9911796707
TMI Blog1992 (10) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961 on a petition filed on 11-4-1988. The Commissioner of Income-tax granted registration under section 12A by his order dated 23-10-1989. Copies of orders of the Registrar of Societies and the Commissioner of Income-tax, Visakhapatnam are placed in a paper compilation. The Memorandum of Association of the society is placed as part of the paper book filed before us. The assessee society was formed for purely charitable and educational purposes which include imparting of moral instructions and diffusion of useful knowledge to the public at large. Other objects of the Society as found in the Memorandum are the following : (i) To impart and promote responsible behaviour towards Society among the abandoned and to make them better citizens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was contended before him on behalf of the assessee Trust that the taxable income had been wrongly calculated by the Income-tax Officer. It was contended that 25% of the gross income is permitted to be accumulated under section 11(1) of the Income-tax Act and this permitted accumulation should be allowed as deduction while computing the taxable income. The Dy. Commissioner (Appeals) held that the assessee failed to apply in writing for permission for accumulation under section 11(2) and no notice in form No. 10 was given to the Income-tax Officer and permission for accumulation was obtained thereon. Therefore, in principle the Income-tax Officer is correct when he subjected the unspent balance to tax. However, the Dy. Commissioner (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ultimately found out by the Dy. Commissioner (Appeals) in this case is Rs. 6,055. Therefore, we hold that even assuming that the amount of Rs. 6,055 should be computed as taxable income of the assessee since it is less than Rs. 18,000 which is the maximum not liable to tax in that assessment year, the tax effect will be nil and hence no tax can be levied against the assessee. We are also satisfied that the contention that maximum marginal rate under section 164(2) cannot be made applicable to the assessee Trust. Section 164(2) and the proviso thereunder are the following : " 164(2) In the case of relevant income which is derived from property held under trust wholly for charitable or religious purposes, or which is of the nature referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a substantial interest. Section 13(1)(d) applies to incomes earned during the previous year which were found deposited otherwise than in one or more of the forms or modes specified in sub-section (5) of section 11 etc. However, in the case before us, the assessee Trust had a Savings Bank account with Indian Overseas Bank, Vijayawada and it was holding account No. 523 therein and it had always kept the income of the Trust in its Savings Bank account in Indian overseas Bank. Thus it had fulfilled all the requirements of section 11(5)(a)(iii) which says that deposit in any account with a scheduled bank of a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner. No order for accumulation was also obtained. Under the circumstances the shortfall out of 75% being Rs. 6,055, it became liable to tax in this assessment year by virtue of section 164(2) and if the relevant income became taxable under section 164(2) ordinarily the ordinary rate applicable to AOP is to be applied to such relevant income if such relevant income is found to be over and above taxable limits. In this case, the relevant income is found to be below the taxable limits which is Rs. 18,000 per year and, therefore, on that ground itself it is not taxable since it falls below the taxable limit. Further we hold that the proviso to section 164(2) does not apply since the assessee had substantially complied with the provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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