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TMI Blog2011 (9) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, full disclosure of income and its application for charitable purposes. Accumalation of income under 11(2) - Time limit for giving information of accumalation - form no. 10 - 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. - Intimation in form no. 10, under Rule 17, setting out the prescribed particulars has to be furnished before the completion of the assessment because it is necessary that AO must have this information at that time so as to enable him to compute the total income. In absence of such information, he will not be in a position to grant the benefit. Once the assessment is completed, it would be futile to find fault with the Assessing Officer for having included such income in the total income. Contents of form no. 10, which contains stipulation regarding the amount of income to be set apart, the period of accumulation and the purpose for which the income is accumulated or set apart. Filing of the form before assessment is not an empty formality because it is necessary to take into account its contents for computing the income. - t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said sum has been treated as undisclosed income. 1.3 Coming to the claim of accumulation of income u/s 11(2), it is mentioned that a copy of undated resolution was filed to the effect that the society has decided to exercise its option to spend the amount in subsequent years. The resolution has been held to be vague in content. It is further mentioned that form no. 10, required to be submitted for availing the benefit of section 11(2), has not been filed. Therefore, the claim has been rejected. 1.4 Lastly, in respect of denial of capital expenditure of Rs. 14,53,112/-, it has been mentioned that the assessee has claimed the deduction in respect of donations, which have not been proved and which are anonymous in character. Therefore, the deduction has been denied. 2. Aggrieved by this order, the assessee filed appeal before the CIT(Appeals)-XII, New Delhi, which was disposed off on 14.12.2010. The appeal was partly allowed. We will come to the contents of this order at appropriate place. 3. Aggrieved by this order, the assessee has taken up three substantive grounds in the appeal. The revenue in its cross appeal, has assailed the finding of the ld. CIT(Appeals) in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilding fund donation was taken out showing receipt of donations aggregating to Rs. 9,03,700/- from 258 persons. Thereafter, the computer developed snag on account of virus. The data was sought to be retrieved with the help of an expert and three lists of donations of Rs. 3,23,341/-, Rs.9,19,106/- and Rs.7,97,100/-, aggregating to Rs. 20,39,547/- could be printed. These were submitted to the AO. While going through the list of donation amounting to Rs. 9,03,700/-obtained from the AO, it was found that there were certain discrepancies. Thus, it has been deposed that the list of donations submitted to the survey team on 30.01.2008 is correct and the list submitted in the course of assessment is not correct in respect of receipt nos. 904 to1000 because the data got corrupted due to virus. It is affirmed that all the donations received in this year by way of cheque or in cash have been recorded in the books. On the basis of this deposition, the case of the ld. counsel is that all donations including the one received under "building fund" have been correctly accounted for although there may be some error in the computer data. These are all normal donations and none of them is towards the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of anonymous donation, the income-tax payable by it shall be aggregate of-(i) 30% of the anonymous donation, and (ii) the income-tax payable on the total income as reduced by anonymous donation. Subsection (2) excludes wholly religious institutions from the purview of the aforesaid provision. It further excludes wholly religious and charitable institutions from the purview of the aforesaid provision if the anonymous donation is made with the specific direction that such donation is for purposes other than for any university, educational institution, hospital or medical institution. It is clear that this provision excludes religious institution and institution whose objects are wholly religious and charitable. Sub-section (3) defines the expression "anonymous donation" in an exhaustive manner to be a case where the institution etc. does not maintain record of identity indicating the name and address of the person making the contribution. No further particulars remained to be maintained have been prescribed under this sub-section. The learned DR has relied on the Board circular no. 14, (2007) 288 ITR (St.) 9, titled as "Finance Act, 2006-Explanatory Notes on provisions relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the assessee had shown the amount under the building fund, but at the time of filing the return, this amount was added to the income. In the case of DIT (Exemption) v. Keshav Social Charitable Foundation [2005] 278 ITR 152/146 Taxman 569 (Delhi), it has been held that section 68 has no application because the assessee had disclosed the donation of Rs. 18,24,000/- as its income and it cannot be disputed that all receipts other than corpus donation would be the income in the hands of the n assessee. There was, therefore, full disclosure of income and its application for charitable purposes. In view of this decision, the provisions contained in section 68 cannot be invoked as the amount has already been disclosed as income. Following this decision, it is held that the amount of Rs. 19,25,047/- was taxable as income in the hands of the assessee. 5. Ground No. 2 is that the ld. CIT(A) erred in upholding the addition of Rs. 3,37,841/- as unexplained cash credit u/s 68 of the Act. It is mentioned by the ld. CIT(Appeals) that the donation receipt book, which was impounded in the course of survey u/s 133A, shows that the assessee had been collecting funds, some of which were not acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount are contained in the receipt book in the list supplied to the survey party. However, this amount remained to be included in the total income because of subsequent malfunctioning of the computer on account of virus. This cannot change the character of the receipt. Therefore, in the light of the decision of Hon'ble Delhi High Court in the case of Keshav Social Charitable Foundation (supra), it is held that both these amounts are income from property held for charitable purpose. It may be mentioned here that the aforesaid decision of Hon'ble Delhi High Court has been followed in the case of the assessee by the "C" Bench of Delhi Tribunal in appeals for assessment year 2006-07. Following this decision, it is held that a sum of Rs. 2,49,000/- is includible in the total income on account of donation. Thus, this ground is partly allowed. 6. Ground no. 4 is that the ld. CIT(Appeals) erred in not considering the additional ground regarding accumulation of income of Rs. 11,44,605/-u/s 11(2) of the Act. The AO has denied this benefit on the ground that form no. 10 has not been filed and the undated resolution is vague. The ld. CIT(Appeals) has not decided this ground although an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment. It is argued that the judgment speaks about the information and such information was there before the Assessing Officer. If there is any technical deficiency, the Tribunal may fill the same in view of form no. 10 now filed on 26.08.2011. 6.2 In reply, the ld. DR submitted that it is mandatory to file form no. 10 before the completion of the assessment. The form contains important details regarding the amount to be accumulated, the purpose of accumulation and the period of accumulation. All these details were not there before the AO. Further, the word "information" used by the Hon'ble Supreme Court subsequently refers to information in statutory form no. 10 prescribed under Rule 17, as clearly mentioned in earlier part of the judgment. This has not been done. 6.3 We have considered the facts of the case and submissions made before us. Section 11(2) permits the accumulation of income at the option of the person receiving the income provided that-(a) a notice in writing is given by the AO in the prescribed manner specifying the amount of income sought to be accumulated, the purpose for which income is accumulated or set apart and the period for which income is to be so ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till after the assessments for the relevant years were completed. In the light of the above, we are of the opinion that the stand of the Revenue that the High Court erred in answering the first question in favour of the assessee is correct, and we reverse that finding and answer the said question in the negative and against the assessee. In view of our answer to the first question, we agree with Mr. Verma that it is not necessary to answer the second question on the facts of this case. In view of the above findings of ours, the second question referred will not arise for consideration. Accordingly these appeals are allowed." 6.4 From the statutory language read with this decision, it becomes clear that intimation in form no. 10, under Rule 17, setting out the prescribed particulars has to be furnished before the completion of the assessment because it is necessary that AO must have this information at that time so as to enable him to compute the total income. In absence of such information, he will not be in a position to grant the benefit. Once the assessment is completed, it would be futile to find fault with the Assessing Officer for having included such income in the total in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case and submissions made before us. It has already been held by us that the donations received by the assessee are not anonymous donations. The details in respect of the name and address are available in possession of the AO in the form of donation receipts, which were impounded in the course of survey. The discrepancy in respect of the amount of Rs. 2,49,000/- has occurred on account of computer malfunctioning, but the details as above are available in the donation receipts. Therefore, no donation can be said to be anonymous. We have also not accepted the case of the revenue that the amounts are taxable u/s 68 by relying on the decision in the case of Keshav Social Charitable Foundation (supra) and the decision of the Tribunal in the case of the assessee itself for assessment year 2006-07. These findings displace the foundation of disallowance made by the AO. Accordingly, it is held that the ld. CIT(Appeals) rightly allowed the deduction. C.O. No. 102(Del)/2011 8. The cross objection is in support of the decision of the ld. CIT(Appeals) in respect of deduction of Rs. 14,53,112/-, being expenditure on purchase of capital assets. This matter has already been decided i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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