Income Tax Officer (Exemptions), Ambala V. M/s S.D. Public School, Yamunanagar

ITA 80/CHANDI/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1615 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-07-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 22-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUSHIL V ERMA
• Keywords: Charitable institution; Rule of consistency
• Section: 10B; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO.80/CHD/2015 ASSESSMENT YEAR:2011-12 THE ITO(EXEMPTIONS), VS. S.D. PUBLIC SCHOOL AMBALA CHHOTI LINE JAGADHRI YAMUNANAGAR PAN NO. AAFTS4465A (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SUSHIL VERMA RESPONDENT BY : SH. TEJ MOHAN SINGH DATE OF HEARING : 26/10/2015 DATE OF PRONOUNCEMENT : 04/11/2015 ORDER PER ANNAPURNA MEHROTRA A.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF LD. CIT(A) PANCHKULA DT. 26/11/2014. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A REGISTERED SOCIETY UNDER SECTION 12 AA OF THE ACT. FOR THE IMPUGNED ASSESSME NT YEAR THE ASSESSEE FILED ITS RETURN OF INCOME ON 26/09/2011, DECLARING NIL INCOM E. DURING ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE HAD INV ESTED AN AMOUNT OF RS. 1,20,00,000/- IN FIXED DEPOSITS IN PUNJAB NATIONAL BANK, JAGADHRI AND CLAIMED THE SAME AS APPLICATION OF INCOME AS PER THE PROVIS IONS OF SECTION 11(1)(A) OF THE ACT. THE AO FURTHER OBSERVED THAT AS PER ANNEX URE TO THE AUDITORS REPORT, AT COLUMN NO. 5, IT WAS MENTIONED THAT THE ASSESSEE HA D NOT ACCUMULATED ANY INCOME FOR SPECIFIED PURPOSES UNDER SECTION 11(2) O F THE ACT, NOR IT HAD INVESTED 2 OR DEPOSITED THE SAME IN ANY MANNER LAID DOWN IN SE CTION 11(2)(B) OF THE ACT. THUS THE AO HELD THAT THE INVESTMENT OF RS. 1,20,0 0,000/- IN FIXED DEPOSIT WAS NOT IN PURSUANCE TO THE PROVISIONS OF SECTION 11(2) RE AD WITH SECTION 11(5) OF THE ACT. FURTHER THE AO HELD THAT THE IMPUGNED INVESTME NT COULD NOT BE TREATED AS APPLICATION OF INCOME AS PER SECTION 11(1)(A) AND I N VIEW THEREOF HELD THAT THE ASSESSEE HAD SHORT APPLIED ITS INCOME BY RS. 37,14, 985/- AND MADE AN ADDITION THEREOF TO THE RETURNED INCOME OF THE ASSESSEE. THE MATTER WAS CARRIED IN APPEAL BEFORE THE CIT(A), WHO PLACING RELIANCE ON T HE JUDGMENT OF THE HONBLE ITAT IN THE CASE OF VED PRAKASH MUKAND LAL EDUCATIO NAL SOCIETY IN ITA NO.952/CHANDI/2011 FOR ASSESSMENT YEAR 2008-09 DT. 25/01/2012 HELD THE INVESTMENT IN FDRS TO BE APPLICATION OF INCOME AND ALLOWED THE ASSESSES APPEAL BY HOLDING AT PARA 5.2 AND 5.3 OF HIS ORDER AS FOLLOWS: 5.2 I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE WRITTEN SUBMISSION FILED BY THE APPELLANT. IT IS NOTED THAT THE AO HAS TREAT ED INVESTMENT IN FDR AS NON APPLICATION OF MONEY AFTER CONSIDERING THE ASSESSEE S REPLY AND DISTINGUISHING THE DECISIONS CITED BY THE APPELLANT. THE DISTINGUISHME NT HAVE BEEN ON MINOR TECHNICALITIES LIKE IN CASE OF EAST INDIA CHARITABL E TRUST (SUPRA), THE MONEY WAS GENERATED ON SALE