TMI Blog2021 (1) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... trust provide for such purpose, then the assessee can accumulates funds for the purpose which is specified in trust deed. This view is fortified by the decision of Hon ble Gujarat High Court in the case of CIT (Exemption) vs. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust reported in [ 2018 (10) TMI 995 - GUJARAT HIGH COURT where it was held that lack of declaration in Form No.10 regarding specific purpose for which funds were being accumulated by the assessee trust would not be fatal to the exemption claimed u/s.11(2) of the Act. The Hon ble Supreme Court [ 2019 (3) TMI 1405 - SC ORDER ] has dismissed SLP filed by the Department in the above case and has upheld the findings of the Hon ble Gujarat High Court. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tually impossible for trusts to survive and grow. In the instant case, at the end of every year, after drawing up its financial statements, the trust arrives at the surplus for the year, if any. Based on the surplus, the trust decides the end-use, First, funds are set aside for the long-term repairs and renovations to be carried out in its premises. These are apart from the regular maintenance expenses. For this, the accumulation is done under the Ashram Major Repair Fund. Next, the trust allocates funds for the following two charitable purposes a) Poor Children s Education Fund; and b) Medical Aid Fund The amount set apart differs from year to year, depending upon the need or requests received for support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipt of the income, provided the following conditions are complied with namely: (a) such person specifies by notice in writing given to the Assessing officer in the prescribed manner the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart which shall in no case exceed ten years; (b) the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub section (5) From the above, it is clear that the only condition regarding purpose is that they should be Charitable in nature. There is no stipulation that the purpose should capital or revenue in nature, Funding a school/hospital building, providing scholarsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, filing Form no.10 is not an empty formality and assessee needs to specify the purpose for which such income has been accumulated. Since, the assessee has accumulated income for general purpose, the same cannot be allowed to be accumulated u/s.11(2) of the Act, accordingly, allowed accumulation of income for the purpose of Ashram major repair fund, but rejected accumulation of income for the purpose of poor children educational fund and medical aid fund amounting to ₹ 10.00 lakhs and added back to total income. 4. Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee has reiterated its arguments made before the Assessing Officer and claimed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s covered, we proceed to dispose of appeal, after hearing the learned DR. 6. The learned DR, supporting the order of the learned CIT(A) submitted that assessee is accumulating income u/s.11(2) on vague reasons without specifying the purpose for which such income has been accumulated, even though section 11(2) clearly mandates the assessee to specify purpose for accumulation of income, therefore, there is no reason to interfere with the findings recorded by the learned CIT(A) to deny accumulation of income u/s.11(2) of the Act. 7. We have heard the learned DR and perused the materials available on record. The assessee is a charitable trust claiming benefit of exemption u/s.11 of the Act, has accumulated income u/s. 11(2) of the Act for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee trust would not be fatal to the exemption claimed u/s.11(2) of the Act. The Hon ble Supreme Court reported in (2019) 263 Taxmann.com 247(SC) has dismissed SLP filed by the Department in the above case and has upheld the findings of the Hon ble Gujarat High Court. 8. In this case, on perusal of facts available on record, clause 4k of trust deed provides for extending help and relief to distressed and destitute, homeless and underprivileged and funds accumulated u/s.11(2) is covered under main objects of the trust. We, therefore are of the considered view that Assessing Officer as well as learned CIT(A) has erred in denying benefit of accumulation of income u/s.11(2) of the Act. Hence, we direct the Assessing Officer t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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