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2016 (1) TMI 1492 - ITAT COCHINRevision u/s 263 by - exemption u/s 11 - grant 15% accumulation on the gross income - need to file Form 10 - whether 15% of the accumulation permitted u/s 11(1)(a) of the Act is to be calculated on the gross income or on the net income? - HELD THAT:- On a plain reading of section 11(1)(a) of the Act, it can be seen that 85% of the income of the trust to be applied for charitable/religious purposes and upto15% is permitted for accumulation in order to avail full exemption. There is no condition stated/s 11(1)(a) of the act to invest the 15% accumulated income in the modes specified as per section 11(5) of the Act. Section 11(2) of the Act is for giving relief to unapplied income which is short of 85% with a condition of keeping such surplus in the specified mode as per section 11(5) of the Act. This is to be done after giving notice to the AO by the assessee in Form No.10 of the Income Tax Rules. In the instant case, if the 15% of the gross total income is set apart u/s 11(1)(a) of the Act, it comes to Rs. 2,03,50,121/- (15% of Rs. 13,56,67,475/-). After incurring of capital expenditure, the surplus was only Rs. 92,71,940/-. Therefore, there is no need to file Form 10 before the AO nor for any investment as mentioned u/s 11(5) of the Act, since the entire excess would be within 15% of the income accumulated as per Sec. 11(1)(a) of the Act. Hence we hold that CIT is not justified in invoking his revisionary jurisdiction u/s 263 of the Act and the same is quashed. Decided in favour of assessee.
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