same stands deleted. Accordingly, appeal of the assessee is allowed. 7. As we have already adjudicated the appeal of the assessee and deleted the disallowance made by the AO and confirmed by the ld. CIT(A), the stay petition filed by the assessee stands dismissed as....