DCIT, C-1 (E), CHANDIGARH vs. M/S SHRI AUROBINDO SOCIO ECONOMIC & MANAGEMENT RESEARCH INSTITUTE, LUDHINA

आदेश/ORDER

PER A.D.JAIN, VICE PRESIDENT

ITA No. 1348/CHD/2019 is assessee's appeal against

the order of the ld. Commissioner of Income Tax (Appeals)-4,

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 2

Ludhiana [in short ‘the ld. CIT(A)’] dated 30.07.2019 for

2015-16 assessment year.

“1. That the order passed by Ld.CIT(A) is contrary to law and facts of the case.

adjudication.

ld. CIT(A) has erred in not allowing exemption u/s 11 of the

Income Tax Act, 1961 to the assessee and in taxing the

assessee as an AOP.

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 3 5. The Assessing Officer (in short ‘the AO’) noted that the

surplus generated by the assessee during the year, being

excess of income over expenditure, was of Rs.8,92,79,605/-,

i.e., 53.17% of the gross receipts; that the assessee was

earning huge profits from its activities, charging huge fees

from the students and collecting charges in various forms,

resulting in surplus; that the assessee was spending only

from 60% to 70% of its gross receipts for the claimed

charitable activity and, over the years, huge surplus had

been accumulated by the assessee, which had been kept in

the form of FDRs and capital investments; that the large

scale accumulation being generated was not being ploughed

back into the stated objects of the assessee, mainly

education; that the assessee had given buses on rent of

Rs.4.98 lacs to M/s Vardhman Textiles Ltd.; that the charges

received for usages had earned income of Rs.18,25,575/-;

that during the year, income of Rs.2,48,02,031/- had been

generated in the form of buses rental income, DG Set usages

receipt, interest income, and miscellaneous income; that the

assessee was, thus, earning huge surplus from activities

other than education; that the assessee was not fulfilling the

conditions of Section 11(1) of the Income Tax Act and was

not doing charitable activities; that so, the status of

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 4 charitable activities was being denied to the assessee and

the income of the assessee was being assessed as an AOP.

The AO made addition of surplus of Rs.2,92,18,989/-.

confirmed the assessment order.

issue stands covered by the decision of the Tribunal in the

assessee's own case, for assessment year 2014-15, vide order

(APB 66 to 87) dated 27.02.2020, passed in ITA No.

1599/CHD/2018, holding that there was no basis to hold the

activities of the assessee Trust to be commercial in nature;

that the assessee is claiming exemption u/s 11 of the Act

from assessment year 1994-95 and as per the principle of

consistency, there was no reason to deny the exemption

claimed; and that for the purpose of calculation of surplus,

corpus donation should not be included. It has been

contended that since there is no difference in the facts for

the year under consideration, the decision of the Tribunal for

assessment year 2014-15 be followed.

reliance on the impugned order. Though it has not been

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 5

disputed that this issue has been elaborately dealt with by

the Tribunal in the assessee's case for A.Y. 2014-15., it has

been contended that as rightly observed by the ld. CIT(A),

that since assessee has earned huge surplus @ 72.72%

(wrongly taken by the AO at 53.17%) of the total receipts, it

cannot but be said that the assessee is running its

Institution purely on a commercial basis for earning huge

profit in a manner that is not at all transparent and the

affairs of the assessee do not reflect any charitable purpose

being carried out. It has been contended that accordingly,

the disallowance of the claim u/s 11 of the Act and taxation

of surplus as AOP, as upheld by the ld. CIT(A), be confirmed

and Ground No.2 raised by the assessee be rejected.

