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TMI Blog2017 (3) TMI 1227X X X X Extracts X X X X X X X X Extracts X X X X ..... Before the Assessing Officer the assessee filed all the details about the construction and also explained that his accumulation is for the purpose of construction and maintenance of the province of the society and also maintenance of sisters etc. The assessee also filed the details of investment of funds. The Commissioner of Income Tax (Appeals) after considering the explanation of the assessee and also considering the details submitted, in respect of the purpose for which funds are accumulated, he gave a specific finding that the assessee society has utilized the funds for charitable purpose and the order of the Assessing Officer was reversed on this count. Insofar as deposits made in the bank account, the Commissioner of Income Tax (Appeals) gave a specific finding that the assessee received funds during the year to utilize the same for specific purposes and it has set apart these funds and invested the same in the fixed deposits during the year itself for the purpose of future utilization. - Decided against revenue - ITA No. 647/VIZ/2014 - - - Dated:- 22-3-2017 - SHRI V. DURGA RAO, HON BLE JUDICIAL MEMBER SHRI G. MANJUNATHA, HON BLE ACCOUNTANT MEMBER For The Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income Tax (Appeals), assessee made a detailed submission and also filed details of funds received and investments thereof. The Commissioner of Income Tax (Appeals) after considering the detailed explanation given by the assessee and also considering other details, has deleted the addition made by the Assessing Officer and held that assessee is eligible for exemption under section 11 of the Act. The relevant portion of the order is extracted as under:- 5. I have carefully gone through the order of the Assessing Officer, the grounds of appeal and also the submissions made by the appellant. Accordingly, the issues agitated in this appeal are dealt in as under:- 5.1 The only issue to be dealt in this appeal is denial of exemption claimed of the Act Out of the total income of the previous year 2010-11, the accumulated ₹ 55,00,0007- u/s.11(2) of the Act for 'building construction and Other Activities' and claimed exemption under that section. The Assessing Officer brought this income to tax mainly for the following reasons. (i) The purpose of accumulation of income u/s. 11(2) is not specific. (ii) Amount accumulated u/s.11(2) was not inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oves this fact. It is not the case of the appellant that the said funds were utilized for purposes other than charitable purposes. Hence, I am not in agreement with the comments of the Assessing Officer on this issue and accordingly, the grounds of the appellant on this issue are allowed. 5.1.2 Investment or deposit of amount accumulated u/s.1 1(2) of the Act : a) The second reason for disallowing the exemption claimed u/s.11(2) is that the appellant has not invested or deposited the accumulated funds in the manner laid down in section 11(2)(b) of the Act. The Assessing Officer has observed that the funds of ₹ 55,00,000/- accumulated u/s.11(2) of the Act were not invested or deposited by the appellant as in the Audit Report enclosed to the return of income, the investment details were reported as Nil. In this connection, the appellant has explained that they made a Fixed Deposit of ₹ 60,00,000/- on 4/5/2010 which included ₹ 55,00,000/- accumulated u/s.11(2) of the Act. However, the Assessing Officer denied the appellant's explanation stating that the deposit was made prior to the date of resolution for accumulation of funds and hence it was not rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble High Court held as under:- It is one thing to say that the requirement of investment is deemed to have if the investment was made in the year in which income was received, although such income was not necessarily received in the very year the accumulation was sought to be made. However, to stretch it to the investments made in years even earlier to the previous year in question is not warranted on a plain reading of the section. The express wording of the provision indicates that in order to satisfy the requirement of section 11(2)(b), the investment must necessarily come out of the current year's income. An investment made in the past obviously cannot satisfy this requirement. It was not the assessee's case that the said deposit matured during the assessment year in question and was renewed soon thereafter. e) In view of the foregoing facts and also as the appellant has deposited the monies received and set apart during the financial year 2010-11 in that year itself in the investments specified in Sec. 11 (5) of the Act, I am of the view that the appellant has complied with the provisions of sec.11(2)(b) of the Act. Accordingly, the grounds o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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