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TMI Blog1987 (5) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the application and after considering the trustees of the trust, he held that it was necessary and expedient to amalgamate the 7 trusts and to have a scheme for running all these trusts. The Charity Commissioner permitted the amalgamation by an order dated 7-2-1980. The accounting year of the trusts ended on 31-12-1979. It was held by the Charity Commissioner that the registration of the trusts had to be cancelled and the new trust was to be known as Rao Bahadur Vissanji Khimji Charitable Trust. The properties of all the 7 trusts were deemed to be the properties of the amalgamated trust. The Charity Commissioner also approved of the detailed scheme which included the property of the trust, the objects of the trust and other matters relating to the administration of the trust. One of the objects of the trust was the economic, social and general welfare and upliftment of women in India and advancement and propagation of education to women, and to give to them medical aid by establishing hospitals, maternity homes, etc. 2. In the earlier two assessment years, the trust had accumulated two amounts of Rs. 25,000 and Rs. 15,000 for the purpose of construction of a school building an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trying to escape through the tax net by not making any provision in the scheme sanctioned by the Charity Commissioner and also by not filing any return of income for the subsequent assessment year. Approval of the addition of Rs. 1 lakh was stated to be on a protective basis. 4. To complete the picture, it may be mentioned that the Department had registered the new trust in February 1981. As regards the objection of the IAC, that the return for the assessment year 1981-82 had not been filed by the trust, we find that for the assessment year 1981-82 an assessment has been made and accumulation u/s. 11(2) had been allowed to the extent of Rs. 60,000. 5. When the matter came before the Commissioner of Income-tax (Appeals), he considered the argument of the counsel for the assessee that once Form No. 10 is submitted, the action of the ITO is merely a formality. In this connection, he referred to an order of the Tribunal in ITA No. 1822/Bom/ 82 dated 26-2-1983. The Tribunal had not accepted the plea of the assessee that the ITO had no power to reject the request for accumulation. He further noted the fact that long before the close of the accounting year on 31-12-1979, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an decline to accept the claim of the assessee. It was submitted that the assessee was not questioning the general power with the ITO, but the justification for the denial of the assessee's claim in this year. He pointed out that the two accumulations which had already been permitted in earlier years could not be added as the income in this year merely on the ground that the trust has amalgamated with 6 other trusts. He pointed out that in all such amalgamations, not only the properties of the trusts are taken over by the new trust, the liabilities and assets of all the trusts are also taken over by the trustees of the new trust. In this connection, the learned counsel pointed out that for the accumulation of the current year, the resolution of the trust was sent in the name of the old trust though it had been amalgamated by that date. Similarly, Form No. 10 also mentioned the name of the old trust in an application filed in June 1980. It was submitted that it may be a technical flaw, but as for the accounting period, the old trust was in existence, such action might have been taken. In this connection, he drew our attention to the letter written by the trust to the ITO on 16 Febru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposited in any of the forms or modes specified in sub-sec. (5), or is not utilised for the purpose for which it is so accumulated or set apart during the specified period, shall be deemed to be the income of such person of the previous year in which the income accumulated is applied, or ceases to be so accumulated or set apart or ceases to remain so invested or deposited or, as the case may be. In the present case, it cannot be held that any of the situations contemplated under sub-see. (3) have arisen. Merely because the trust has been amalgamated with other trusts with similar objects, it cannot be held that the accumulated amounts have been applied for any purposes other than charitable and it is nobody's case that the amounts invested have ceased to be invested in the year in question. There was also no question of not utilising it for the purpose for which the accumulations had been permitted as the period during which the contemplated building was to be constructed was still not over. The trust has given a specific clarification and undertaking regarding the utilisation of the accumulated amount. Thus, the treatment of the accumulated income as the income of this year was no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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