8.1 The matter, it is seen, has been dealt with elaborately

by the Tribunal in the assessee's own case for assessment

year 2014-15, in the order dated 27.02.2020, a copy whereof

has been placed at APB 66 to 87. For ready reference, the

relevant portion thereof is reproduced hereunder :

“11. We have heard he rival contentions carefully, perused the orders of the authorities below. It is uncontroverted fact that the,, corpus donations were received through banking channel's by accounts payee cheque and PAN numbers of the donors in most of the cases had been filed. Further letters and original extracts of Board's Minutes had been received in case of all the donors submitting that the donation was towards corpus of the assessee trust. The only basis with the Revenue for treating the conations

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 6

as not eligible as corpus donations is that they were not genuine donations since they were received from sister concerns or their employees for malafide reasons. We do not find any merit in this argument of the Revenue since it is not backed with any evidence but mere allegation leveled on the assessee trust. The fact that the donors enjoyed the benefit u/s 80G of the Act on account of these donations does not take away the character of the donations made by the donors as corpus donations. Merely because it is the employees of the donor companies who made donations doe not establish that it was a mode of taking back the salaries paid to them by the sister concerns. These appear to be very farfetched allegations and deserved to be rejected outrightly. In view of the above, we do not find any infirmity in the order of the Ld.CIT(A) holding the corpus donations to be eligible for exemption u/s l l ( l )(d) r.w.s. 2(24)(iia) of the Act. Ground No.l raised by the Revenue is, therefore, dismissed”. ………………

“15. We have heard the rival contentions and carefully perused the orders of the authorities below. On going through the orders of the AO and the CIT(A), we find that the Revenue rests its case for denying the exemption u/s 11 of the Act to the assessee for two fold reasons; i) that its activities were commercial in nature for earning huge profits to the tune of 53.17% for the impugned year and; ii) that it was earning income from sources other than the education as under:

As on 31.03.2014 As on 31.03.2013 Other Receipts Schedule - IX Schedule - IX Bus Rental Income 23,31,050.00 21,02,100.00 D.G. Set Usages Receipt 20,00,544.00 - In c o m e fro in U TI 4,97,121.04 2,74,761.52 Liquid Fund Interest Income 1,24,96,330.48 1,32,05,294.30 Interest Income 11,28,244.00 Misc. Income 93,943.00 2,49,805.00 Prospectus Receipts 5,65,100.00 5,25,150.00 Rental Income 11,850.00 15,875.00 Sanitation & Sewerages 4,80,900.00 Charges Short & Excess 2,792.00 3,112.00 Re-Admission Fee 610.00 Fine 4,01,294.00 Industrial Training 4,66,800.00 Animal Scholarship 15,40,440.00 Function Run for Fitness 93,515.00

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 7

Teaching 4,66,800.00 Through Multimedia Honours Fee 7,70,000.00 Total 1,96,07,874.52 2,01,15,556.82 16. The calculation of surplus of 53.17% is as under : Particulars AY. 2013-14 A.Y. 2014-15 Total Receipts 6,67, 40,319/- 7,17,85, 575/- Revenue 2,30, 29,1 41/- 3.02.01.080/- Expenditure Capital Expenditure 5,91,92,922/- 34.15.376/- Total Expenditure 8,22,22,063/- 3,36,16,456/- Profit (-)!, 54,81, 744/- 3,81,69,1 19/-(53.17%)

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 8 giving any undue benefit to the related concern but on the contrary, it was efficient utilization of the buses during their idle time when not being run for the school purposes thus generating further income to be used in the charitable activities of the assessee trust. Even otherwise, we find that the Revenue has not demonstrated as to how any benefit was given to the related concern by renting out buses for a sum of Rs.4,98,000/-. Therefore, we dismiss this contention of the Revenue. 18. On considering the entire facts and circumstances of the case as above, we hold that there was no basis at all for holding the activities of the assessee trust as commercial in nature and further we hold that the assessee had not given any benefit to-, /any of its related concern. The denial of exemption.; u/s 11(1) of the Act is, therefore, set aside and the AO is" directed to grant exemption to the assessee trust as per law. The grounds of appeal raised by the assessee are, therefore, allowed.” 8.2 For the year under consideration also, we find that

whereas the taxing authorities have taken the surplus to be

@ 72.72% of the total receipts, as per the comparative chart

of surplus generated by the assessee from educational

activity for assessment year 2014-15 and 2015-16 (APB 178),

the surplus for the year under consideration in fact comes to

5.26% of the total receipts. This, in no manner, can be said

to be excessive.