OF SHARES, IN CASE OF DLF QUTUB E NCLAVE COMPLEX MEDICAL CHARITABLE TRUST, THE MONEY WAS GENERATED ON ACCOUN T OF PREMIUM RECEIVED ON LEASING THE PLOTS AND IN CASE OF VED PARKASH MUKUND LAL EDUCATION SOCIETY, THE ASSESSEE HAD FAILED TO FILE FORM NO. 10. HOWEVER, I N ALL SUCH CASES IT IS NOT RELEVANT THAT WHAT WAS THE SOURCE OF GENERATION OF MONEY BY THE TRUSTS BUT THE COMMON QUESTION BEFORE THE HONBLE COURTS AND TRIBUNAL WAS WHETHER THE INVESTMENTS MADE IN FDR WAS LIABLE TO BE TREATED AS APPLICATION OF MONEY. ON PERUSAL OF JUDICIAL PRONOUNCEMENTS REFERRED BY THE APPELLANT, I AM IN AGREEMENT WITH THE SUBMISSIONS MADE BY THE APPELLANT THAT THE INVESTME NTS IN FDR MADE BY THE TRUST IS APPLICATION OF MONEY AS PER PROVISIONS OF SECTIO N 11(2) READ WITH SECTION 11(5) OF THE ACT. THE HONBLE ITAT IN THE CASE OF THE VED PRAKASH MUKAND LAL EDUCATIONAL SOCIETY (SUPRA) IN PARA 11 OBSERVED AS UNDER:- WE FIND NO MERIT IN THE ABOVE SAID PLEA OF THE AS SESSEE IN VIEW OF THE PROVISIONS OF SECTION 11(2) OF THE ACT UNDER WHICH IT IS PROVI DED THAT WHERE 85% OF THE INCOME REFERRED TO IN SUB-SECTION (1)(A) OR (B) R EAD WITH EXPLANATION, IS NOT APPLIED, OR NOT DEEMED TO HAVE BEEN APPLIED, TO CHA RITABLE OR RELIGIOUS PURPOSE DURING THE PREVIOUS YEAR, AND THE SAME IS ACCUMULAT ED OR SET APART, FOR APPLICATION TO SUCH PURPOSE, THEN SUCH INCOME SO AC CUMULATED SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR I N THE HANDS OF THE PERSON, PROVIDED EITHER OF THE TWO CONDITIONS ARE FULFILLED ; A) SUCH PERSON BY NOTICE IN WRITING SPECIFIES TO THE ASSESSING OFFICER THE PURP OSE FOR WHICH THE INCOME IS BEING ACCUMULATED OR SET APART AND THE PERIOD FOR W HICH IT IS SO ACCUMULATED OR SET APART; B) THE MONEY SO ACCUMULATED OR SET APART IS INVESTED OR DEPOSITED IN THE MODES SPECIFIED IN SUB SECTION (5). THE ASSESSE E DURING THE YEAR UNDER CONSIDERATION HAD COMPLIED WITH THE PROVISIONS OF S ECTION 11(5) OF THE ACT BY INVESTING THE SURPLUS IN FDRS. EVEN OTHERWISE ONE O F THE OBJECTS OF THE ASSESSEE SOCIETY WAS TO INVEST SURPLUS MONEY IN THE DEPOSIT SPECIFIED U/S 11(5) OF THE ACT. WHERE THE SURPLUS MONEY HAS BEEN SO INVESTED IN THE FDRS, THE SAID INVESTMENT IS TO BE TREATED AS APPLICATION OF INCOME OF THE PREVI OUS YEAR IN WHICH SUCH INVESTMENT IS MADE, IN THE HANDS OF THE ASSESSEE. 3 5.3 IN VIEW OF THE FACTS OF THE CASE AND JUDICIAL P RONOUNCEMENTS AS REFERRED ABOVE, THE INVESTMENT IN FDR IS TREATED AS APPLICAT ION OF MONEY AS PER PROVISIONS OF SECTION 11(5) OF THE ACT. THE AO IS DIRECTED TO RE-COMPUTE THE INCOME OF THE TRUST AFTER GIVING EFFECT OF RS. 1,20,000/- AS INCO ME APPLIED BY THE TRUST DURING THE YEAR. THE GROUND OF APPEAL IS ALLOWED. 