The Tax Publishers

Income Tax--Charitable Trust

Specification of Purpose of Accumulation in Form No. 10--Necessity Thereof

CA. Nisha Bhandari

The present write up analyses the issue as to whether exemption can be validly claimed under Section 11(2) where purposes of accumulation could not be properly specified in Form No. 10 but later on duly established. The learned author draws the attention towards amendment made by the Finance Act, 2015 requiring the submission of Form No. 10 before the due date of filing of return of income under Section 139(1).

1. Scheme of accumulation of income under Section 11(2)

Under clauses (a) or (b) of Section 11(1), 85 per cent of income has to be applied for charitable or religious purposes and only 15 per cent can be accumulated for such purposes. However, even this 85 per cent of income may also be accumulated or set apart and it will earn full exemption subject, however, to the fulfilment of certain conditions. Thus the total 100 per cent of income can be accumulated under the present law and it will qualify for exemption--15 per cent under Section 11(1)(a) and 85 per cent under Section 11(2) which is a specific provision for setting apart. The conditions precedent for accumulation of the balance 85 per cent of income are as under :

(a) such person furnishes a statement in Form No. 10 and in the prescribed manner to the assessing officer, stating the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed five years;

(b) the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5);

(c) the statement referred to in clause (a) is furnished on or before the due date specified under sub-section (1) of Section 139 for furnishing the return of income for the previous year.

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT

TaxPublishers.in

'Kedarnath', 7, Avadh Vihar, Near Nirali Dhani,

Chopasni Road

Jodhpur - 342 008 (Rajasthan) INDIA

Phones : 9785602619 (11 am - 5 pm)

E-Mail : mail@taxpublishers.in / mail.taxpublishers@gmail.com