Exemption u/s 11

 AO rejected accumulation of income u/s.12AA

 Ground for rejection was that the assessee has accumulated its income not for specific purpose, but merely to defer taxation of surplus of amount which has not been applied towards its objects in the corresponding accounting period

  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 [2018 (10) TMI 995 – GUJARAT HIGH COURT 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 [2019 (3) TMI 1405 – SC ORDER] 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.

AO 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.

 Decided in favour of assessee.