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2015 (9) TMI 658 - ITAT COCHIN

2015 (9) TMI 658 - ITAT COCHIN - [2015] 41 ITR (Trib) 140 (ITAT [Coc]) - Assessment 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 accumulati .....

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hat 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. .....

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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 .....

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son 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. - I.T.A. No. 552/Coch/2014 - Dated:- 14-5-2015 - SHRI V.DURGA RAO AND B.R.BASKARAN, JJ. For The Assessee : Shri Jose Pottokkaran, CA For The Revenue : Shri K.K. John, Sr. DR .....

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ase are stated in brief. The assessee is a public charitable institution and its main objective is to provide medical aid, education and carry on other public charitable activities. It was registered u/s. 12A of the Act. It filed its return of income for the year under consideration declaring a loss of ₹ 9631/- on 25-10-2004 and the same was processed u/s. 143(1) of the Act. Subsequently, the Assessing officer re-opened the assessment on 03/04/2006 by issuing notice u/s. 148 of the Act. In .....

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posit as under: Deposit No. Date of Deposit With whom the amount is deposited Amount of Deposit Due date 0685101000005345 22.02.03 South Indian Bank Ltd., Bazar Branch, Thrissur 108,243 22.02.06 0085101000004639 23.09.2002 -do- 518,399 21.09.05 PWD 20022213 23.09.2002 Catholic Syrian Bank Ltd., Thrissur Main 519,110 22.09.2005 PWD 012753 31.01.2004 Catholic Syrian Bank Ltd., East Fort, Thrissury 750,000 28.02.06 00841010000010754 31.01.04 South Indian Bank Ltd., Thrissur Main 750,000 31.01.06 PW .....

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of the Act, i.e., the AO took the view that deposits should have been made out of the current year s income. Accordingly, he took the view that the first three deposits aggregating to ₹ 11,45,752/- cannot be considered to be deposits made in terms of section 11(2)(b) of the Act, since they have not been made out of current year s income. Accordingly, the Assessing officer restricted the deduction u/s. 11(2) of the Act to ₹ 20.00 lakhs and thus determined the total income of the asse .....

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f the Act. The Ld. Counsel further submitted that the Co-ordinate Bench of the Tribunal has considered an identical issue in the case of Ollur Sadhu Samrakshna Sangham in I.T.A. No.178/Coch/2002 and the Tribunal, vide its order dated 26th October, 2004, has upheld the findings of the CIT(A) that the intention of the law appears to be that the income set apart should be represented by some assets prescribed u/s. 11(5) of the Act. The Ld. Counsel further submitted that the above said order of the .....

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me has not been found fault with by the assessing officer. The Ld. Counsel further submitted that the Act does not prescribe any condition that only current year s income should be invested in specified assets in order to avail deduction u/s. 11(2) of the Act. 8. On the other hand, the Ld. DR submitted that the assessee cannot place reliance on the decision of the Tribunal in the case of Ollur Sadhu Samrakshna Sangham, cited supra, since the facts prevailing in that case are totally different. I .....

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facts, the Ld. CIT(A) has held that the accrued interest in Kisan Vikas Patras can be considered to be the prescribed investment made by the assessee in compliance of section 11(2) of the Act. The Ld D.R further submitted that the Form No.10 prescribed under rule 17 of the I.T Rules prescribed a time limit of six months commencing from the end of the previous year to make investment/deposit of accumulated income. He submitted that this condition prescribed in Form No.10 amply makes clear that th .....

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ear s income only. Since the assessee had earmarked the fixed deposits that were made in the immediately preceding year to satisfy the compliance of the provisions of sec. 11(2)(b), the assessing officer has held that the same cannot be considered to be proper compliance of the conditions prescribed for accumulation of income u/s 11(2) of the Act, since they have not been made out of current year s income. 11. In our opinion, the view taken by the revenue appears to be too technical. In our view .....

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es specified in sec. 11(5) of the Act. Obviously, the objective behind insisting for deposit of the money so accumulated or set apart is only to ensure that the assessee utilizes the said money only for the purpose of achieving the objective for which the income was accumulated. There will not be any check if the assessee is not mandated to make deposit/investment of the income so accumulated. 12. In the instant case, there is no dispute that the assessee has passed a resolution for accumulation .....

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t 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. 13. It is also pertinent to note that the provisions of sec. 11(2)(a) talks about income , where as the provisions of sec. 11(2)(b) talks about the .....

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