Section 11(2) exemption cannot be denied merely for discrepancy in fund accumulation object in Form No. 10

The assessee is a charitable trust claiming benefit of exemption u/s.11 of the Act, has accumulated income u/s. 11(2) of the Act for specified purpose and for which Form No.10 has been filed specifying the amount and purpose. The assessee has accumulated funds for poor children education fund and medical aid fund and claimed that purpose specified in Form No.10 is in accordance with main objectives of the trust. We have gone through Form No.10 filed by the assessee along with objects of the trust and find that objects of the trust specifies extend help and relief to the distressed, poor destitute, homeless and underprivileged students and providing medical relief to the needy persons. Further, the assessee trust is regularly accumulating funds for the above purpose and such earmarked funds are continuously spent for the purpose for which they have accumulated. Once assessee has accumulated income with a specific purpose and such purpose is specified in the main objects of the trust, then the Assessing Officer cannot deny such accumulation of income merely for the reason that purpose specified in Form No.10 is vague and general in nature. As long as objects of the trust provide for such purpose, then the assessee can accumulates funds for the purpose which is specified in trust deed. This view is fortified by the decision of Hon’ble Gujarat High Court in the case of CIT (Exemption) vs. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust reported in [2019] 102 taxmann.com 122, where it was held that lack of declaration in Form No.10 regarding specific purpose for which funds were being accumulated by the assessee trust would not be fatal to the exemption claimed u/s.11(2) of the Act. The Hon’ble Supreme Court reported in (2019) 263 Taxmann.com 247(SC) has dismissed SLP filed by the Department in the above case and has upheld the findings of the Hon’ble Gujarat High Court.

 In this case, on perusal of facts available on record, clause 4k of trust deed provides for extending help and relief to distressed and destitute, homeless and underprivileged and funds accumulated u/s.11(2) is covered under main objects of the trust. We, therefore are of the considered view that Assessing Officer as well as learned CIT(A) has erred in denying benefit of accumulation of income u/s.11(2) of the Act. Hence, we direct the Assessing Officer to delete the additions made towards denial of accumulation of income u/s.11 (2) of the Act and direct him to allow benefit of accumulation as claimed by the assessee.

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