TMI Blog2018 (8) TMI 2071X X X X Extracts X X X X X X X X Extracts X X X X ..... in fixed deposits. Therefore, the identification of funds of the Assessee as identifiable to accumulation of unutilized income of AY 2011-12 or that of receipt as income of AY 2012-13 is not possible in the present case. In such circumstances, we are of the view that the plea of the Assessee ought to have been accepted by the CIT(A). The provisions require that the income earned from the property held under trust must be first applied to the objects of the trust and if any income is remaining then accumulation to the extent of 15% of such income is permitted and if the total income could not be utilised towards the objects of the trust then the assessee can resort to further accumulation u/s. 11(2) over and above the amount of 15%. The CIT(A) has used the word first in his order whereas the expression first is not found in Sec.11(1)(a) or Sec.11(2) of the Act. If the sum of ₹ 1,89,01,520 spent for charitable purpose in AY 2012-13 is reduced from ₹ 7,88,84,408 the resultant figure of ₹ 5,99,82,888/- which would be the deficit in applying 85% of the total income of AY 2012-13 u/s.11(2) of the Act. 15% of the receipts of AY 2012-13 of ₹ 9,28,05,186 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust. The object of the trust was to provide education to the public, relief to the poor, medical relief and other objects of general public utility. The assessee institutes prizes which are meant to achievers in various fields and endeavours to elevate the prestige of scientific research in India and inspire young Indians to choose a vocation in scientific research. 3. The assessee filed return of income for the AY 2012-13 on 24.09.2012 declaring NIL income. The total receipts of the assessee in the form of bank interest and interest on income-tax refund was ₹ 9,28,05,186. Under section 11(1)(a) of the Income-Tax Act, 1961 [ the Act ], the assessee can claim that its income is not includible in the total income, subject to certain conditions. 85% of the receipts which are considered as income has to be applied for charitable purpose in the same year. 15% of such income could be accumulated without any restriction u/s. 11(1)(a) of the Act. To the extent 85% is not applied for charitable purpose, the assessee has to make an application for accumulation of the deficit for application for charitable purpose in future. 4. In the AY 2011-12, the total income or receipts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax refund 151,887 Total Receipts 9,28,05,186 Less:- Income set apart for future under section 11(1)(a) - 15% of total receipts 1,39,20,778 Balance 7,88,84,408 Total expenditure incurred towards objects of the trust 5,34,67,009 Less:- Amount utilized out of income accumulated under section 11(2) for FY 2010-11 3,45,65,489 1,89,01,520 Balance 5,99,82,888 Less:- Income of the current year accumulated under section 11(2) 5,99,82,888 Taxable income NIL 6. An Intimation under section 143(1) was passed on 30.03.2014 accepting the income returned. Subsequently notice under section 143(2) was issued on 23.09.2013. Notice under section 142(1) was issued on 23- 05-2014. Details / information / submissions called fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated to set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of [fifteen] per cent of the income from such property. 6. And further Section 11(2) permits accumulation where 85% of the income could not be or is deemed to be not to have been applied to charitable or religious purposes in India during the previous year. 7. Examination of the provisions of Section 11(1) make it clear that the income derived from property during the previous year is not equated with accumulated income u/s. 11(2). The provisions require that the income earned from the property held under trust must be first applied to the objects of the trust and if any income is remaining then accumulation to the extent of 15% of such income is permitted and if the total income could not be utilised towards the objects of the trust then the assessee can resort to further accumulation u/s. 11(2) over and above the amount of 15%. In view of the above, the contention of the assessee that applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19-May-10 25-May-10 22,59,807* 3.25 ICICI FD 4087 25-May-10 02-Jul 10 13,32,430* 2.50 IDBI