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2017 (3) TMI 1227 - AT - Income TaxEntitlement for exemption under section 11(2) denied - scope of charitable activities - accumulation of income under section 11(2) is not specific and the deposits made in the bank are not as per provisions of section 11(2)(b) - Held that - The assessee is a charitable society and carrying various charitable activities, such as, construction of building for the purpose to accommodate HIV / AIDS patients and also accommodation for sisters and training centres. The Assessing Officer has not doubted about the charitable activities carried-out by the assessee-society. We have considered all the details and found that the assessee is carrying charitable activities as per its objects. The assessee made a detailed submission before the Assessing Officer and also before the Commissioner of Income Tax (Appeals). So far as, the accumulation of income, it was submitted before the Assessing Officer that it is for the purpose of construction of Vimala Women Charitable Society and also maintenance of the institution. The explanation of the assessee was simply rejected. Before the Assessing Officer the assessee filed all the details about the construction and also explained that his accumulation is for the purpose of construction and maintenance of the province of the society and also maintenance of sisters etc. The assessee also filed the details of investment of funds. The Commissioner of Income Tax (Appeals) after considering the explanation of the assessee and also considering the details submitted, in respect of the purpose for which funds are accumulated, he gave a specific finding that the assessee society has utilized the funds for charitable purpose and the order of the Assessing Officer was reversed on this count. Insofar as deposits made in the bank account, the Commissioner of Income Tax (Appeals) gave a specific finding that the assessee received funds during the year to utilize the same for specific purposes and it has set apart these funds and invested the same in the fixed deposits during the year itself for the purpose of future utilization. - Decided against revenue
Issues:
Appeal against order of Commissioner of Income Tax for Assessment Year 2011-12 - Exemption under section 11(2) of the Act - Accumulation of income for building construction and other activities - Investment details - Disallowance of exemption claimed - Dispute over specific purpose of accumulation and investment of accumulated funds. Analysis: The appeal involved a dispute over the exemption claimed under section 11(2) of the Act by the assessee, a charitable society involved in social works related to Leprosy / AIDS / HIV and vocational training for women. The Assessing Officer disallowed the exemption, stating that the purpose of accumulation of income was not specific and the accumulated funds were not invested or deposited as required. The assessee explained that the funds were set aside for specific purposes, including construction and maintenance, and had been invested in fixed deposits. The Commissioner of Income Tax (Appeals) considered the detailed submissions and evidence provided by the assessee, concluding that the society was eligible for exemption under section 11 of the Act. The Commissioner noted that the funds were accumulated for definite charitable purposes, as evidenced by the clear mention of utilization for specific objectives and subsequent utilization for those purposes within the stipulated timeframe. The Commissioner also found that the funds had been deposited in accordance with the provisions of the Act, despite the Assessing Officer's objections regarding the timing of the deposits. The Tribunal considered the arguments presented by both parties, reviewed the evidence on record, and analyzed the orders of the authorities below. It noted that the charitable activities of the assessee were not in question, with the main contention being the specificity of income accumulation and compliance with investment provisions. The assessee had provided detailed explanations and evidence regarding the purpose of accumulation for construction and maintenance activities, as well as the investment of funds in fixed deposits. The Tribunal agreed with the Commissioner of Income Tax (Appeals) that the funds had been utilized for charitable purposes and that the deposits made during the year were in accordance with the Act. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the decision of the Commissioner of Income Tax (Appeals) regarding the eligibility of the assessee for exemption under section 11 of the Act. In conclusion, the judgment addressed the issues of specific purpose of income accumulation and compliance with investment requirements under section 11(2) of the Act. It highlighted the importance of clear documentation and utilization of funds for charitable purposes, ultimately affirming the eligibility of the charitable society for exemption based on the evidence presented and the provisions of the Act.
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