TMI Blog2021 (8) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... es. In any case, reference to the other sections, which have been enacted for some other purpose, may not be appropriate. Accordingly, we reject these contentions of the assessee. In view of the above said discussions, we confirm the order passed by Ld. CIT(A) on this issue. Tax authorities have not accepted application made in form No.10 for accumulation of funds u/s 11(2) - We notice that the time limit for furnishing form No.10 has been prescribed in section 11(2)(c) of the Act by Finance Act, 2015 w.e.f. 1.4.2016. Hence the amendment shall take effect from AY 2016-17 only. It is pertinent to note that Rule 17(2) of the Income tax Rules as amended from 1.4.2016 and also earlier Rule 17 prescribed that the Form No.10 shall be furnished before the expiry of time limit u/s 139(1) for furnishing return of income. We notice that the Chandigarh Bench of Tribunal has held in the case of Infrastructure Development Fund vs DCIT [ 2020 (12) TMI 542 - ITAT CHANDIGARH ] that the amendment has been brought into the Income tax Act with effect from 1.4.2016 and hence it will apply only from AY 2016-17. The Tribunal did not give much credence to the time limit prescribed in the Income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned CIT (Appeals) erred in not deleting the addition of fixed deposits made by the AO as not amounting to accumulation for application of income as provided under Section 11(2)(b) read with Section 11(5) of the Act though in the scrutiny assessment for AY 2011-12 such fixed deposits were treated as accumulation for application of income. Additional Ground of appeal: The CIT(A) erred in not treating the investment made in fixed deposits as application of income for the purposes of Section 11(1)(a) of the Act, even though the Memorandum of Trust of the Appellant contained clauses providing for such investment in fixed deposits and also the funds from the same were utilized towards the objects of the Appellant-Trust. 2. The above said grounds give rise to following two issues:- (a) Rejection of claim to allow deduction of fixed deposits as application of income u/s 11(1)(a) of the Act. (b) Rejection of claim for accumulation of income u/s 11(2) of the Act. 3. The assessee is a Charitable Trust. During the year under consideration, the assessed claimed a sum of ₹ 2,38,20,119/- as application of income towards acquisition of assets. The breakup of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the Trust was established. 6. The contention of the assessee is that the word Applied does not necessarily mean Spent . However, it is the duty of the assessee to show that the amount has actually been allocated to or earmarked for a charitable purpose in consonance with the objects of the Trust, even though the actual payment may be made later. We find support for this proposition in the case of CIT Vs. Nizams Trust 131 ITR 497. For example, a trust may purchase a vehicle before the end of the financial year, but actual payment be made subsequently. In this example, if the trust earmarks or allocate its funds towards payment of vehicle cost, it may be considered as having been applied . 7. In the instant case, the assessee has not shown that the amount kept in fixed deposits have been allocated to or earmarked for a charitable purpose in accordance with the objects of the Trust. The assessee is making only a general statement that it should be considered as applied . Hence, in our view, the assessee is not entitled for exemption u/s 11(1)(a) of the Act in respect of deposits made in the banks. 8. The assessee has also placed reliance on section 11(1A) and sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f filing return of income but before the date of completion of the assessment, it was entitled to benefit of accumulation u/s 11(2) of the Act. 11. We heard Ld D.R on this issue and perused the record. We notice that the Hon ble Supreme Court has observed as under in the case of Nagpur Hotel Owners Association (supra):- It is abundantly clear from the wordings of sub-section (2) of Section 11 that it is mandatory for the person claiming the benefit of Section 11 to intimate to the assessing authority the particulars required, under Rule 17 in Form No.10 of the Act. If during the assessment proceedings the Assessing Officer does not have the necessary information, question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from Section 11 and is subjected to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time he completes the assessment. In the absence of any such information, it will not be possible for the assessing authority to give the assessee the benefit of such exclus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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