Case Law Details
Maharaja Ranjit Singh War Museum Society Vs CIT (Punjab And Haryana High Court)
The issue under consideration is whether the Money Transferred to Unregistered Trust Can be Treated as Applied for Charitable Purpose?
High Court states that, under s. 11(1)(a), income held under trust for charity, to the extent that such income is applied for charitable or religious purposes will be exempt from income-tax. Where the income or the entire income is not so spent, but is accumulation, it will be exempt to the extent of 25 per cent of its total income or Rs.10,000/- whichever is higher. Under s.11(2), if the trust desires to accumulate more than 25 per cent, of its income and wants to claim exemption from income-tax it has to comply with the conditions which are laid down in s.11(2)(a) and (b). The first condition is that a notice in writing should be given to the ITO in the prescribed manner specifying the purpose for which the income is being accumulated and the period for which the income is to be accumulated. The period should not exceed ten years. Rule 17 of the IT Rules 1962, prescribes that the notice which is required to be given under s. 11(2)(a) should be in Form No.10. The second condition is that the amount so accumulated has to be invested in any Government security as specified in s.11(2)(b). The trust is allowed to accumulate its income for a maximum period of ten years. The condition is that the trust should specify in the prescribed form the purpose for which the income is accumulated or set apart. It is not enough for the trustees to repeat the objects of the trust, but must specify a particular purpose for which the income is being accumulated. We are in agreement with the view of the Calcutta High Court in director o I.T. Vs. Singhania Charitable Trust (1993) 199 ITR 819 (Cal): TC 23 R.1317 wherein the Calcutta High court held that e long-term accumulation should be for a definite and concrete purpose or purposes and the charitable trust cannot use its objects as the purposes for the accumulation of the income under s. 11(2) of the Act. It is only by mentioning the purposes for the accumulation of the income under s.11(2) of the Act. It is only by mentioning the purposes specifically, it accumulated income for the purposes mentioned in Form No.10. Therefore, it is essential that the trust should specify its purposes and the requirement is that the purposes must have some individuality and mere repetition of the objects of the trust would not meet the requirements of s.11(2) of the Act. However, on the facts of the case, it is seen that the assesee-trust had merely repeated its objects when it filed the necessary form No.10 furnished by the assessee, allowed its income to be accumulated for a period of ten years and that it is too late in the date of question the purposes mentioned in Form No.10 and learned senior counsel for the Revenue in his fairness has not disputed that the Department is not in a position how to challenge that the Form No.10 filed is invalid. In view of above, the addition of amount transferred to PSWHMMS is upheld. The question is answered against the appellant. The appeal is dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
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