3. AGGRIEVED BY THE SAME THE REVENUE HAS FILED THIS APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS: I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS RIGHT IN DELETING THE ADDITION OF RS. 1.20CRORE INVESTED IN FDR AS APPLICATION OF INCOME AS PART OF 85% OF INCOME STRAIGHTWAY, WHICH RESULTE D IN APPLICATION OF INCOME SHORT FALL BY RS. 37,14,895/-. II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS RIGHT IN GIVING RELIEF OF RS. 1.20 CRORE INVESTED IN FDR U/S 11(5) WITHOUT FILING FORM NO. 10 NEITHER BEFORE AO NOR BEFORE THE WORTHY CIT(A). III) APPELLANT CRAVES LEAVE TO AMEND OR ADD ANY OR MORE GROUNDS OF APPEAL. 4. BEFORE US THE LD. DR STATED THAT THE RELIANCE PL ACED BY THE LD. CIT(A) ON THE DECISION OF HONBLE ITAT IN THE CASE OF VED PRA KASH MUKAND LAL EDUCATIONAL SOCIETY (SUPRA) WHILE ALLOWING THE ASSESSES APPEAL WAS MISPLACED. THE LD. DR POINTED OUT THAT THE FACTS OF THAT CASE WERE DIFFER ENT FROM THE FACTS OF THE ASSESSES CASE. LD. DR , WHILE REFERRING TO THE JUD GMENT, STATED THAT IN THAT CASE, THE INVESTMENT IN FDRS HAD BEEN TREATED AS APPLICA TION OF INCOME ON ACCOUNT OF THE FACT THAT ONE OF THE MAIN OBJECTS SPELLED OU T IN THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE SOCIETY WAS TO MAKE INV ESTMENTS AS PER REQUIREMENTS UNDER SECTION 11(5) OF THE ACT. THE LD . DR DREW OUR ATTENTION TO PARA 11 OF THE ORDER WHERE THE IMPUGNED FINDINGS OF FACT WAS RECORDED. FURTHER LD. DR STATED THAT IN THE ASSESSES CASE IT WAS NEIT HER BROUGHT ON RECORD NOR WAS IT THE CASE OF THE ASSESSEE THAT THE INVESTMENT IN FDRS HAD BEEN MADE AS PER THE OBJECT OF THE ASSESSEE SOCIETY. THE LD. DR ALSO STATED THAT IN THE ABOVE REFERRED CASE THE ASSESSEE HAD BEEN ALLOWED THE BEN EFIT FOLLOWING THE PRINCIPLE OF CONSISTENCY SINCE THE HONBLE TRIBUNAL FOUND THA T SIMILAR APPLICATION OF INCOME HAD BEEN ALLOWED IN EARLIER YEARS ALSO. THIS FACT, THE LD. DR POINTED OUT WAS NOT PRESENT IN THE CASE OF THE ASSESSEE. 4 5. LD. AR ON THE OTHER HAND RELIED UPON THE ORDER O F THE LD. CIT(A) AND STATED THAT THE RATIO PROPOUNDED IN THE CASE OF VEK PRAKASH MUKAND LAL EDUCATIONAL SOCIETY (SUPRA) SQUARELY APPLIED TO THE ASSESSES CASE. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRES ENTATIVE OF BOTH THE PARTIES AND HAVE PERUSED THE DOCUMENTS AND ORDER OF THE AUTHORITIES BELOW. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT T HE GROSS RECEIPTS OF THE ASSESSEE FROM ITS CHARITABLE ACTIVITIES CARRIED OUT DURING THE IMPUGNED AY WAS RS. 3,30,95,888/- . THE ASSESSEE CLAIMED APPLICATIO N OF THIS INCOME U/S 11(1) AMOUNTING TO RS. 2,19,66,769/- ON ACCOUNT OF EXPENS ES INCURRED ON CARRYING OUT ITS CHARITABLE ACTIVITIES AND RS. 24,49,751/- ON AC COUNT OF ADDITION TO FIXED ASSETS DURING THE YEAR WHICH AGAIN ARE NOT IN DISPUTE. THE ASSESSEE ALSO INVESTED A SUM OF RS. 1,20,00,000/- IN FIXED DEPOSITS WITH PNB AND CLAIMED THE SAME TO BE APPLICATION OF INCOME. THUS, AFTER TAKING THE INVES TMENT IN FDRS INTO CONSIDERATION THE ASSESSEE CLAIMED APPLICATION OF M ORE THAN 85% OF ITS INCOME IN CHARITABLE ACTIVITIES AND CLAIMED EXEMPTION U/S 11 OF THE INCOME TAX ACT 1961. IT IS ALSO A MATTER OF RECORD, EVIDENT FROM T HE AUDIT REPORT FILED IN FORM NO. 10 BY THE ASSESSEE, THAT NO AMOUNT HAD BEEN ACCUMUL ATED BY THE ASSESSEE AS PER SECTION 11(2) OF THE ACT AND NEITHER HAD ANY AM OUNT BEEN INVESTED AS PER SECTION 11(5) OF THE ACT. MEANING THEREBY THAT THE INVESTMENT IN FDRS WAS NOT IN PURSUANCE TO THE PROVISIONS OF SECTION 11(2) READ W ITH SECTION 11(5) OF THE ACT AND NO CLAIM OF APPLICATION OF INCOME HAD BEEN MADE THERE UNDER BY THE ASSESSEE. 