8.3 As for assessment year 2014-15, the only basis for

treating the donations as not eligible for corpus donations is

that they were not genuine donations, having been received

from sister concerns, or their employees, for malafide

reasons. However, such a reason had not been backed with

any evidence and so, as found by the Tribunal in the earlier

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 9 year, there is no merit therein. The corpus donations are,

thus, eligible corpus donations, requiring exemption under

the provisions of Section 11(1)(d) read with those of Section

2(24)(iia) of the Act.

8.4 Exemption u/s 11 of the Act has been denied to the

assessee, as in the earlier year, for the reason that the

activities of the assessee are commercial in nature, aimed at

earning huge profits to the tune of 72.72% for the year under

consideration and that the assessee was earning income from

sources other than education. The case of the Revenue is

that the assessee was collecting huge amounts from students

under different heads, like Annual Scholarship Fees,

Computer Lab Charges, Extension Lecture Fees, Case Study

& Management Games Fee, Student & Management Software,

Student Personality Development etc., and that the assessee

was incurring huge expenses against the same and was

earning huge profits. On the other hand, it has been shown

that corpus donations, which has been accepted by us and

which, accordingly, cannot be included for the purpose of

calculating the surplus generated. Thus, the assessee has

successfully demonstrated that it was actually not earning

any profit, as also held for assessment year 2014-15.

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 10 Further, exemption u/s 11 has been claimed from

assessment year 1994-95 and it has been allowed to it

consistently over all these years.

thereby allegedly providing undue benefit to them, attracting

the provisions of Section 13(1)(c) of the Act, for the year

under consideration also, such letting out is found to be not

giving of undue benefit, but effective utilization of the buses

during their idle time, when they were not being run for the

purposes of the school, thereby generating further income to

be used in the charitable activities of the assessee Trust.

The Department has not shown otherwise, and even apart

from that, as to how the renting out of the buses amounts to

giving of any undue benefit to the related concerns, has not

been established.

assessee's own case for assessment year 2014-15, Ground

No. 2 is accepted and the exemption claimed u/s 11 of the

Act is directed to be allowed.

to Ground No.2. Since Ground No.2 has been accepted by

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 11 us, Ground Nos. 3 and 4 do not survive and they are rejected

as infructuous.

in not allowing exemption u/s 11(1)(d) of the Act on corpus

donations of Rs.6 crores and Rs.26,40,000/- received by the

assessee during the year.

tax benefit to its sister concern and accommodating them for

reduced tax liability. It was also held that concerning

donations from employees, the assessee was taking back

salary from its persons in the mode of corpus donation.

Rs.5,10,24,446/- out of the corpus donations received by the

assessee. For support, the ld. CIT(A) placed reliance on the

order dated 22.11.2017 passed by the Vishakhapatnam

Tribunal in the case of ‘Touching Heart Ministries Vs ITO’,

in ITA No. 101/viz/2015.

14.1 The contention on behalf of the assessee is that

during the year, it had received an amount of

Rs.6,26,40,000/- towards corpus of the Trust; that vide

reply dated 04.09.2017, details of the donors had been

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 12 provided to the AO; that also, letters sent by the donors had

been filed before the AO; that further, vide reply dated

18.11.2017, the assessee had also filed before the AO, true

copies of Resolutions passed by the donor companies; and

that in the letters issued, the donors have clearly stated that

the donations were towards the corpus of the Trust. It has

been stated that the donations were received through proper

banking channels and that the PANs of the donors were duly

mentioned in the letters. ‘Touching Heart Ministries’ (supra)

is stated to have been wrongly relied on by the ld. CIT(A),

since in that case, the party was not registered u/s 12A of

the Income Tax Act. It has been contended that huge corpus

donations were also received during assessment year 2014-

15 from the Vardhman Group of Industries and no adverse

inference had been drawn; and that therefore, for the year

under consideration, the ld. CIT(A) has erred in confirming

the AO’s action in considering the corpus donations as part

of the assessee's income.

