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Facts
The assessee, a charitable company registered under Section 12A, filed a nil return claiming exemption under Section 11. The Assessing Officer (AO) completed the assessment under Section 143(3) making additions by disallowing income earmarked/set apart under Section 11(2), income from conducting curries, and depreciation claimed under Section 31. The CIT(A) confirmed these additions.
Held
The Tribunal held that income from conducting curries for charitable activities is eligible for exemption under Section 11 and that it is not necessary to specify a specific object in Form 10 for accumulation of income under Section 11(2). The matter was remanded to the AO for fresh adjudication to verify the fulfillment of other conditions for granting exemption under Section 11.
Key Issues
Whether income derived from charitable activities (conducting curries) is eligible for exemption under Section 11; and whether it is mandatory to specify specific objects in Form 10 for income accumulation under Section 11(2).
Sections Cited
11, 11(2), 12A, 31, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI PRAKASH CHAND YADAV., JM
O R D E R Per: Inturi Rama Rao, AM These appeals filed by the assessee are directed against different orders of the National Faceless Appeal Centre, Delhi dated 08.07.2024 for Assessment Years 2009-10 to 2011-12 & 2013-14.
Since identical issues and facts are involved in these appeals, they are heard together and disposed of by this common order.
to 795/Coch/2024 The Dharmodayam Company 4. Brief facts of the case are that the appellant is a company incorporated under the provisions of section 25 of the Companies Act. The company was duly registered u/s. 12A of the Act. The return of income for AY 2009-10 was filed on10.09.2009 declaring Nil income after claiming exemption u/s. 11 of the Income Tax Act, 1961 (the Act). Against the said return of income, the assessment was completed by the ITO, Ward -1(1), Thrissur (hereinafter called "the AO") vide order dated 29.12.2011 passed u/s. 143(3) of the Act after making the following additions: - i) Disallowance of income earmarked and set apart for Education and Hospital fund u/s. 11(2) Rs. 59,25,000/- for the AY 2009-10. ii) Income earmarked and set apart u/s. 11(2) balance outstanding as on 01.04.1999 Rs. 56,06,078/- utilised during the FY 1999-00 relevant to the AY 2000-01 Rs. 31,76,146/-. iii) Income earmarked and set apart u/s. 11(2) balance outstanding as on 01.04.1999 Rs. 56,06,078/- utilised during the FY 2000-01 relevant to the AY 2001-02 Rs. 24,38,932/-. iv) Income earmarked and set apart u/s. 11(2) for the FY 2003- 04 relevant to the AY 2004-05 utilised during the FY 2004- 05 relevant to the AY 2005-06 Rs. 31,35,000/-.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
We have heard the rival contentions and perused the material available on record. We find from the material on record that raising of funds for charitable activities was by conducting curries and receiving donations, etc. The business of conducting curries was done under the trust by the appellant. Conducting curries was not the object of the company. It was the property of the company, hence, eligible for exemption u/s. 11 of the Act, therefore, the AO was not correct in assessing the profits from curries. Similarly, the AO was also not correct in holding that the income accumulated from earlier years can be brought to tax for the year under consideration as Form 10 does not specify any specific object for the funds were accumulated. It is not necessary that the specific purpose should be mentioned in Form 10 for accumulation of income under the provisions of section 11(2) of the Act. In the light of this proposition we are of the considered opinion that the matter requires remand to the file of AO for the purpose of verification to satisfy himself as to fulfillment of other conditions for grant of exemption u/s. 11 of the Act. Therefore, we remand the matter to the file of the AO for fresh to 795/Coch/2024 The Dharmodayam Company adjudication in accordance with law after affording reasonable opportunity of hearing to the appellant. According the appeal of the assessee is partly allowed.
Since identical issued are involved in all other appeals, the above findings are mutatis mutandis apply to all these appeals also.
In the result, the appeals in to 795/Coch/2024 stand partly allowed.
Order pronounced in the open court on 30th May, 2025.