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2016 (3) TMI 546 - AT - Income TaxDenial of benefit of exemption u/s 11(2) - Held that:- It was not a case of A.O. that there was no form at all. If at all, any defects in the form, they are procedural defects and which can be rectified. There is no specific bar prohibiting the assessee from modifying the figures of accumulation as held by the Hon’ble High Court of Punjab & Haryana in the case of CIT vs. Simla Chandigarh Diocese Society (2009 (8) TMI 103 - PUNJAB AND HARYANA HIGH COURT) . In any case period of accumulation cannot be more than five years. In the absence of specific period, it can be always presumed that the period of accumulation is five years. Therefore, we are of the opinion that the CIT(A) should have allowed the assessee to file the revised form no.10 rectifying the defects pointed out by the A.O., which was not done. Therefore, we deem it appropriate to remit the issue back to the file of the A.O. and direct the A.O. to allow the assessee to file revised form no.10 and consider the exemption claimed u/s 11 of the Act. Depreciation claim - Held that:- Depreciation on assets, the cost of which was allowed has application of income in earlier year is to be allowed while computing the income available for application for charitable purpose. The CIT(A) rightly directed the A.O. to allow the depreciation. We do not see any error or infirmity in the order passed by the CIT(A). Application of income towards release of funds to Horticulture department - Held that:- The assessee being a State Govt. organization, constituted under sec. 15 Andhra Pradesh (Agricultural Produce and Livestock) Market Act, 1966 is authorized to spend funds specified by the Government through general or special orders. Therefore, when the Government is directed to spend amount for particular purpose as per the said Act, the assessee is bound to follow the instructions of the Government. The amount is paid to farmers in the form of horticulture subsidy for establishment of cold storage facility, which is coming under one of the objects of the assessee. Therefore, we are of the opinion that the amount spent for the welfare of farmers and paid through horticulture department as directed by the Govt. is application of income for charitable purpose. The CIT(A) has rightly deleted the addition subject to verification by the A.O. We do not see any error or infirmity in the order passed by CIT(A). Hence, we inclined to upheld the order of CIT(A) and set aside the issue to the A.O. for the limited purpose of verification and direct the A.O. to allow the claim subject to verification of directions of the Director of horticulture or Govt., after giving due opportunity to the assessee.
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