THE issue before the Bench is - Whether when the objects of the trust are charitable in character and the purposes mentioned by the assessee are for achieving the objects of the trust, merely because of non-furnishing of the details, as to how the said amount is proposed to be spent in future, the assessee can be denied the benefit u/s 11. NO is the answer.
Facts of the case
The assessee is a registered charitable trust. For the relevant AY, the Assessee had declared its total income as nil. In the said year, the Assessee - Trust had collected donations of Rs.32,47,909/- and had made incidental expenses of Rs.7527/-. The remaining amount was claimed by the Assessee as accumulation u/s 11(2) in which the certain purposes were also stated. After holding that though the purpose stated in prescribed form by the assessee may be in terms of some of the 14 objects of the trust deed, AO disallowed the accumulation holding the purpose stated was vague and thus the benefit of Section 11(2) was denied. On appeal, CIT(A) had allowed the assessee's contentions and noted that in Form -10, the three purposes given were covered by 14 objects of the Trust and since the law did not prohibit or preclude plurality of purpose for accumulation, the same were held to be within the scope of Section 11(2). On further appeal, Tribunal had dismissed the Revenue's contentions.
Held that,
++ the Calcutta HC in the case of Singhania Charitable Trust, was dealing with a case where in the declaration given by the assessee claiming benefit u/s 11 (2), all the purpose mentioned were for achieving the charitable objects for which the trust was created. Though it was held the accumulation of income for more than one purpose was permissible, but the generality of the purpose for which the benefit was claimed u/s 11(2) was not found to be permissible as the purpose for which the trust required that accumulation of income was not specified and clearly mentioned. Hence the matter was remanded back to the Tribunal permitting the assessee to adduce fresh evidence. The said judgment of the Calcutta HC was considered by the Delhi HC in the case of CIT vs HOTEL & RESTAURANT ASSOCIATION, (2003) 261 ITR 190 (Del). The Delhi HC, while considering the case for grant of benefit u/s 11(2), held that specification of certain purpose or purposes is needed for accumulation of income of the trust, and the same cannot be beyond the objects of the trust. It was further held that plurality of purpose for accumulation was not precluded and as long as the purpose was to achieve the objects of the trust, the assessee would be entitled to the benefit of Section 11(2). In another case of DIT vs MITUSI AND CO.ENVIRONMENTAL TRUST, (2008) 303 ITR 111 (Delhi), the Delhi HC noted the judgment of the Calcutta High Court in the case of Singhania Charitable Trust and reiterated view taken in the case of Hotel and Restaurant Association;
++ 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) 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. For the reasons stated above, we dismiss this appeal and answer the substantial question of law in favour of assessee and against the revenue.
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