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TMI Blog2021 (8) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... ) erred in not treating the fixed deposits amounting to Rs. 1,47,42,765/- kept as deposit in State Bank of India though as accumulation for application of income as provided under Section 11(2) of the Act though the said amounts of fixed deposits were claimed as accumulation for application of income in the return of income filed on 25.09.2012 under Section 139(4A) of the Act. 2. The CIT (Appeals) erred in not appreciating that the notice of accumulation for application of income vide the return of income filed formed sufficient compliance with the provisions of Section 11(2)(a) of the Act. 3. The learned CIT (Appeals) erred in not treating the fixed deposits amounting to Rs. 1,47,42,765/- kept as deposit in State Bank of India as accum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rease in fixed deposits - Rs. 1,47,42,765/- Rs. 2,38,20,119 The AO held that the "increase in fixed deposits" cannot be considered as application of income as it is a mere administrative activity of converting the liquid funds into fixed deposits. Accordingly, he rejected the claim of application of income in respect of increase in fixed deposits. The same was also confirmed by Ld. CIT(A). 4. The first issue relates to the said rejection to allow the amount of fixed deposit as application of income u/s 11(1)(a) of the Act. The contention of the assessee before the tax authorities as well as before us is as follows: a) The word "Applied" used in section 11 of the Act does not necessarily mean "Spent". Even if the amount has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Applied" does not necessarily mean "Spent". However, it is the duty of the assessee to show that the amount has actually been 'allocated to or earmarked for a charitable purpose in consonance with the objects of the Trust, even though the actual payment may be made later. We find support for this proposition in the case of CIT Vs. Nizams Trust 131 ITR 497. For example, a trust may purchase a vehicle before the end of the financial year, but actual payment be made subsequently. In this example, if the trust earmarks or allocate its funds towards payment of vehicle cost, it may be considered as having been "applied". 7. In the instant case, the assessee has not shown that the amount kept in fixed deposits have been allocated to or earmarke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter dated 23.3.2015. The assessee filed the above said forms for the first time before the AO during the course of assessment proceedings, instead of filing the same along with return of income. The A.O., by placing reliance on the circular no.273 dated 3.6.1980 issued by CBDT, observed that only CIT is empowered to condone the delay in filing Form No.10 and therefore the A.O. cannot condone the delay. Further, the A.O. noticed that the form No.10 and resolution filed along with the letter dated 23.3.2015 are dated 29.3.2012 and hence he doubted the genuineness of Form No.10 and resolution dated 29.3.2012. Accordingly, he refused to entertain the Form No.10 and resolution. The Ld. CIT also confirmed the same. 10. Before us, the Ld. A.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have this information at the time he completes the assessment. In the absence of any such information, it will not be possible for the assessing authority to give the assessee the benefit of such exclusion and once the assessment is so completed, in our opinion, it would be futile to find fault with the assessing authority for having included such income in the assessable income of the assessee. Therefore, even assuming that there is no valid limitation prescribed under the Act and the Rules even then, in our opinion, it is reasonable to presume that the intimation required under Section 11 has to be furnished before the assessing authority completes the concerned assessment because such requirement is mandatory and without the particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form No.10, but the undisputed fact remains that the Form no.10 and resolution have been filed before him during the course of assessment proceeding itself, i.e., before completion of the assessment.
14. In view of the above, we are of the view that the AO should have entertained Form No.10 and resolution filed by the assessee. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore this issue to the file of the A.O. with a direction to consider Form No.10 and resolution filed by the assessee and examine the claim of the assessee u/s 11(2) of the Act in accordance with law.
15. In the result, the appeal filed by the assessee is treated as partly allowed.
Order pronounced in the open court on 23rd Aug, 2021. X X X X Extracts X X X X X X X X Extracts X X X X
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