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2015 (9) TMI 658 - AT - Income TaxAssessment of part of income accumulated u/s. 11(2) - disallowance of income accumulated u/s 11(2) - whether the bank fixed deposits, which were made in the immediately preceding year, could be earmarked towards the income accumulated u/s 11(2) of the Act or not, in compliance with the provisions of sec. 11(2)(b)? - Held that:- In the instant case, there is no dispute that the assessee has passed a resolution for accumulation of income duly specifying the purpose of accumulation. Out of the sum of ₹ 31.35 lakhs claimed u/s 11(2) of the Act as accumulation of income, a sum of ₹ 20.00 lakhs was found to have been deposited in bank fixed deposits during the year under consideration. For the remaining amount, the assessee has earmarked the fixed deposits already available with it towards the income accumulated u/s 11(2) of the Act. Considering the objective of the provision of sec. 11(2)(b), in our view, what is required to be seen is whether the income accumulated has been deposited or invested in the forms prescribed u/s 11(5) of the Act, i.e., there should be corresponding investment, which could be identified with the income accumulated. The period of six months prescribed in Form No.10, in our view, is the outer limit for making deposit/investment. The provisions of sec. 11(2)(a) talks about “income”, where as the provisions of sec. 11(2)(b) talks about the “money” so accumulated. The “money” available with the assessee may be pertaining to the current year’s income or earlier year’s income. Further, if the view taken by the tax authorities that the deposit should have been made out of current year’s income is accepted as correct for a moment, then the assessee trust shall be forced to foreclose the existing deposit and thereafter make a new deposit, thus losing considerable amount towards loss of interest/penalty. The same would be very much technical in nature. Hence, in our considered view, the earmarking of existing bank fixed deposits, which is free from any lien, towards the income accumulated u/s 11(2) of the Act during the year under consideration would be sufficient compliance with the provisions of sec. 11(2)(b) of the Act, since the accumulated income is represented by the corresponding deposit/investment. Thus set aside the order of Ld CIT(A) on this issue and direct the assessing officer to delete the disallowance of income accumulated u/s 11(2) of the Act. - Decided in favour of assessee. Validity of re-opening of assessment - Held that:- As the return of income filed by the assessee had earlier been processed u/s 143(1) of the Act only and further the assessment has been reopened within four years from the end of the relevant assessment year. Further there was prima facie reason with the assessing officer to believe that the assessee had not made investment in terms of sec. 11(2)(b) of the Act. Even though the prima facie reason may go wrong subsequently, the reopening cannot be held to be invalid on that count. Under these set of facts, by following the decision of Hon’ble Supreme Court rendered in the case of Rajesh Jhaveri Stock Brokers Ltd (2007 (5) TMI 197 - SUPREME Court), we uphold the re-opening of assessment. - Decided against assessee.
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