The Director of Income-tax, Exemptions, Bangalore / The Deputy Commissioner of Income-tax (Exmp), Bangalore v. Envisions
[Citation -2015-LL-0313-108]

Citation 2015-LL-0313-108
Appellant Name The Director of Income-tax, Exemptions, Bangalore / The Deputy Commissioner of Income-tax (Exmp), Bangalore
Respondent Name Envisions
Court HIGH COURT OF KARNATAKA
Relevant Act Income-tax
Date of Order 13/03/2015
Assessment Year 2005-06
Judgment View Judgment
Keyword Tags charitable objects • trust deed
Bot Summary: The remaining amount was claimed by the Assessee as accumulation u/s 11(2) of the Act by filing Form -10 in which the following purposes were stated: a) To conduct various activities in the field of Academics, Architecture, Music and Literature for preservation of our heritage. Challenging the said order, the assessee filed appeal before the Commissioner of Income Tax which was allowed by the order dated 14.2.2008 after holding 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) of the Act. The three purposes for which accumulation was prayed for and mentioned in Form -10 by the assessee were undisputedly covered by the objects of the trust. The Calcutta High Court 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 of the Act, all the purpose mentioned were for achieving the charitable objects for which the assessee- trust was created. The Delhi High Court, while considering the case for grant of benefit u/s 11(2) of the Act, 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. 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. 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 8 denied the exemption as is admissible under sub-section 2 of Section 11 of the I.T.Act, 1961.


1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 13TH DAY OF MARCH 2015 PRESENT HON BLE MR.JUSTICE VINEET SARAN AND HON BLE MRS.JUSTICE S.SUJATHA ITA No. 752 OF 2009 (IT) BETWEEN : 1. DIRECTOR OF INCOME TAX, EXEMPTIONS, C.R. BUILDING, QUEENS ROAD, BANGALAORE. 2.THE DEPUTY COMMISSIONER OF INCOME TAX(EXMP) CIRCLE-17(1) C.R. BUILDING, QUEENS ROAD, BANGALORE ... APPELLANTS (By Sri: K V ARAVIND, ADVOCATE) AND ENVISIONS NO.203, CAMELOT KENSINGTON ROAD 2 ULSOOR, BANGALORE ... RESPONDENT (By Sri: SHANKAR & M LAVA, ADVOCATES) This ITA is filed U/S.260-A of I.T.Act, 1961 arising out of Order passed in ITA No.8/BNG/2009 dated 26/06/2009, for Assessment Year 2005-2006, praying that this Hon'ble Court may be pleased to allow appeal and set aside orders passed by Income Tax Appellate Tribunal, Bangalore in ITA No.8/BNG/2009 dated 26/06/2009 confirming order passed by Appellate Commissioner and confirm order passed by Dy. Director of Income Tax Exmp Circle, 17(2), Bangalore THIS APPEAL IS COMING ON FOR ADMISSION THIS DAY, VINEET SARAN, J. DELIVERED FOLLOWING: JUDGMENT This is appeal filed by Revenue against order of Tribunal whereby benefit of Section 11(2) of Income Tax Act, 1961 ( for short Act) has been granted in favour of assessee. 2. This appeal was admitted to consider following substantial question of law:- Whether Appellate Authority were correct in holding that assessee was entitled to accumulation of income of 85% of donations received during current assessment year u/s 11(2) of 3 Act(without specifying object of accumulation) as it was for purposes of trust without complying with other provisions of said section including Section 11(5) of Act and failing to carry on any charitable activity during current assessment year ? 3. brief facts of this case are : That respondent assessee is registered charitable trust. For relevant Assessment Year 2005-06, Assessee had declared its total income as nil. In said year, Assessee Trust had collected donations of Rs.32,47,909/- and had made incidental expenses of Rs.7527/-. remaining amount was claimed by Assessee as accumulation u/s 11(2) of Act by filing Form -10 in which following purposes were stated: a) To conduct various activities in field of Academics, Architecture, Music and Literature for preservation of our heritage. b) To run maintain educational or other institution for providing and promoting education for poor and weaker sections of society. c) To run, maintain or assist any medical institution to grant assistance to indigent needy people for meeting cost of medical treatment. 