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2016 (9) TMI 1046 - AT - Income TaxIndependent accumulation of income u/s. 11(2), besides accumulation of profit u/s. 11(1)(a) - Held that:- It has been brought to our notice from the details of application of funds in both the assessment years with the submission that application of fund is already more than 85%, therefore the issue of accumulation of fund u/s. 11(2) becomes academic and does not require any adjudication, as the CIT(Appeals) has already allowed the accumulation of fund as per the provisions of section 11(1)(a) of the Act. Therefore, we do not find it necessary to give a specific finding on a issue, whether accumulation of fund is further permissible after allowing accumulation of fund u/s. 11(1)(a) of the Act. Accordingly, this issue is disposed of for both the assessment years. Investment or deposit disallowed - Held that:- The mode of investment is given in sub-section (5) of section 11 for accumulating the fund. Investment or deposits of money can be made as per sub-section (5) of section 11 of the Act and clause (iii) says that for the purpose of sub-section (2), deposits can be made in any account of the Scheduled Bank or co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); meaning thereby, if the assessee makes investments or deposits in the scheduled bank and claims the deposits as accumulated for the purpose of section 11(1)(a) or 11(2), the investment or deposit cannot be disallowed only for the reason that application of money was not for the object of the society. We accordingly do not find any merit in the disallowance and direct the AO to treat the deposits in the scheduled bank as part of accumulation of fund as no disallowance can be made. Non-application of accumulation of fund within a specified period - Held that:- CIT(Appeals) has categorically observed that the accumulated fund was not applied for the objects of the society and if not applied, it is to be liable to be taxed in the previous year immediately following the previous year in which it was derived where it could not be applied to the specified purposes and the CIT(Appeals) has given directions that the said amount will be taxable in A.Y. 2009-10 and not in the current year. The CIT(Appeals) has taken into account the provisions of the Act and having noted that the accumulated fund was not applied for the specified purposes, he directed that this amount be taxed in the A.Y. 2009-10. Since we do not find any infirmity in the order of CIT(Appeals), we confirm the same.
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