impugned order in this regard, at the same time, not

disputing that this matter too has been considered at length

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 13 by the Tribunal in the assessee's case for the immediately

preceding assessment year, i.e., A.Y. 2014-15.

paragraphs, we have held the corpus donations to be eligible

for exemption u/s 11(1)(d) read with Section 2(24)(iia) of the

Act. In accordance therewith, on parity of facts in the year

under consideration also, Ground No.6 is accepted and

exemption on corpus donation of Rs. Six Crores and

Rs.26,40,000/- received by the assessee during the year

under consideration is directed to be allowed.

not allowing accumulation or setting apart of funds

amounting to Rs.1,20,93,334/- as per the provisions of

Section 11(2) of the Act for a period of five years.

17.1 The AO held that the accumulation of the amount of

Rs.1,20,93,334/- could not be allowed u/s 11(2) of the Act to

the assessee, since the objects stated in the Form 10 (APB

140) filed were not specific, but were general in nature. The

ld. CIT(A) confirmed the AOs action, holding that since the

exemption u/s 11 had been denied, set off and carry forward

of funds could not be allowed.

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 14 17.2 On behalf of the assessee, it has been contended that

the objects mentioned in Form 10 are not general; that in

fact, these are a few of the objects of the assessee as per its

Trust Deed and out of its many objects, only a few were

mentioned in Form 10; that the amount accumulated was to

be spent on these stated objects, which mainly included

establishment or maintenance of schools, libraries, Study

Centers , Amusements, etc.; that the authorities below are,

thus, not justified in refusing exemption u/s 11 on this

accumulated amount. Reliance has been placed on :

i) Director of Income Tax (Exemptions) Vs Envisions, 378 ITR 483 (Kar)”;

ii) CIT Vs Gokula Education Foundation, 394 ITR 236 (Kar); and

iii) Director of Income Tax (Exemption) Vs Daulat Ram Education Society, 278 ITR 260 (Del).

17.3 It has been stated that this issue did not arise in

assessment year 2014-15, since in that year, there was no

surplus.

17.4 The ld. DR has, here too, placed reliance on the

impugned order.

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 15 17.5 This Ground corresponds to Ground No. 8 before the

ld. CIT(A). The ld. DR has placed reliance on the findings

recorded by the ld. CIT(A) with regard thereto, wherein the

ld. CIT(A) has held that the objects for which the funds were

set apart by the assessee, as per the Form No.10 filed, are of

a general nature; and that since exemption u/s 11 has been

denied to the assessee and its surplus, which includes the

accumulated amount, has been taxed, set aside and carry

forward of the funds cannot be allowed.

17.6 The assessee has maintained that the purposes

mentioned in the Form No. 10 filed are not general in nature

and that there are only a few of the objects/purposes of the

assessee as per its Trust Deed; that the assessee is running

a premier Educational Institution and Business School and

the objects mentioned in the Form 10 are in line with the

objects mentioned in the Trust Deed and even in the

subsequent years, amounts have been utilized for the same

purposes.

17.7 We find the contention of the assessee to be correct.

The objections mentioned in the Form No. 10 (APB 140) are

as follows :

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 16

17.8 The objects mentioned in the Trust Deed (APB 130 to

134) are as follows :

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 17

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 18

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 19

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 20

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 21

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 22 17.9 Therefore, evidently, there is no force in the finding

recorded that the objects of the Trust, as mentioned in Form

No.10 are of general nature.

