INCOME TAX ACT, 1961

Section 11(2) Rule 17

Charitable trust - Exemption under section 11 - Accumulation of fund - Failure to furnish requisite form within prescribed time

Assessee declared income from other sources of Rs. 20,20,000 and claimed application of money of Rs. 42,332. Assessee also claimed Rs. 3,03,000 as the amount set out and claimed Rs. 16,74,668. As amount accumulated under section 11(2), AO did not allow this claim and treated the same as income of assessee on the ground of assessee having furnished requisite form belatedly. Held: It is pertinent to note that as per section 11 assessee was required to exercise option for accumulation of funds in a prescribed format as prescribed under rule 17. The time limit prescribed under rule 17 for exercising such option was time limit as prescribed under sub-section (1) of section 139 for furnishing of return of income. Admittedly, assessee failed to exercise this option as prescribed under rule 17. Moreover, revenue had pointed out serious discrepancies in resolution of society for setting apart of fund. Therefore, foundation of exercising the option iself was faulty and, therefore, AO was justified in denying assessee's claim.

Distinguished:CIT v. Nagpur Hotel Owners Association (1994) 209 ITR 441 (Bom.) : 1994 TaxPub(DT) 199 (Bom-HC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2010-11

INCOME TAX ACT, 1961

Section 10(23C)(iiiad)

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