7. THE ONLY QUESTION TO BE ANSWERED IN THE PRESENT APPEAL IS WHETHER FOR THE PURPOSES OF SECTION 11(1)(A), INVESTMENT IN FDRS C AN BE TREATED AS APPLICATION OF INCOME ? FOR THE SAKE OF CLARITY THE PROVISIONS OF SECTION 1 1(1)(A), EXPLANATION 2 TO SECTON 11(1) AND 11(2) ARE BEING REPRODUCED HERE UNDER: 5 SECTION 11(1) SUBJECT TO THE PROVISIONS OF SECTIONS 60 TO 63, TH E FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR O F THE PERSON IN RECEIPT OF THE INCOME. (A) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST W HOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT TO WHICH SUCH INC OME IS APPLIED TO SUCH PURPOSES IN INDIA, AND, WHERE ANY SUCH INCOME IS ACCUMULATED OR SET APART FOR APPLICATION T SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH TH E INCOME SO ACCUMULATED OR SET APART IS NOT IN EXCESS OF FIFTEEN PER CENT OF THE I NCOME FROM SUCH PROPERTY. EXPLANATION 2 (2) IF, IN THE PREVIOUS YEAR, THE INCOME APPLIED T O CHARITABLE OR RELIGIOUS PURPOSES IN INDIA FALLS SHORT OF EIGHTY FIVE PER CENT OF THE INCOME D ERIVED DURING THAT YEAR FROM PROPERTY HELD UNDER TRUST, OR, AS THE CASE MAY BE, HELD UNDE R TRUST IN PART, BY ANY AMOUNT- (I) FOR THE REASON THAT THE WHOLE OR ANY PART OF TH E INCOME HAS NOT BEEN RECEIVED DURING THAT YEAR, OR (II) FOR ANY OTHER REASON, THEN- (A) IN THE CASE REFERRED TO IN SUB-CLAUSE (I), SO MUCH OF THE INCOME APPLIED TO SUCH PURPOSES IN INDIA DURING THE PERVIOUS YEAR IN WHICH THE INCO ME IS RECEIVED OR DURING THE PREVIOUS YEAR IMMEDIATELY FOLLOWING AS DOES NOT EXCEED THE S AID AMOUNTS, AND (B) IN THE CASE REFERRED TO IN SUB-CLAUSE (II), SO MUCH OF THE INCOME APPLIED TO SUCH PURPOSES IN INDIA DURING THE PREVIOUS YEAR IMMEDIAT ELY FOLLOWING THE PREVIOUS YEAR IN WHICH THE INCOME WAS DERIVED AS DOES NOT EXCEED THE SAID AMOUNT, MAY, AT THE OPTION OF THE PERSON IN RECEIPT OF THE INCOME (SUCH OPTION TO BE EXERCISED IN WRITING BEFORE THE EXPIRY OF THE TIME ALLOWED UNDER SUB-SECTION (1)*** OF SECTION 139*** FOR FURNISHING THE RETURN OF INCOME) BE DEEMED TO BE INCOME APPLIED TO SUCH PURPOSES DURING THE PREVIOUS YEAR IN WHICH THE INCOME WAS DERIVED; AND THE INCOME SO DEEMED TO HAVE BEEN APPLIED SHALL NOT BE TAKEN INTO ACCOUNT IN CAL CULATING THE AMOUNT OF INCOME APPLIED TO SUCH PURPOSES, IN THE CASE REFERRED TO I N SUB-CLAUSE(I), DURING THE PREVIOUS YEAR IN WHICH THE INCOME IS RECEIVED OR DURING THE PREVIOUS YEAR IMMEDIATELY FOLLOWING, AS THE CASE MAY BE, AND IN THE CASE REFERRED TO IN SUB-CLAUSE(II), DURING THE PREVIOUS YEAR IMMEDIATELY FOLLOWING THE PREVIOUS YEAR IN WHICH TH