FD no. 1199 27-Jul-09 27-Jul 10 1,00,00,000* 7.25 IDBI FD no. 1205 27-Jul-09 27-Jul-10 1,00,00,000* 7.25 IDBI FD no. 1175 27-Jul-09 27 Jul-10 1,00,00,000* 7.25 IDBI FD no 1182 27-Jul-09 27 Jul-10 1,00,00,000* 7.25 IDBI FD no. 1243 27-Jul-09 27-Jul-10 1,00,00,000* 7.25 IDBI ED no. 1168 27-Jul-09 27-Jul-10 1,00,00,000* 7.25 IDBI FD no. 1229 27-Jul-09 27-Jul-10 1,00,00,000* 7.25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,00,00,000 7.50 ICICI FD 1475 07-Aug-10 10-Aug-11 1,00,00,000 7.50 SBI FD 5090 05-Oct-10 05-Oct-11 8,00,00,000 8.25 SUB TOTAL 84,59,27,570 Sundaram BNP 04-May-09 04-May 10 4,00,00,000' 9.50 HDFC 08 Jan-101 08-Jan-13 17,00,00,000 7.85 SUB TOTAL GRAND TOTAL 101,59,27,570 11. The ld. counsel for the assessee submitted that the maturity proceeds of the FDs go to the SB Account and monies are spent for charitable purpose from the SB account. In this scenario, it was submitted by him that accumulation of the earlier AY and the receipts in the present A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e words he shall be entitled to have the amount of loss set off accruing in s. 24(1) would seem to be consistent with the conferment of a benefit on the assessee which he can claim as a right. Hence, in the above illustration, the assessee's contention should prevail and the Department should adopt that mode which will give the assessee maximum benefit. Circular No.26(LXXVI-3) [F.No.4(53)-IT/54, dated 7-7-1955. 12. Similarly, our attention was drawn to Circular No.1 of 2016 dated 15.02.2016 wherein the CBDT has opined that the choice of the first year in which deduction u/s. 80IA of the Act is to be claimed by the assessee should be left to the choice of the assessee. Our attention was also drawn to the decision of Mumbai Bench of Tribunal in the case of Milan Sharad Ruparel v. ACIT [2009] 27 SOT 61 (Mumbai), wherein the Mumbai Bench on a question of allowing deduction u/s. 54F of the Act, opined that the deposit of the same capital gain in a deposit account to claim exemption is not a requirement of law. It was held that identity of the amount received on sale and utilization of the same amount in making investment in the purchase of new house is not a requirement of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be first applied to the objects of the trust and if any income is remaining then accumulation to the extent of 15% of such income is permitted and if the total income could not be utilised towards the objects of the trust then the assessee can resort to further accumulation u/s. 11(2) over and above the amount of 15%. The CIT(A) has used the word first in his order whereas the expression first is not found in Sec.11(1)(a) or Sec.11(2) of the Act. The provisions of Sec.11(1)(a) of the Act have already been extracted in the earlier part of this order. The provisions of Sec.11(2) of the Act, reads as follows: Section 11(2) Where eighty-five per cent of the income referred to in clause (a) or clause (b) of sub-section (1) read with the Explanation to that sub-section is not applied, or is not deemed to have been applied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to such purposes in India, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year 2010-11 relevant to AY 2011-12; (ii) Balance amount spent ₹ 1,89,01,520/- should be construed as income applied from the current year's income. Since amount spent ₹ 3,45,65,489/- was relatable to income accumulated under section 11(2) in the FY 2010-11 relevant to AY 2011- 12, the balance amount spent ₹ 1,89,01,520/- should be considered as application of income of AY 2012-13 for charitable purpose. 85% of the total receipts in AY 2012-13 of ₹ 9,28,05,186 was ₹ 7,88,84,408/- being 85% of gross receipts of current year. If the sum of ₹ 1,89,01,520 spent for charitable purpose in AY 2012-13 is reduced from ₹ 7,88,84,408 the resultant figure of ₹ 5,99,82,888/- which would be the deficit in applying 85% of the total income of AY 2012-13 u/s.11(2) of the Act. 15% of the receipts of AY 2012-13 of ₹ 9,28,05,186 which can be accumulated as a matter of right would be a sum of ₹ 1,39,20,778. The above claim of the Assessee for accumulation is in order in the given facts and circumstances of the case where the identity of the monies as accumulation of AY 2011- 12 or the income of AY 2012-13 is not possible. ..... 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