17.10 In this regard, in “CIT (Exemptions) Vs Bochasanwasi

Shri Akshar Purshottam Public Charitable Trust”, 409 ITR

591 (Guj), it has been held that lack of declaration in Form

No. 10 regarding specific purposes for which funds were

accumulated by the assessee Trust would not be fatal to the

exemption claimed u/s 11(2) of the Act. SLP against the said

order stands dismissed.

17.11 “Bochasanwasi Shri Akshar Purshottam Public

Charitable Trust” (supra) was followed by the Chennai

Tribunal in “Arhatic Yoga Asharam Management Trust Vs ITO

(Exemptions)”, 126 taxmann.com 76 (Chennai) (Trib),

allowing exemption u/s 11(2) of the Act.

17.12 In “CIT Vs National Institute and Financial

Management”, 322 ITR 694 (P&H), it has been held as

follows:

“2. The assessee is a society registered under section 12A of the Act and is engaged in the business of imparting professional training to probationers of the Central Accounts and Finance Services. The Assessing Officer rejected the claim for exemption under section 11 on the ground that the assessee accumulated profits without explanation. However, the Commissioner of

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 23 Income-tax (Appeals) accepted the plea of the assessee and held that utilisation of accumulation was on the agenda of the governing body. The Tribunal upheld the said view relying upon the judgment of the Delhi High Court in Bharat Kalyan Pratisthan v. Director of Income-tax (Exemption) [2008] 299 ITR 406 . The Tribunal held that the assessee was entitled to accumulate the income (for objects of the institution}.”

17.13 In “Director of Income Tax (Exemptions) Vs

Envisions”, (2015) 378 ITR 483 (Karnataka High Court), it

has been held as follows :

“The facts of this case were that, "After holding that though the purpose stated in Form -10 by the assessee may be in terms of some of the 14 objects of the trust deed, the Assessing Officer disallowed the accumulation holding the purpose stated was vague and thus the benefit of Section 11(2) of the Act was denied. Reliance in this regard was placed by the learned Assessing Officer on the decision of the Calcutta High Court rendered in the case of DIT(Exemption) v. Trustees of Singhania Charitable Trust [1993] 199 ITR 819. ………………….

In the present case, we find that the revenue does not dispute the fact that all the three purposes specified by the Assessee in Form 10 are for achieving the objects of the trust, and that the purposes as well as objects, are both charitable. Merely because more than one purpose has been specified and details about the plan of such expenditure has not been given, the same would not, in our view, be sufficient to deny the benefit u/s 11(2) of the Act to the Assessee. 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 of non-furnishing of the details, as how the said amount is proposed to be spent in future, the assessee cannot be denied the exemption as is admissible under sub-section 2 of Section 11 of the I.T Act, 1961."

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 24

17.14 In “CIT Vs Gokula Education Foundation” (2017)

394 ITR 236 (Karnataka High Court), it has been held as

follows :

"The Assessing Officer found that there is no specific activity mentioned and the language used is general and therefore he disallowed the claim. The matter was carried in appeal before CIT (Appeals) and he concurred with the view of the Assessing Officer and allowed the appeal in part on other aspect which is not touching to the question involved. The Income Tax Appellate Tribunal in further appeal has more or less recorded the same reasoning and it relied upon its earlier decision in case of Dy. DIT (E) v. Gokula Education Foundation in ITA No.l091/Bang/2014 dated 30.12.2014 (which is subject matter of ITA No.300/2015 being simultaneously heard and considered) and the Tribunal thereafter found that the issue could be said as covered by its earlier decision, wherein the reliance was placed upon the decision of Delhi High Court in case of DIT (Exemption) v. Daulat Ram Education Society [2005]'278 ITR 260/[2006] 156 Taxman 399 and therefore ultimately allowed the appeal of the assessee by the impugned order. Under the circumstances, the present appeal before this Court. ………………………… At this stage we may refer to the decision of this Court in case of DIT, Exemptions v. Envisions [2015] 378 ITR 483/232 Taxman 164/58 taxmann.com 184, wherein the decision of Calcutta High Court was also relied upon by the Revenue and this Court at paragraph-10 had observed thus:—