E INCOME WAS DERIVED. SECTION 11 (2) WHERE EIGHTY FIVE PER CENT OF THE INCOME REFERRED TO IN CLAUSE(A) OR CLAUSE (B) OF SUB- SECTION (1) READ WITH THE EXPLANATION TO THAT SUB-S ECTION IS NOT APPLIED, OR IS NOT DEEMED TO HAVE BEEN APPLIED, TO CHARITABLE OR RELIGIOUS PU RPOSES IN INDIA DURING THE PREVIOUS YEAR BUT IS ACCUMULATED OR SET APART, EITHER IN WHO LE OR IN PART, FOR APPLICATION TO SUCH PURPOSES IN INDIA, SUCH INCOME SO ACCUMULATED OR SE T APART SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOME, PROVIDED THE FOLLOWING CONDITIONS ARE COMPLIED WITH NAMELY:- (A) SUCH PERSON SPECIFIES, BY NOTICE IN WRITING GIVEN T O THE ASSESSING OFFICER IN THE PRESCRIBED MANNER, THE PURPOSE FOR WHICH THE INCOME IS TO BE A CCUMULATED OR SET APART, WHICH SHALL IN NO CASE EXCEED TEN YEARS; (B) THE MONEY SO ACCUMULATED OR SET APART IS INVESTED O R DEPOSITED IN THE FORMS OR MODES SPECIFIED IN SUB-SECTION (5). IT IS EVIDENT FROM A BARE PERUSAL OF THE SECTION TH AT FOR THE PURPOSE OF CLAIMING EXEMPTION U/S 11 OF THE ACT, 85% OF THE INCOME FROM PROPERTY HELD UNDER TRUST FOR CHARITABLE OR RELIGION PURPOSES SHOULD BE APPL IED TO SUCH PURPOSES MEANING CHARITABLE PURPOSES. THE SAME IS TO BE DONE IN THE SAME YEAR BUT WHERE AN ASSESSEE IS UNABLE TO APPLY SUCH INCOME, A SAVING GRACE IS PROVIDED IN 6 EXPLANATION 2 TO SECTION 11(1) (A) WHEREBY THE APPL ICATION OF INCOME FOR CHARITABLE PURPOSES CAN BE POSTPONED, BY INTIMATING THE AO IN WRITING OF THE SAME. SIMILARLY SECTION 11(2) ALSO GIVES A FURTHER PERIOD OF 5 YEARS FOR APPLICATION OF INCOME PROVIDED THE ASSESSEE ACCUMULATES IT FOR A SPECIFIC AND CHARITABLE PURPOSE, INTIMATES THE SAME TO THE AO IN A SPECIFIE D FORM AND INVESTS IT IN MODES SPECIFIED U/S 11(5). THE COMMON THREAD RUNNING THROUGH SECTION 11(1)(A), EXPLANATION (2) TO SECTION 11(1) AND IN SECTION 11(2) IS THAT THE INCOME OF TH E TRUST MUST BE APPLIED FOR CHARITABLE PURPOSES WHETHER IN THE SAME YEARS OR IN SUCCEEDING YEARS. MEANING THEREBY IT MUST BE USED FOR CHARITABLE PURPOSES. TH IS CONCLUSION IS LOGICAL ENOUGH CONSIDERING THAT EXEMPTION U/S 11 IS GRANTED TO CHA RITABLE ORGANIZATIONS FOR CARRYING OUT CHARITABLE ACTIVITIES. THUS IT IS ONLY WHEN FUNDS OF SUCH ENTITIES ARE UTILIZED FOR CHARITABLE PURPOSES, THE OBJECT OF THE ENTITY WILL BE ACHIEVED WHICH IN TURN WOULD JUSTIFY THE EXEMPTION GRANTED BY STATUTE TO SUCH ENTITIES. 8. IN THE BACKDROP OF THE ABOVE FACTUAL AND LEGAL P OSITION WE SHALL NOW PROCEED TO EXAMINE WHETHER INVESTMENT OF FUNDS OF T HE ASSESSEE TRUST IN FDRS COULD BE TREATED AS APPLICATION OF INCOME FOR CHARI TABLE PURPOSE. FOR ARRIVING AT THIS CONCLUSION THERE HAS TO BE NEX US BETWEEN INVESTMENT IN FDRS AND ACHIEVEMENT OF THE CHARITABLE OBJECTS OF THE AS SESSEE, MEANING THEREBY THAT BY VIRTUE OF MAKING THIS INVESTMENT, SOME CHAR ITABLE OBJECTS OF THE ASSESSEE SHOULD BE ACHIEVED. THE PURPOSE / INTENTION FOR WHI CH THE INVESTMENT IS MADE SHOULD BE TOWARDS FULFILLING THE CHARITABLE