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2020 (3) TMI 1033 - HC - Income TaxExemption u/s 11 - Use of accumulated income for different purpose - Treating the amount given to PSWHMMS as the income of the appellant-society in terms of section 11(3)(d) - appellant is a Society working under the Government of Punjab, same being principal donor also - HELD THAT:- In the present case, it was not the claim of the appellant that the amount was being accumulated for the payment to PSWHMMS. At this stage, we are not dilating as to whether for such purpose there could be accumulation or not. In such circumstances, there is a clear violation of the conditions referred in sub-section (2) and sub-section (3) of section 11. The amount has been spent for the purpose other than for what it was accumulated, it comes within the mischief of section 11(3)(c). The second limb of the argument raised is that by adding explanation to sub- section (2) and adding clause (d) to sub-section (3) of section 11 it is rather clarified that the assessees like appellant can pay or credit the accumulated sum to an unregistered or funds or Trust or institution not specified therein. The argument is not well founded. From the changes made by Finance Act, 2002 in section 11, it is clear that restrictions have been imposed on transfer of accumulated or set apart amount but the utilization of income received during the year has not been touched. It is settled that income received during the year can be transferred to other Trust or institution for charitable or religious purpose and same shall be held to be application for such purpose. The argument raised that since there is a restriction only for payment or credit of accumulated amount to a registered Trust or institution recognized under the Act and it would mean that payment can be made to un-registered Trust, institution or to institutions or Trusts not even recognized by the Act as charitable is far-fetched. This would lead to adding words to the provisions of the Statute which is not permissible. There is another aspect of the matter, it has not been even the case of the appellant that the donee is indulged in charitable or religious purpose what has been stated is that the aims and objects of the donor and donee are similar. Circular No.8 of 2002 ar nowhere supports the argument raised by the appellant rather clause 21.1 clarifies that payment to other Trust or institution out of the receipt of the year will continue to be treated as application, however no payment can be made from the accumulated income and the same shall be taxed; clause 21.2 reproduces Section 11(3)(d) stating that transfer shall be deemed to be income or person making such payment or credit. The addition of amount transferred to PSWHMMS is upheld. The question is answered against the appellant. The appeal is dismissed.
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