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TMI Blog2006 (4) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... se appeals is the denial of exemption under section 11(2) of the Act during the relevant assessment years in respect of income accumulated/set apart for application as per the provisions of the I.T. Act. 3. Brief facts relating to the issue are that the assessee is a charitable trust and it filed its audit report along with the return of income for the relevant previous year. The assessee filed Form No. 10 along with the resolution of the trust. The assessee had requested for accumulation of surplus funds under section 11(2) of the Act. The purpose of accumulation was men-tioned as "for making substantial donation to selected institutions after a careful appraisal for meeting the objects of the trust". During the assess-ment year 1993-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said order was complied with. The ld. counsel for the assessee drew our attention to page-1 of the paper book filed by the assessee wherein the assessee-trust had sought accumulation of the sum of Rs. 25 lakhs out of the income of the trust for a period of 10 years beginning from the previous year relevant to the assessment year 1987-88 with a view to enabling the trust to make substantial donations for charitable objects particularly for the construction or establishment of a hospital, dispensary or decease detection centres, or medical research institutions, or educational institutions, widows homes etc. or for their maintenance, consistent with the objects of the trust for relief to humanity. Thus, according to him the notice contained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod for which accumulation or setting apart is sought which shall in no case exceed 10 years and; ( b ) the money so accumulated or set apart is invested or deposited in the forms or modifications specified in sub-section (5) of section 11. According to him the assessee while making an application under section 11(2) has not specified the specific purpose for which the accumulation is sought and therefore the Assessing Officer was right in denying the exemption under section 11(2) of the Act. 6. Heard both the parties and considered their rival contentions. For proper appreciation of facts, section 11(2) as in force in the relevant assessment year is reproduced hereunder : "Section 11(2) Where seventy-five per cent of the income refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause ( iv ) or sub-clause ( v ) or sub-clause ( vi ) or sub-clause ( via ) of clause ( 23C ) of section 10, shall not be treated as application of income for charitable or religious purposes, either during the period of accumulation or thereafter. From the above, it is clear that the charitable trust has to apply 75 per cent of its income during the relevant financial year to charitable or religious purposes in India during the relevant financial year itself and in case it is not able to do so, it is permitted to accumulate or set apart either in full or in part the unutilized inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appraisal for meeting the objects of the trust. According to us, the section only provides for specifying the purpose for accumulating the funds. The assessee had mentioned the purposes i.e., for making donations and has not mentioned the specific institutions to which the donations are to be made. As we have come to the conclusion that Form No. 10 has to be filed every year in which unapplied income of that year is sought to be accumulated or set apart, it goes without saying that the purpose also has to be mentioned in the Form No. 10 each year. The said purpose could be the same from year to year, but nevertheless, it is the duty of the assessee to mention the same in Form No. 10 as prescribed by law. The ld. counsel s arguments tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds, which wants to accumulate its income for a long period of 10 years to carry out the charitable objects as set out in the trust deed, does require time to think, time to plan and time to garner its resources etc. to fulfil those objects for which it has sought accumulation of funds and the Legislature in its wisdom has allowed a long period of 10 years. Therefore, the argument of the revenue that even when the application for accumulation was filed, assessee trust must mention the type of institution, medical or educational which it should set up as also the type of the educational or medical treatment which it would impart could not be appreciated. This was never the intention of the law makers and the provision in the form of conce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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