Case Law Details
CIT (Exemptions) Vs Tibetan Children’s Village Dal Lake (Himachal Pradesh High Court)
Himachal Pradesh High Court held that exemption u/s 11 of the Income Tax Act duly entitled even if ‘Funds Pending Utilization’ was more than the prescribed limit as proved that funds were utilized for the purpose of achieving its objective.
Facts- The return was filed by the respondent-assessee for A.Ys. 2004-05 and 2005-06 after claiming exemption u/s. 11 of the Act. The cases of the assessee were, however, re-opened u/s. 147 of the Act for the said assessment years on the ground that the assessee had earmarked funds amounting to Rs.20,66,74,263/- for A.Y. 2004-05 under the head ‘Fund Pending Utilization’ and had not included in receipts.
AO observed that if the said amount was routed through the Income & Expenditure account, the application of income would have fallen short of the statutorily required 85%, and hence income had escaped assessment within the meaning of Section 147 of the Act. He held that the deficiency in application of fund for charitable purposes during the year under assessment comes to Rs.5,55,50,896/- and the same is added back to the taxable income of the assessee-trust.
CIT(A) dismissed the appeal. Whereas, Tribunal deleted the additions.
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