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TMI Blog2023 (12) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is not suppose to mention the exact purpose of accumulation. Thus it can be safely concluded that all the technical requirements were duly fulfilled by the assessee along with satisfactory response to the queries raised through notice under section 142(1). The only objection raised by the learned Commissioner of Income-tax (Exemptions) through notice issued u/s 263 was that the assessee has not specifically mentioned the purpose of accumulation, is not a valid objection for which proceedings u/s 263 cannot be carried out. As the facts discussed above and considering various judicial pronouncements, we find the merits in contentions of the assessee. We find no error in order passed under section 143(3) of the Act. In view of this ground Nos. 2 and 3 raised by the assessee are allowed and order passed under section 263 of the Act is set aside. Decided in favour of assessee. - Vikas Awasthy (Judicial Member) And Gagan Goyal (Accountant Member) For the Assessee : Rahul Sarda For the Department : Smt. Riddhi Mishra , Commissioner of Income-tax-Departmental representative ORDER GAGAN GOYAL (ACCOUNTANT MEMBER) . 1. This appeal by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mptions) after considering the response of the assessee passed an order under section 263, dated March 20, 2023. Against this order of the learned Commissioner of Income-tax (Exemptions), the assessee being aggrieved filed this present appeal before us. 4. We have gone through the order of the Assessing Officer, notices issued under section 263, order of the learned Commissioner of Income-tax (Exemptions) under section 263 and submissions of the assessee. Ground Nos. 1 and 4 are general in nature ; hence, no specific adjudication is required. Ground Nos. 2 and 3 are substantial grounds and inter-linked also, hence, disposed of by common findings through this order. For proper adjudication, we, are reproducing herewith the copy of notice issued under section 263 as under : First notice under section 263 of the Act Subject : Notice for the hearing in respect of revision proceedings under section 263 of the Income-tax Act, 1961 assessment year 2018-19 In this regard, a hearing in the matter is fixed on March 9, 2023 at 2.30 p.m. You are requested to attend in person or through an authorised representative to submit your representation, if any along with supporting documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject of the trust, but must specify a particular purpose for which the income is being accumulated. It is essential that the trust should specify its purposes and the requirement is that the purposes must have some individuality and mere repetition of the object/activity of the trust would not meet the requirement of section 11(2) of the Act. Thus, the assessee has not complied with the provisions of section 11(2)(a), hence, the assessee's claim for accumulation of funds under section 11(2) of the Income-tax Act, amounting to Rs. 16,15,000 needs to be rejected. The Assessing Officer has passed order without the basic verification of the above the facts stated above and, therefore, the order is prejudicial to the interests of the Revenue. 3. In view of the above, may I request you to show cause why the assessment order dated February 13, 2021 should not be set aside under section 263 of the Act with appropriate directions to the Assessing Officer to redo the assessment ? You are accorded an opportunity to attend in person or through an the authorised representative before the undersigned on March 9, 2023 at 2.30 p.m. at my office. Personal appearance is not necessary, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 13, 2021 by the accepting the returned income of the assessee at Rs. 8,66,050. It is observed that the assessee has claimed accumulation under section 11(2) of the Income-tax Act, amounting to Rs. 16,15,000. It is also seen from the statement in form 10 filed as per rule 17(2) of the Income-tax Rules, by the assessee that it has shown purpose of accumulation as 'charitable purpose'. The said funds have been parked in balance-sheet as balance with bank in current account during the previous year. However, as per amended provisions of section 11(2)(a) read with section 11(3)(a), the assessee is expected to state the exact purpose for which the income is being accumulated and period for which said income is being accumulated. In this case the assessee has transferred aforesaid funds to the balance-sheet without specifying the exact purpose for which accumulated funds will be utilised for the fulfilment of the object of trust claiming accumulation under section 11(2) of the Income-tax Act. For allowing the exemption under section 11(2) the condition is that the trust should specify in the prescribed form the exact purpose for which the income is accumulated or set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 and 29 of the paper book as under : 9. The trust has made accumulation under section 11(2) of the Income-tax Act, 1961 in the assessment year 2018-19 of Rs. 16,15,000 for charitable purpose. We enclose herewith form 10 filed on October 11, 2018 for your ready reference. The accumulation has till date not been utilised by the assessee for charitable purpose and same shall be utilised within 5 years from the year it is accumulated. We have inadvertently vide our submission to submitted on January 10, 2020 stated that there were no accumulations. However, the assessee has made accumulations under section 11(2) of the Income-tax Act, 1961 and, we, rectify our error in respect to the same. 10. We have already submitted form 10 for the assessment year 2018-19 at point 9 of the letter. We enclose herewith form 9A filed for the assessment year 2017-18 filed on August 17, 2017, wherein, the assessee accumulated Rs. 8,66,053 under section 11(1)(2) of the Income-tax Act, 1961. The same was added as taxable income under section 11(1)(b) in the assessment year 2018-19. We enclose herewith the computation of the assessment year 2018-19, wherein, the same is properly reflected. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in form 10 are not falling as the object of the trust. But the only case of the Revenue is that the purpose should be specifically mentioned, though it may be one of the objects of the trust and it may be more than one of the objects of the trust. (Para 14) The Karnataka High Court in DIT (Exemptions) v. Envisions [2015] 378 ITR 483 (Karn) ; [2015] 232 Taxman 164 (Karn) ; [2015] 58 taxmann.com 184 (Karn) stated that as long as the objects of the trust are charitable in character and as long as the purpose or purposes mentioned in form 10 are for achieving the objects of the trust, merely because the details are not furnished, the assessee cannot be denied benefit of the exemption under section 11(2). (Para 17). Thus, the Tribunal was right in allowing the claim of the assessee under section 11(2). Hence, the question is answered in the affirm ative in favour of the assessee and against the Revenue. (Para 22) . [2003] 261 ITR 190 (Delhi) ; [2003] 132 Taxman 76 (Delhi) (CIT v. Hotel and Restaurant Association) : It is true that specification of certain purpose or purposes is needed for accumulations of trust's income under section 11(2). At the same time, the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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