TMI Blog2015 (10) TMI 2840X X X X Extracts X X X X X X X X Extracts X X X X ..... t of such accumulation given the fact that the accumulation is sought for the purpose of its objects on the basis of which it was granted registration u/s 12A - We do not even find the objects stated in the Form No.10 too vague either, as these are the objects as per the bye laws. Admittedly, the objects stated in Form No.10 are not elaborately stated, but that cannot be the reason to deny the said benefit. Thus we find that there is no vagueness in the purposes specified by the assessee in Form No.10. Assessee has enough funds for the purposes of salary to be paid in the form of grants received from the State Government as well as the unutilized amount of grant so received by the assessee - It is not the Assessing Officer s case that the assessee has not complied with any of these conditions. His only concern is the availability of a huge amount of funds for the said purpose. AO in this regard has to confine himself to the provision of the Income Tax Act read with the Income Tax Rules only. AO does not have any prerogative to comment on the way the activities are to be carried on by the assessee. How much funds are needed for which purpose and how funds are to be used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose. 3. Aggrieved by the order of the Assessing Officer the assessee went in appeal before the learned CIT (Appeals). It was submitted that the assessee is a charitable trust having 12A registration certificate from Commissioner of Income Tax, Shimla. It is carrying on its activities with hundred percent financial aid from Government of Himachal Pradesh. The trust has been created by the State Government for the welfare of patients. It was submitted before the learned CIT (Appeals) that the accumulation of surplus income for the purpose of salary and welfare of patients as described in Form No. 10 is duly in accordance with objects of the trust for which it has been granted registration under section 12A of the Act. It was also brought to the notice of the learned CIT (Appeals) that the issue raised by the Assessing Officer that the assessee has made an excess provision of Rs. 4,85,00,000/- for the payment of salary in the next year is not relevant in the facts and circumstances of the present case. It was clarified that in the next year the assessee had proposed to start a Super Specialty services in the Medical College and appointments of highly paid doctors were also to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear under consideration, the assessee has not been able to spent 85% of its receipts and Form No.10 was duly filed before the Assessing Officer. The contention of the Assessing Officer is that the objectives for which the receipts had been accumulated as described in Form No.10 are vague. He drew our attention to the copy of Form No.10, whereby the objectives for which accumulation was sought for is stated to be salary of staff and welfare of patients . Further, our attention was invited to the objectives of the trust as stated in the bye laws of the assessee society. The relevant portion of the objectives reads as under : i) To hire staff for enabling M/s Rogi Kalyan Samiti, Dr. R. P. Medical College, at Tanda to meet its obligations besides strengthening the staff positions in all categories. ii) This will be a charitable Samiti and all the income generated by the Samiti will be utilized for the welfare of the patients These objectives have also been reproduced by the Assessing Officer in his order at para 6. Since first objective as stated hereinabove is to hire the staff and second objectives is that of welfare of the patients. In view of the same it was argued t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come beyond the previous year under section 11(2) of the Act, the purpose of such accumulation must be specific. In this view, it was prayed that the orders of the Assessing Officer and the learned CIT (Appeals) be held as per law. 8. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The only issue to be decided by us is that whether in the given facts and circumstances, the assessee has accumulated the funds as per law. The undisputed facts of the assessee are that the assessee society is registered under section 12A of the Act, hence is eligible to get exemption under section 11 of the Act. However, during the year, the assessee could not utilize funds to the extent of 85% and to comply with the requirements of section 11(2) of the Act, it filed Form No.10 before the Assessing Officer, stating the object for accumulation of funds as salary and welfare of patients . On perusal of the bye laws of the assessee society, we see that hiring of staff and utilization of funds for welfare of patients are two objects of the society. Therefore, it cannot be said that the objects w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishable on facts as in that case all the objects as per law of the assessee were specified as the purpose of accumulation, which is not the case of the present assessee. 9. In view of the above, we find that there is no vagueness in the purposes specified by the assessee in Form No.10. 10. The other issue raised by the Assessing Officer to deny the benefit of accumulation is that the assessee has enough funds for the purposes of salary to be paid in the form of grants received from the State Government as well as the unutilized amount of grant so received by the assessee. The assessee has duly given its explanation for need of such huge amount in future years as it has plans to have same super specialty facilities in coming year. However, we find that the issue of such availability of funds or need for such huge funds in future are not relevant for the purposes of granting benefit of accumulation of income. The provision of section 11(2) of the Act provides to give assessee the benefit of such accumulation on the compliance of two conditions stated there in clause (a) and clause (b). Clause (a) provides to give the notice to the Assessing Officer in the prescribed manner stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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