9911796707
TMI Blog2013 (12) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... us of Rs. 55,73,560/ - after claiming expenditure under various heads. The Assessing Officer opined that as per sec. 11 (2)(a) of the Act, if the assessee accumulates or sets apart more than 15% of the gross receipts, the assessee has to file From No.10 along with return of income. In the assessee's case, the assesseee had transferred Rs. 55,73,560/- to the capital fund, which was more than 15% of gross receipts. The A.O. observed that for accumulating in excess of 15%, the following requirements were to be fulfilled: (a) Application in Form No. 10 should have been filed within the time provided in Form No. 10. (b) The purpose for which the Income was accumulated had to be specified in Form No. 10. (c) Accumulation was possible for five years within which the income was to be utilised for specific purposes. (d) All accumulated income was required to be invested in the modes prescribed under sec. 11 (5) of the I T Act. (e) Form No. 10 should have been accompanied by a board resolution regarding accumulation and the specific objects for which income was accumulated. It should have also enclosed details of investments and copies of annual accounts. 4. The Assessing Officer also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing in the language of Sec.11(1)(a) which lends support to the contention that the expenditure incurred in the earlier year cannot be met out of the income of the subsequent year and utilization of such income for meeting the expenditure of the earlier year would not amount to such income being applied for charitable or religious purposes. 9. The learned A.R. further submitted that similarly the Hon'ble Gujarat High Court in the case of CIT vs. Shri Plot Swetamber Murti Pujak Jain Mandal (119 CTR 144) had referred to the Circular No.100 dated 24.01.1973, which allowed repayment of loans taken in earlier years for fulfilment of charitable objects as application. It was held that the same principle should apply if instead of taking the loan the organization spends money out of its corpus and it is reimbursed in the subsequent years. Accordingly, they have also held that there is nothing in sec.11(1)(a), which shall indicate that the expenditure incurred in the earlier year cannot be met with the income of the subsequent years. 10. The learned CIT(A) held as follows : "In the present case, it is the contention of the assessee that there was a deficit of Rs. Rs.46,42,125/- for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in sub- s. (4) of s. 11. The expression "income" has to be understood in the popular or general sense and not in the sense in which the income is arrived at for purpose of assessment to tax by the application of some artificial provisions either giving or denying deduction. Taking into account the purpose for which the conditions of s. 11(1)(a) are imposed, it would be clear that one has to consider the income as arrived at in the context of what is available in the hands of the assessee, subject of course to any adjustment for expenses extraneous to the trust. If the expression "income" is so understood, then one has to take the accounts of the assessee with reference to the receipts and deduct therefrom the expenses necessary for earning or looking after that income. The net amount that remains would be available for distribution or application for charitable purpose. In applying the income for charitable purposes, even capital expenditure may be incurred. Therefore, the nature of the expenditure in the hands of the entity which receives the money is not the criterion. So long as the assessee disburses the amount for charitable purposes, whether the amounts are utilised for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly for charitable or religious purposes to the extent to which such income is applied to such purposes in India is to be excluded for the purposes of computing the income of the trust for the purpose of assessment. There are no words of limitation in this section providing that the income should have been applied for charitable or religious purposes only in the year in which the income had arisen. The word 'applied' means `to put to use' or `to turn to use' or `to make use' or `to put to practical use'. Having regard to the provisions of s. 11, it is clear that when the income of a trust is used or put to use to meet the expenses incurred for religious or charitable purposes, it is applied for charitable or religious purposes. The said application of the income for charitable or religious purposes takes place in the year in which the income is adjusted to meet the expenses incurred for charitable or religious purposes. In other words even if expenses for charitable and religious purposes have been incurred for the earlier year and the said expenses are adjusted against the income of a subsequent year, the income of that year can be said to have been applied for charitable and relig ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
