Charitable trust – Exemption u/s. 11(2) – A. Y. 2005-06 – Accumulation of income – Three purposes given covered by fourteen objects of trust – More than one purpose specified in Form 10 and details about plan of such expenditure not given – Not sufficient to deny exemption

The assessee, a registered charitable trust, collected donations of Rs.32,47,909/- and incurred incidental expenses of Rs.7,527/-. For the A. Y. 2005-06, it claimed the remaining amount as accumulation u/s. 11(2). In Form 10, 3 purposes were given out of the 14 objects of the Trust. The Assessing Officer disallowed the accumulation holding that the purpose stated was vague and thus the benefit of section 11(2) was denied. The Commissioner (Appeals) and the Tribunal allowed the assesee’s claim.

On appeal by the Revenue, Karnataka High Court upheld the decision of the Tribunal and held as under:

“i) T he objects of the trust, as given in the trust deed, were 14 in number. The three purposes for which accumulation was prayed for and mentioned in Form 10 by the assessee were undisputedly covered by the objects of the trust. As such, it could not be disputed that the purpose mentioned by the assessee while claiming the benefit, was for achieving the objects of the trust.

ii) M erely because more than one purpose had been specified and details about the plan of such expenditure had not been given would not be sufficient to deny the benefit u/s. 11(2) to the assessee. As long as the objects of the trust are charitable in character and as long as the purpose or purposes mentioned in Form 10 are for achieving the objects of the trust, merely because of nonfurnishing of the details, as to how the amount was proposed to be spent in future, the assessee could not be denied the exemption as was admissible u/s. 11(2) of the Act.”