The Tax Publishers2021 TaxPub(DT) 0643 (Chen-Trib)

INCOME TAX ACT, 1961

Section 11

Where Clause 4(k) of trust deed provided for extending help and relief to distressed and destitute, homeless and underprivileged and funds accumulated under section 11(2) is covered under main objects of the trust and AO as well as CIT(A) had erred in denying benefit of accumulation of income under section 11(2), therefore, AO was directed to delete the additions made towards denial of accumulation of income under section 11(2).

Charitable trust - Exemption under section 11 - Allegation that assessee had accumulated its income not for specific purpose, but merely to defer taxation of surplus of amount which has not been applied towards its objects -

Assessee claimed exemption under section 11 and filed Form No. 10 along with return of income and accumulated a sum under section 11(2) for the purpose of objects of the trust, including specific objects such as Ashram major repair fund, poor children education fund and medical aid fund. AO rejected accumulation of income under section 12AA on the ground that assessee had accumulated its income not for specific purpose, but merely to defer taxation of surplus of amount which had not been applied towards its objects in corresponding accounting period. Accordingly, allowed accumulation of income for purpose of Ashram major repair fund, but rejected accumulation of income for the purpose of poor children educational fund and medical aid fund. Held: Lack of declaration in Form No.10 regarding specific purpose for which funds were being accumulated by the assessee trust would not be fatal to the exemption claimed under section 11(2). Clause 4(k) of trust deed provides for extending help and relief to distressed and destitute, homeless and underprivileged and funds accumulated under section 11(2) is covered under main objects of the trust. AO as well as CIT(A) had erred in denying benefit of accumulation of income under section 11(2). Hence, AO was directed to delete the additions made towards denial of accumulation of income under section 11(2) and allow benefit of accumulation as claimed by the assessee.

Followed:CIT (Exemptions) v. Bochasanwasi Shri Akshar Purshottam Public Cable Trust [2019] 102 Taxmann.com 122 (Guj) : 2018 TaxPub(DT) 6730 (Guj-HC), CIT v. M. C.T. Muthiah Chettiar Family Trust & Ors. (2000) 245 ITR 400 (Mad-HC) : 2000 TaxPub(DT) 1051 (Mad-HC) and CIT (Exemptions) v. Bochasanwasi Shri Akshar Purshottam Public Cable Trust (2019) 263 Taxman 247(SC) : 2019 TaxPub(DT) 2013 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13



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