"10. In the present case, we find that the revenue does not dispute the fact that all the three purposes specified by the Assessee in Form 10 are for achieving the objects of the trust, and that the purposes as well as objects, are both charitable. Merely because more than one purpose has been specified and details about the plan of such expenditure has not been given, the same would not, in our view, be sufficient to deny the benefit u/s 11(2) of the Act to the Assessee. As long as the objects of the trust are charitable in character and as long as the purpose or purposes mentioned in Form 10 for achieving the objects

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 25

of the trust, merely because of non-furnishing of the details, as how the said amount is proposed to be spent in future, the assessee cannot be denied the exemption as is admissible under sub-section (2) of Section 11 of the I. T. Act, 1961."

The aforesaid shows that as per the view taken by this Court as long as the objects of the trust are charitable in character and as long as the purpose or purposes mentioned in Form No. 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) of the Act."

17.15 In “Director of Income Tax (Exemptions) Vs Daulat

Ram Education Society” (2005) 278 ITR 260 (Delhi High

Court), it has been held as follows :

“Here too, out of 29 purposes/objects stipulated in the memorandum of association, the assessee has specified eight purposes in Form No. 10 for which it was accumulating the unspent income while claiming benefit under section 11. It is not the case of the revenue that any of these eight purposes not charitable or that the same do not figure in the memorandum of association. In the circumstances, just because more than one purpose have been specified and just because details about the plans which the assessee has for spending on such purposes are not given may not be sufficient to deny the exemption admissible to it under section 11. So long as one or more of the purposes specified by the assessee find place in the objects for which the society has been incorporated and so long as the said purpose are charitable in character, the benefit admissible under I on 11 must flow to the assessee.

Museum Society, Ludhiana Vs CIT”, rendered by the Hon'ble

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 26

Punjab & Haryana High Court in ITA No.259/2019, as rightly

contended, is in-act, since the facts therein are different.

Therein, the assessee raised the following question of law

before the Hon'ble High Court :

“a. Whether the ld. ITAT was justified in upholding that the amount give to PSWHMM is the income of the appellant- society in terms of Section 11(3)(d) by upholding that the status of the recipient-society is immaterial for the purposes of application of section ll(3)(d), when the departmental circular itself differentiate between the societies as enumerated in section ll(3)(d) and other societies? b. Whether in the present circumstances the Id. ITAT was justified in rejecting the revision of form No. 10 when the calculations have been changed by the authorities below? c. Whether in the present facts and circumstances of the case the order of the Ld. ITAT is perverse?"

18.1 It was held that the amount accumulated had not

been utilized in accordance with the purpose mentioned in

the Form 10 filed. No purpose had been specified by that

assessee in the Form 10 filed with regard to payment made

to the other society. It was held as follows :

"10. There is fallacy in the contention raised by learned counsel for the appellant. The requirement of section 11 is that atleast 85% of the income is to be applied for religious or charitable purpose in year of receipt and the accumulation cannot be more than 15%. However, subsection (2) provides for accumulation out of 85% income but the same has to be for a specified purpose and for a specific period. The reasons behind allowing such an accumulation is that in case there is a future project for which larger amount is required, the same may be accumulated and thereafter applied. As a built-in mechanism in section 11 itself, sub- section (3) provides that in case eventualities mentioned in

