The assessment was completed by making additions and disallowances on account of difference between the interest income as declared by the assessee and that reflected in form 26AS, the amount remaining unutilised out of accumulated funds in terms of provisions of section 11, the amount claimed as embezzlement expenses and anonymous donations. The assessee had recovered out of the embezzled funds, and subsequently offered to tax.Tribunal held that the  principle laid down in Central Board of Direct Taxes Circular No. 35D (X1, VII-20) [F. No. 10148/65-IT (AL) would be squarely applicable to the facts and circumstances of the case inasmuch as the embezzlement had occurred during the course of day-to-day carrying out of charitable activities by the assessee-trust. Undisputedly, the funds were embezzled on account of manipulation made by the employees of the society. Therefore, the loss was a revenue loss and was to be allowed. There was much more application of income by the assessee-society and, therefore, the Assessing Officer was not justified in not allowing the benefit of exemption to the assessee u/s. 11 of the Act and taxing the assessee under the status of association of persons.

That the adjoining land was purchased for the purpose of extending the college building. The purchase of land adjoining the college for the purpose of extending the scope of activities of the college was in furtherance of the objects of imparting of education. Though form 10 filed by the assessee did not specifically mention the object for which the funds were being accumulated, it could not be said that the condition of section 11(2) of the Act had not been fulfilled. (AY .2015-16)