Gangarani Balika Vidhyalya Vs ITO (ITAT Delhi)
Delhi ITAT allowed the appeal of Gangarani Balika Vidhyalya, a charitable trust, & held that surplus accumulated for specified purpose & retained in a current account of a scheduled bank qualifies as valid investment u/s 11(5).
Assessee, a charitable trust registered u/s 12A/12AA & engaged in imparting education in Kannauj district (UP), filed return for AY 2018-19 declaring receipts of ₹1.59 crore. Out of this, ₹31.34 lakh was accumulated u/s 11(2) for construction of a building, & Form 10 was duly filed. This amount was kept in current account with Bank of India, a scheduled bank. AO denied exemption u/s 11(2) holding that keeping funds in a current account is not one of the prescribed modes under u/s 11(5). NFAC upheld AO’s view & confirmed denial of exemption.
Tribunal observed that It is undisputed that Assessee is a registered trust eligible for exemption u/s 11. Madras HC in ADIT (Exemption) vs. Murugappa Chettiar Trust (303 ITR 360) held that deposit in any account with a scheduled bank, including current account, is covered by u/s 11(5)(iii). The words “any account” are wide enough to include current account as well. Therefore, AO & NFAC erred in denying exemption merely because funds were kept in current account. Following binding precedent of Madras HC, Tribunal held that deposit in current account of a scheduled bank qualifies as valid investment u/s 11(5). Exemption claimed u/s 11(2) for ₹31.34 lakh was allowed.