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 27 clauses (a) to (d), the income shall be deemed to be income of the person in receipt, in the previous year in which it was to be applied or ceased to be accumulated. 11. By insertion of explanation to sub section (2) and clause (d) in sub-section (3) by the Finance Act, 2002, the accumulated amount cannot be transferred to a registered Trust or institution or to the Trust or Institution or funds as specified in sub-clause (iv), (v), (vi) and (via) to section 10(23C). In case of such credit payment, same shall not be treated as application for charitable and religious purpose and further, it would be treated as income of such person i.e. the person who had made the payment. 12. From sub-section (2) and sub-section (3), it is clear that accumulation has to be for a specified purpose and the same is to be utilized within the time frame. 13. The aims and objects of the Trust cannot be reproduced as a specific purpose. The purpose must have some individuality, it is so because only from the purpose, the assessing officer would be able to monitor the amount so accumulated. 14. In the present case, it was not the claim of the appellant that the amount was being accumulated for the payment to PSWHMMS. At this stage, we are not dilating as to whether for such purpose there could be accumulation or Hot. In such circumstances, there is a clear violation of the conditions referred in sub-section (2) and subsection (3) of section 11. The amount has been spent for the purpose other than for what it was accumulated, it comes within the mischief o f section ll(3)(c)."

18.2 The Hon'ble High Court thus, held that the amount

had been spent for a purpose other than for which it had

been accumulated and, therefore, it came within the mischief

of Section 11(3)(c).

different. There, the amount accumulated had been used for

a purpose other than for which it had been accumulated,

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 28 which is not so in the case of the present assessee. Rather, it

has not been disputed that out of the total accumulation of

Rs.1,20,93,335/-, an amount of Rs.83,84,603/- was spent

during assessment year 2016-17 and an amount of

Rs.37,08,732/- was spent in assessment year 2017-18, i.e.,

that it is unchallenged that the assessee had also utilized

the amount for the same purposes, as mentioned in the Form

10 filed, which objects are only a part of the objects

mentioned in the Trust Deed of the assessee, in the

subsequent years.

19.1 It has further been contended on behalf of the

assessee and not disputed on behalf of the Department that

in the assessment proceedings completed in the assessee's

case for assessment year 2018-19, (APB 17-23) in scrutiny

assessment proceedings, similar questions had been raised,

but the matter was decided in favour of the assessee,

allowing accumulation u/s 11(2) of the Act, as is evident

from Form No. 10 ( APB 15) for assessment year 2018-19.

way of Ground No. 7 is accepted and accumulation or set

apart of funds amounting to Rs.1,20,93,334/- is directed to

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 29

be allowed for a period of five years, in accordance with the

provisions of Section 11(2) of the Act.

allowed.

ITA 1375/CHD/2019

the ld. CIT(A)-4, Ludhiana dated 30.07.2017 pertaining to

2015-16 assessment year.

“1. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in allowing benefit of utilization of Rs.5,10,24,445/- in the F.Y.2014-15 out of donation received from M/s Vardhman Textile Ltd. when the assessee had failed to submit any proof of the same and when the resolution by the donor for approving and ratifying the donation was passed in the subsequent Financial Year. 2. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in ,holding that the donations for setting up of school received from M/s Vardhman Textile Ltd. are tied up grants and are not income u/s 2(24) (iia) when "income" defined section 2(24)(iia) clearly states that it includes voluntary contributions received by a trust created wholly for charitable or religious purpose and does not qualify that the specific-purpose voluntary contributions are to be excluded. That the appellant craves to leave, add or amend the grounds of appeal on or before the appeal heard and disposed off.” 24. The ground raised by the Department corresponds to

Ground Nos. 5 and 6 raised by the assessee which we have

ITA 1348 & 1375/CHD/2019 A.Y. 2015-16 30

decided in respect of the assessee, in the relevant preceding

paragraphs. In accordance therewith, the grounds raised by

the Department are rejected.

dismissed.

No.1348/CHD/2019 is partly allowed, as indicated,

Department’s appeal in ITA No.1375/CHD/2019 is

dismissed.

Order pronounced on 01.05.2024.

Sd/- Sd/- (VIKRAM SINGH YADAV) (A.D.JAIN ) ACCOUNTANTMEMBER VICE PRESIDENT “Poonam” आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�/ CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar