TaxTMI 
TaxTMI 
2026 (8) TMI 130
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....urpose resemble routine operation expenditure akin to salary payment and no finding to the effect that the above said nature of payment is covered under religious activity. 3) The Ld. CIT(A) erred in observing on set off of past accumulation for AY 2014-15, 2015-16 and 2016-17 amounting to Rs. 77,23,254/- that the appellant failed to demonstrate that the accumulated funds were utilized within the prescribed five-year period OR had valid approval and documentation under Rule 17 and also the appellant did not substantiate whether Form 10 was filed appropriately in those years Ignoring the fact that the appellant claimed set off for AY 2014-15 only and the Assessing Officer without providing any reason added accumulation made in AY 2016-17 and 2017-18 WHARE no set off claimed in the present assessment year. 4) The Ld. CIT(A) was silent on the issue whether maintenance of preachers / priests / religious functionaries is of religious nature under covered in the objects to carry on religious activity provided at clause 4 of object clause of the Memorandum of Association. 5) The Ld. CIT(A) erred in observing no violation of natural justice is established when as....
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....ous functionaries. 4. The AO after considering relevant submissions of the assessee and also taken note of main object of the assessee Trust which are reproduced in Para No. 5 of the AO's order observed that the purpose of accumulation is general not specific and doesn't undertake to set-apart to accomplish concrete definite purpose. Unspent money has been earmarked for an explicit purpose. Hence, the claim of exemption u/s. 11(2) of the Act can't be allowed. The AO further observed that without prejudice if you look into the objects for which the Trust was formed which has been stated in Para No. 5, it can be seen that maintenance of priests/preachers/religious functionaries is not their objectives. Therefore, observed that income has been accumulated u/s. 11(2) of the Act for routine purpose of payment of salaries and other allowances to teachers of a Charitable Institution whose object is to impart education. Therefore, rejected accumulation of income u/s. 11(2) of the Act for the purpose of maintenance of priests/preachers/religious functionaries to the extent of Rs. 30 lakhs and allowed exemption claimed u/s. 11(2) of the Act for balance amount of Rs. 1,21,01,831/-. 5. T....
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....ion of the Hon'ble Supreme Court in the case of CIT v. Nagpur Hotel Owners Association reported in [2001] 247 ITR 201 (SC) held that accumulation u/s. 11(2) of the Act must be for a definite purpose linked to capital expenditure or long term projects but not for routine payments. Therefore, rejected the explanation of the assessee and sustained the additions made by the AO towards rejection of accumulation of income u/s. 11(2) of the Act for the year under consideration and also protective addition towards accumulation of income u/s. 11(2) of the Act for the very same purpose for earlier assessment years. 7. Aggrieved by the order of the Ld.CIT(A), the assessee is now in appeal before this Tribunal. 8. The Ld. Counsel for the assessee, Shri E.S. Ranganath, CA, submitted that the Ld.CIT(A) erred in sustaining the additions made by the AO towards rejection of accumulation of income u/s. 11(2) of the Act, without appreciating the relevant facts. He further submitted that as per provisions of Sec. 11(2) of the Act, there is no specific bar on accumulation of income for Revenue purposes, if such purpose is as per the objects of the Trust. The Ld. Counsel for the assessee further s....
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....t the orders of the AO & the Ld.CIT(A) should be upheld. 11. We have heard both the parties, perused the materials available on record and had gone through the orders of the authorities below. There is no dispute with regard to the fact that the assessee society is registered u/s. 12A of the Act as Charitable & Religious Trust. It is also not in dispute that the objects for which the society is established is to do all activities according to the catholic religious principles and to support and promote the advancement of educational cause particularly schools, colleges, cultural, technical and medical sciences for all persons irrespective of religion, race, caste community or social status. The assessee has carried out its activities in accordance with its main objectives by constructing and maintaining Churches as per Catholic religious principles and also running school. The assessee mainly receives income in the form of contributions from various foreign countries and institutions, individuals with a specific purpose of construction and maintenance of religious places for worship as per Catholic religious principles and also for maintenance of schools. The assessee claims exe....
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....urpose should be specific and it should be as per the objects of the Trust. This principle is supported by the decision of the Hon'ble Delhi High Court in the case of Director of Income Tax (Exempt) v. Daulat Ram Education Society in ITA No. 644/2005 order dated 24.08.2005 where it has been held as under: 4. The Tribunal has placed reliance upon the judgment of a Division Bench of this Court in CIT v. Hotel and Restaurant Association 261 ITR 190. In that case also the assessee had accumulated the unspent amount for being spent on more than one purposes specified by it. The question for consideration was whether it was necessary for the assessee to make a specific mention of any purpose or purposes to enable it to accumulate the income. The court held that Section 11(2) of the Act did not prohibit plurality of purposes. The court also held that the purposes which the assessee had specified formed part of its objects and were charitable in nature. The position is no different in the instant case. Here too, out of 29 purposes/ objects stipulated in the memorandum of association, the assessee has specified eight purposes in Form No. 10 for which it was accumulating the unspent....