4 4. After holding that though purpose stated in Form -10 by assessee may be in terms of some of 14 objects of trust deed, Assessing Officer disallowed accumulation holding purpose stated was vague and thus benefit of Section 11(2) of Act was denied. Reliance in this regard was placed by learned Assessing Officer on decision of Calcutta High Court rendered in case of DIRECTOR OF INCOME TAX (EXEMPTION) vs TRUSTEES OF SINGHANIA CHARITABLE TRUST, (1993) 199 ITR 819 (CAL). 5. Challenging said order, assessee filed appeal before Commissioner of Income Tax which was allowed by order dated 14.2.2008 after holding that in Form -10, three purposes given were covered by 14 objects of Trust and since law did not prohibit or preclude plurality of purpose for accumulation, same were held to be within scope of Section 11(2) of Act. Challenging order of Commissioner, revenue filed appeal before Tribunal which has been dismissed by order 5 dated 26.6.2003. Aggrieved by same, this further appeal has been filed by revenue. 6. We have heard Sri K.V. Aravind, learned counsel for appellant as well as Sri A.Shankar, learned counsel for respondent, at length and perused records. 7. It is not disputed by parties that objects of trust, as given in trust deed, were 14 in number. three purposes for which accumulation was prayed for and mentioned in Form -10 by assessee were undisputedly covered by objects of trust. As such, it cannot be disputed that purpose mentioned by assessee while claiming benefit, was for achieving objects of trust. 8. Calcutta High Court in case of Singhania Charitable Trust (supra), was dealing with case where in declaration given by assessee claiming benefit u/s 11 (2) of Act, all purpose mentioned were for achieving charitable objects for which assessee- trust was created. Though it was held accumulation of income for more than one purpose was 6 permissible, but generality of purpose for which benefit was claimed u/s 11(2) of Act was not found to be permissible as purpose for which trust required that accumulation of income was not specified and clearly mentioned. Hence matter was remanded back to Tribunal permitting assessee to adduce fresh evidence. 9. said judgment of Calcutta High Court was considered by Delhi High Court in case of COMMISSIONER OF INCOME TAX vs HOTEL & RESTAURANT ASSOCIATION, ( 2003) 261 ITR 190 (Del). Delhi High Court, while considering case for grant of benefit u/s 11(2) of Act, held that specification of certain purpose or purposes is needed for accumulation of income of trust, and same cannot be beyond objects of trust. It was further held that plurality of purpose for accumulation was not precluded and as long as purpose was to achieve objects of trust, assessee would be entitled to benefit of Section 11(2) of Act. In another case of DIRECTOR OF INCOME TAX vs 7 MITUSI AND CO.ENVIRONMENTAL TRUST, (2008) 303 ITR 111 (Delhi), Delhi High Court noted judgment of Calcutta High Court in case of Singhania Charitable Trus (supra) and reiterated view taken in case of Hotel and Restaurant Association (supra). 10. In present case, we find that revenue does not dispute fact that all three purposes specified by Assessee in Form 10 are for achieving objects of trust, and that purposes as well as objects, are both charitable. Merely because more than one purpose has been specified and details about plan of such expenditure has not been given, same would not, in our view, be sufficient to deny benefit u/s 11(2) of Act to Assessee. As long as objects of trust are charitable in character and as long as purpose or purposes mentioned in Form 10 are for achieving objects of trust, merely because of non-furnishing of details, as how said amount is proposed to be spent in future, assessee cannot be 8 denied exemption as is admissible under sub-section 2 of Section 11 of I.T.Act, 1961. 11. For reasons stated above, we dismiss this appeal and answer substantial question of law in favour of assessee and against revenue. Sd/- JUDGE Sd/- JUDGE nm Director of Income-tax, Exemptions, Bangalore / Deputy Commissioner of Income-tax (Exmp), Bangalore v. Envision
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