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TMI Blog2021 (12) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... er expenditure connected to main activity. 4.1 The learned CIT(A) erred in making no distinction between section 11(1)(a) and 11(2), while section 11(2) has been incorprated for accumulating for specific purpose, if there is no distinction then there would not be any purpose for the incorporation of the provisions of Sec. 11(2) if the same is allowed for general purpose of the Trust. 4.2 The Learned CIT(A) failed to appreciate the fact that the prepondence of a condition u/s. 11(2), in case of under-utilization of income as per the provisions of Sec. 11(1)(a) and the absence of a corresponding provision in Sec. 10(23C). 4.3 The Learned CIT(A) erred in failing to appreciate that in respect of an Institution governed u/s. 10(23C)(iv), 10(23C)(v), 10(23C)(vi), 10(23C)(via), the objects are solitary and hence the shortfall in application of income is automatically accumulated without undergoing the rigors of procedure laid down in Sec. 11(2) and Rule 17(2). On the contrary, in respect of a charitable Institution governed under the provisions of Sec. 11 & 12, the objects are not isolated or lone but multifarious in nature. Therefore, one of the objects has to be identified for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000 Life Science 2 Prof. Jonardon Ganeri 6,500,000 Humanities 3 Prof. Mahan 6,500,000 Mathematical Science 4 Prof. G Ravindra Kumar 6,500,000 Physical Science 5 Prof Umesh Waghmare 6,500,000 Computer Science 6 Dr. Srinath Raghavan 6,500,000 Social Science Total 3,90,00,000 2.3 The Ld.AO observed that gross income as per Income and expenditure account for the year amounted to Rs. 11,96,49,077. Total expenditure as per Income and expenditure account for the year amounted to Rs. 9,21,43,622. Break up of the said expenditure as per the Income and expenditure account was as under. Expenditure Prize money 39,000,000 Honorarium to jury 17,703,295 Event management expenses 3,918,646 Travelling and conveyance 8,700,040 Memento and souvenir expenses 1,607,553 Service tax payment 2,151,945 Professional charges 14,264,792 Employee benefits 4,081,787 Conference expenses - Other expenses 715,564 92,143,622 2.4 The expenditure considered in the Balance sheet amounted to Rs. 38,48,948. The Ld.AO noted that the total expenditure of Rs. 9,59,92,570 [9,21,43,622 + 38,48,948] was shown as applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in charitable activities. The assessee trust is registered under Sec.12A and also recognized under Sec.80G of the Income Tax Act. While completing the assessment under scrutiny, the AO noted that the assessee had accumulated funds of earlier year which are applied to the objects of the trust this year. The AO observed that the major item of expenditure in the income and expenditure statement is prize money to the extent of 3.9 Crore. The assessee's expenditure also includes other items to the tune of 5.31 Crore. According to the AO, the accumulated amounts of the earlier year could not be applied to any other activities other than the prize money. However, the AO concedes that the current year income can be applied for various other activities part of 5.31 Crore. With this opinion the AO denied/restricted application of income from the accumulated income of F.Y. 2014-15 (AY 2015-16). Aggrieved by the Assessment Order, the assessee is in appeal. The objects of the trusts are to provide education to the public, relief to the poor. medical relief and other objects of general public utility. The appellant institutes prizes for achievers in various fields with a view to elevat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve its verdict in favour of the assessee on the issue. Hence, the grounds of the assessee are allowed." 4. Aggrieved by the order of Ld.CIT(A), revenue is in appeal before us. 4.1 Ld.CIT.DR relied on order passed by Ld.AO whereas the Ld.AR relied on order passed by Ld.CIT(A). 4.2 We have perused the submissions advanced by both sides in light of records placed before us. 4.2.1 It is accepted by the Ld.AO that the purpose of accumulation u/s 11(2) is "for the objects of the Trust". The objects of the Trust has also been accepted by the Ld.AO which is to institute prizes which are meant to achievers in various fields and endeavors to elevate the prestige of scientific research in India and inspire young Indians to choose a vocation in scientific research. Since its inception, the assessee focused solely on the governance and running of Infosys Prize, annual award to honor outstanding achievements to scholars / scientists. 4.2.2 The contention of the Ld.AO that the expenses amounting to Rs. 5,31,43,622 are routine expenses incurred for the day to day activities of the Trust is not correct. The break up of expenses of Rs. 5,31,43,622 reproduced hereinabove. The expenditure of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application of income amounting to Rs. 5,34,67,009/- as spent out of current year's income of Rs. 9,28,05,186/- and reduced the accumulation of income u/s 11(2) from Rs. 5,99,82,888/- to Rs. 2,54,17,400/-. 4.2.5 On appeal, the Tribunal held that; "accumulation of unutilized income of AY 2011-12 u/s. 11(2) as well as income of AY 2012-13 are deployed in the form of fixed deposits in bank accounts. The fixed deposits as and when they mature are again renewed and reinvested in fixed deposits. Therefore, the identification of funds of the assessee as identifiable to accumulation of unutilized income of AY 2011-12 or that of receipt as income of AY 2012-13 is not possible in the present case. In such circumstances, we are of the view that the plea of the assessee ought to have been accepted by the Ld.C1T(A). The Ld.CIT(A) opined that under the provisions of section 11(1) income derived from property during the previous year is not equated with accumulated income u/s 11(2). The provisions require that the income earned from the property held under trust must be first applied to the objects of the Trust and if any income is remaining then accumulation to the extent of 15% of such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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