OBJECTS OF THE ASSESSEE. MERELY DEPOSIT OF SURPLUS FUNDS IN FDRS CANNOT BE TREATED AS APPLI CATION OF FUNDS FOR THE PURPOSES OF CHARITY. BUT IF THE DEPOSIT IN FDRS IS MADE FOR USING THEM IN THE FUTURE FOR CHARITABLE PURPOSES, THE SAME WILL AMOUNT TO AP PLICATION FOR CHARITABLE PURPOSES SUBJECT TO THE CONDITION THAT THE SAME IS DONE IN CONFORMITY WITH THE PROVISIONS OF SECTION 11(2) OF THE ACT WHEREBY THE ASSESSEE HAS TO INFORM THE AO 7 OF THIS ACCUMULATION OF INCOME ALONGWITH THE SPECIF IC PURPOSE ALSO FOR WHICH IT HAS BEEN ACCUMULATED AND UTILIZE THE SAME IN FIVE Y EARS. 9. IN THE PRESENT CASE WE FIND THAT THERE IS NO FIN DING BY THE AUTHORITIES BELOW REGARDING THE PURPOSE OF INVESTMENTS IN THE F DRS. IF THE INVESTMENTS WERE MADE ONLY TO TAKE CARE OF THE SURPLUS FUNDS OF THE ASSESSEE IT WOULD NOT AMOUNT TO USING THE INCOME OF THE ASSESSEE FOR CHARITABLE PURPOSES. IF THE INVESTMENT WAS MADE TO SET ASIDE FUNDS FOR FUTURE USE FOR SPEC IFIC PURPOSE OF THE TRUST, THE SAME OUGHT TO HAVE BEEN DONE AS PER THE PROVISIONS OF SECTION 11(2) BY FILING FORM NO. 10B TO THE AO. WE FIND THAT THE ASSESSEE H AS DENIED ANY CLAIM OF APPLICATION OF INCOME U/S 11(2) OF THE ACT, IN THE AUDIT REPORT SUBMITTED. THEREFORE THIS POSSIBILITY IS RULED OUT. 10. IN THE IMPUGNED CASE, WE FIND THAT BOTH THE AO AND THE LD. CIT(A) HAVE NOT EXAMINED THIS ASPECT. THERE IS NO FINDING IN TH E ORDERS OF AUTHORITIES BELOW AS TO THE PURPOSE OF MAKING THE INVESTMENT. EVEN IN TH E CASE OF VED PRAKASH MUKUND LAL EDUCATIONAL SOCIETY(SUPRA) RELIED UPON B Y THE LD. CIT(A), WHILE ALLOWING THE ASSESSES APPEAL, THE HONBLE TRIBUNAL HAS TREATED THE INVESTMENT IN FDRS AS APPLICATION ONLY ON ACCOUNT OF THE FACT TH AT AS PER THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE SOCIETY, THE OBJECTS OF THE ASSESSEE SOCIETY, IN ADDITION TO RUNNING EDUCATIONAL AND TECHNOLOGY INST ITUTE, AS PER CLAUSE (VII) WAS TO INVEST THE MONEY OF THE SOCIETY IN A MANNER AS P ROVIDED U/S 11(5) OF THE ACT. IN OUR CONSIDERED OPINION THE EXAMINATION OF THIS A SPECT IS IMPORTANT FOR DETERMINING WHETHER THE INVESTMENT IN FDRS COULD B E TREATED AS APPLICATION FOR CHARITABLE PURPOSE. THE LD. CIT(A) WHILE ALLOWING T HE ASSESSES CLAIM HAS NOT EXAMINED THE CASE ON THE TOUCHSTONES OF THE PARAMET ER ON THE BASIS OF WHICH THE INVESTMENT IN FDRS WAS TREATED AS APPLICATION IN THE CASE OF VED PRAKASH MUKUND LAL EDUCATIONAL SOCIETY(SUPRA). 8 11. IN VIEW OF THE SAME WE REMIT THE MATTER BACK TO THE FILE OF THE LD. CIT(A) TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW A ND AS PER THE RATIO LAID DOWN IN THE CASE OF VED PRAKASH MUKUND LAL EDUCATIO NAL SOCIETY (SUPRA). NEEDLESS TO SAY THAT THE ASSESSEE MAY BE GIVEN ADEQ UATE OPPORTUNITY OF HEARING AND IS FREE TO PRODUCE ALL EVIDENCES RELATI NG TO THE ISSUE, ON WHICH IT WISHES TO PLACE RELIANCE. 12. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04/11/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR