9911796707
TMI Blog2014 (12) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 11(1) of the Income-tax Act enables the charitable / religious trust to accumulate or set apart only 15% of the income - the authorities below have failed to consider the provisions of Explanation to section 11(2) and section 11(3)(d) - CIT(A) proceeded on the presumption that advancing money to other charitable institution does not amount to investment or deposit - the payment or credit to other trust is prohibited by Explanation to section 11(2) and section 11(3)(d) was not considered by both the authorities below – thus, the matter is to be remitted back to the AO for reconsideration in the light of the law brought in the statute book by Finance Act, 2002 with effect from 2003 inserting Explanation to section 11(2) and section 11( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lam, the ld.representative for the assessee submitted that both the assessees advanced funds to other registered trusts which have similar objects. According to the ld.representative, the assessee advanced funds to BCMET for construction of hospital building. BCMET is also a registered trust u/s 12AA of the Act. The ld.representative further submitted that Carmel Education Trust also a registered charitable trust u/s 12A of the Act was given funds by the assessee to carry out their charitable activities. According to the ld.representative, when the funds were advanced to other similarly placed charitable trusts, amounts to application of income; therefore, the provisions of section 11(2) are not applicable. The ld.representative further sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a trust from the property held under trust is exempted and cannot be included in the total income of the previous year where such income is applied for charitable purpose in India, where such income is accumulated or set apart for application of charitable purpose to the extent to which the income was accumulated or set apart is not in excess of 15% of the income from the said property held under trust. Therefore, the assessee is under legal obligation to apply the income to the extent of 85% for charitable purpose or religious purpose for which the trust was established. Section 11(1) of the Income-tax Act enables the charitable / religious trust to accumulate or set apart only 15% of the income. 5. We have also carefully gone through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (3) Any income referred to in sub-section (2) which (a) Is applied to purposes other than charitable or religious purposes as aforesaid or ceases to be accumulated or set apart for application thereto, or (b) Ceases to remain invested or deposited in any of the forms or modes specified in sub-section (5), or (c) Is not utilized for the purpose for which it is so accumulated or set apart during the period referred to in clause (a) of that sub-section or in the year immediately following the expiry thereof, (d) Is credited or paid to any trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment of law with effect from 01-04-2003 if the income is paid or credited to another trust or institution even though they are registered u/s 12AA or approved u/s 10(23C) of the Act, the same has to be treated as income of the assessee. 7. We have carefully gone through the judgment of the Delhi High Court in Acme Educational Society (supra). The assessment year involved in the case before the Delhi High Court is assessment year 2005-06. The assessee trust before the Delhi High Court gave a loan of ₹ 90,50,000 to another educational society, whose president was brother of the assessee society s president before the Delhi High Court. The department contended that there was a violation of section 11(1)(d) r.w.s. 11(5) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed in section 11(5) of the Act. The CIT(A), however, proceeded on the presumption that advancing money to other charitable institution does not amount to investment or deposit. The fact that the payment or credit to other trust is prohibited by Explanation to section 11(2) and section 11(3)(d) was not considered by both the authorities below. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered in the light of the law brought in the statute book by Finance Act, 2002 with effect from 2003 inserting Explanation to section 11(2) and section 11(3)(d) of the Act. This Tribunal is of the considered opinion that by remanding back the matter, the assessee also would get an opportunity to explain the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
