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TMI Blog2024 (1) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... rition, Literacy and Basic Education to rag picking/street children in Mumbai, functioning from two (2) classrooms in Vakola Municipal Schools. The AO noted that the assessee had shown gross receipts of Rs. 69,49,289/- and has offered towards the object of the trust a sum of Rs. 18,83,357/- out of which it has spent only a sum of Rs. 15,99,351/- for educational activities. According to the AO, as per section 11(1)(a) of the Act, the assessee had to apply 85% of gross receipts towards the object during the relevant year. But has utilized only 10% of the gross receipt and accumulated 75% of the gross receipt (Rs.30 Lakhs) u/s 11(2) of the Act by filing Form 10. According to the AO, the purpose for the accumulation of income as shown in Form-10 was "Basic Education, Health Care and Nutrition to Underprivileged children", which is not for a specific purpose and instead was for general purpose. And the AO further noted that assessee has been accumulating receipts for earlier six years and not utilizing the sum accumulated for charitable purpose, and instead has been adding back the sum in the sixth year of accumulation year on year. According to him, accumulation of amount u/s 11(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n clause (a) is furnished the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previous year." 5. According to the Ld. Sr. Counsel, the assessee has fulfilled the condition as prescribed u/s 11(2) of the Act i.e conditions enumerated under clause (a), (b) & (c) (supra). According to the Ld. Counsel merely because assessee has stated the purpose for which the income is being accumulated as "Basic Education, Health Care and Nutrition to Underprivileged children", the Ld. CIT(A) could not have upheld the action of the AO. To bolster his contention, the Ld. Sr. Counsel referred to the judgment of the Hon'ble Delhi High Court in the case of CIT Vs. Hotel and Restaurant Association (261 ITR 190) wherein the Hon'ble Delhi High Court in similar case framed the question of law as under: - A. "A. Whether, on the facts and circumstances of the case, the Tribunal is justified in holding that the accumulation of income by the assessed under Section 11(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), for all objects for which the trust was created and not for specific purpose was neither prejudicial nor erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in the prescribed form the assessed had failed to indicate the specific purpose for which the income was sought to be accumulated and, therefore, the statutory requirement had not been strictly complied with, disentitling the assessed from relief under Section 11(2) of the Act. 6. We do not agree. It is true that specification of certain purpose or purposes is needed for accumulations of the trust's income under Section 11(2) of the Act. At the same time the purpose or purposes to be specified cannot be beyond the objects of the trust. Plurality of the purposes for accumulation is not precluded but it depends on the precise purpose for which the accumulation is intended. In the present case, both the appellate authorities below have recorded a concurrent finding that the income was sought to be accumulated by the assessed to achieve the object for which the assessed was incorporated. It is not the case of the Revenue that any of the objects of the asses-see-company were not for charitable purpose. The aforenoted finding by the Tribunal is essentially a finding of fact giving rise to no question of law. 7. We, accordingly, decline to entertain the appeal. The same is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zation" in Form No. 10 read with Rule 17 of the Income Tax Rules, 1962 the Assessee has fulfilled its obligation as required under Section 11 (2) of the Act'." 9. And the Hon'ble Delhi High Court while answering the question of law has also referred to the decision of the Hon'ble Calcutta High Court in the case of DIT(E) v Trustees of Singhania Charitable Trust (1993) 199 ITR 819 (Cal) which was cited by Ld. CIT(A) in the impugned order in order to uphold the action of the AO; and the Hon'ble High Court (supra) has distinguished on the facts the decision in Trustees of Singhania Charitable Trust (supra), wherein that charitable trust had as many as eighteen (18) objectives and there was no specific objective for which accumulation had been sought, and thus distinguished that case law; and the Hon'ble Delhi High Court followed the judicial precedent laid down in Hotel and Restaurant Association (supra), Bharat Kalyan Pratisthan v DIT(E) (2008) 299 ITR 406 (Del), Daulat Ram Education Society (supra), DIT(E) v Mamta Health Institute for Mother and Children (2007) 293 ITR 380 (Del) and the Hon'ble High Court held as under: - "9. In the present case, the assessing officer himself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "B" of this scheme to the extent that a sum of Rs. 500/- per month shall be paid to the members as per calculation given in the same. Further, other benefits in the cases of death and permanent disability have also been given. Lastly, benefit have been given on resignation from bank prior to the retirement. The contention of the learned counsel is that this is the only object of the assessee and there are no plurality of the objects and as such if the assessee had mentioned in form no. 10 that the accumulation of the funds w0ere for "further utilization" the very purpose is to utilize the amount of accumulation for further benefits to be given to the members in the case of death, retirement, permanent disability ' 10. Other benefits which were specified in part (b) of the Scheme, which stipulated that a sum of Rs. 500/- shall be paid to the members on the event specified therein. 11. The aforesaid contention has been accepted by the Tribunal. The findings recorded are in consonance with ratio of several decisions of this Court. 12. In view of the factual background, the substantial question of law in terms of the decisions of this court has to be answered in favour of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Punjab & Harayana High Court (supra) and wants us not to interfere with the impugned action of Ld CIT(A). In his rejoinder, the Ld. Sr. Counsel submitted that when there are two views possible; and when there is no decision of the jurisdictional High Court on the issue, then the view which is favorable to the tax payer should be adopted by Tribunal and cited the decision of the Hon'ble Supreme Court in the case of CIT Vs. M/s. Vegetables Products Ltd. (1973) 88 ITR 192. 12. Having heard both the parties and after perusal of the records, we note that the assessee is a public charitable trust registered u/s 12A of the Act with the main objective to do philanthropic acts and to take care/education of street-children/under-privileged children. The objective for the Trust, which is discernable from perusal of the page no. 6 of PB, were to do philanthropic acts and to take care of street-children/under-privileged children and especially their (i) Health Care (ii) Nutrition (iii) Literacy and basic education (iv) Self-esteem (v) Group skill, support services and associated support services (vi) Income generating schemes and (vii) Advancement of any other, social welfare objective. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed "Plurality of the purposes for accumulation is not precluded, but it depends on the precise purpose for which the accumulation is intended". Thus, we find that in the present case that income sought to be accumulated by the assessee was to achieve the object for which the assessee was incorporated. We find that it is not the case of AO/Ld. CIT(A) that any of the objects of the assessee trust were not for the purpose beyond the object of the trust or not charitable purpose. Further, we note from the statement of financials of the trust that assessee has applied its income for the education, feeding and clothing of the street children of Mumbai. We note that the income sought to accumulated by assessee was to achieve the three objects for which the assessee was formed. Before us, the Ld. DR could not point out that purpose shown in Form 10 for accumulating Rs. 30 Lakhs was not for object of the trust. In such a scenario, since assessee has satisfied the conditions laid down in section 11(2) of the Act for accumulation of the income, the same has to be allowed. It is also noted that from chart (supra) (statement of income, expenses and accumulation) it shows that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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