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TMI Blog2010 (4) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... PEAL NO. 589 (BANG.) OF 2009 - - - Dated:- 12-4-2010 - GEORGE GEORGE K., A. MOHAN ALANKAMONY, JJ. Smt. V.S. Sreelekha for the Appellant. S. Ramasubramanyam for the Respondent. Order Per George George K., Judicial Member. This appeal of the revenue is directed against the CIT(A) s order dated 25-3-2009. The assessment year concerned is 2004-05. 2. The effective grounds raised reads as follows : (i) The learned CIT(A), Hubli erred in law and on facts of the case in allowing accumulation @ 15 per cent on gross receipts as against 15 per cent of income as laid down in section 11(1)(a). (ii) The learned CIT(A) erred in not considering the fact that Form No. 10 as required under Rule 17 has not been filed by the assessee trust within the stipulated time for which disallowance of deduction under section 11(2) was made. (iii) The learned CIT(A) ought to have followed the case laws relied upon by the Assessing Officer which were squarely applicable to the case. (iv) The case law of Hon ble Supreme Court in CIT v. Programme for Community Organisation [2001] 248 ITR 11 on the basis of which the appeal has been allowed by the CIT(A) is clearly not applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejecting the declaration required to be made under section 11(2) of the Act. 7. The CIT(A) allowed the appeal of the assessee on both the issues mentioned above. The relevant part of the CIT(A) s order reads as follows: 5. I have gone through argument made by AR and seen that in case of carrying forward 15 per cent of trust income for year under consideration. Ruling of Supreme Court referred above has finally decided issue allowing trust to carry forward remaining balance of 15 per cent after spending income up to 85 per cent for objects of trust and F. No. 10 is for carrying forward in respect of capital investment. Therefore, Assessing Officer is directed to allow assessee to carry forward 15 per cent of current year s income to next year in respect of gross income of Rs. 97,30,950. 5.1 Expenses held by Assessing Officer of Rs. 9,01,302 are incidental for objects of trust without which main objects cannot be carried out as discussed above therefore, Assessing Officer is directed to allow to the same. There is no concept of exemption of capital assets but it is exemption of income of property by trust . 8. The revenue being aggrieved is in appeal before us. 9. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. The Assessing Officer s computation of income available for accumulation under section 11(1)(a) is correct and is in accordance with law. As rightly pointed out, for accumulation of income under section 11(1)(a), it is to be computed on commercial principles and not on gross receipts. The learned DR has rightly relied on the order of the Tribunal in the case of Gem Jewellery Export Promotion Council (supra), which in turn, followed the decision of the Hon ble High Court of Madras in the case of CIT v. Rao Bahadur Calavala Cunnan Chetty Charities [1982] 135 ITR 485. The words used in section 11(1)(a) is income and not gross receipts . The decision of the Hon ble Supreme Court relied on by the assessee in the case of Programme for Community Organisation (supra) is misplaced. The Hon ble Supreme Court has only held that exemption under section 11(1)(a) is to be computed not with reference to the income left after application but on income before application and nowhere it was held that exemption is to be computed with reference to gross receipt. Therefore, we hold that the Assessing Officer is justified in allowing 15 per cent on Rs. 88,29,648 which works out to Rs. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 of the IT Rules, 1962, from persons deriving income from property held under trust wholly for charitable or religious purposes for accumulation of such income to be applied for such purposes in India when the aforementioned applications are filed beyond the time stipulated. Commissioners of Income-tax will, while entertaining such applications, satisfy themselves that the following conditions are fulfilled: (a) that the genuineness of the trust is not in doubt; (b) that the failure to give notice to the Income-tax Officer under section 11(2) of the Act and investment of the money in the prescribed securities was due only to oversight; (c) that the trustees or the settler have not been benefited by such failure directly or indirectly; (d) that the trust agrees to deposit its funds in the prescribed securities prior to the issue of the Government sanction extending the time under section 11(2); (e) that the accumulation or setting apart of income was necessary for carrying out the objects of the trust. 13.1 The learned AR had strongly relied on the decision of the Hon ble Gujarat High Court in the case of Mayur Foundation (supra). The facts considered by the Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds received by way of donations had been kept apart in fixed deposits of nationalized banks; and that the trustees or the settlers had not benefited by the failure or delay on the part of the trust to give notice of such accumulation. Accordingly, the Tribunal held that the assessee-trust had complied with all the requirements stipulated by the provisions of section 11(2). 13.2 On reference, the Hon ble High Court held, (i) that the Tribunal was well within its jurisdiction to entertain the new ground by which the assessee claimed the benefit under section 11(2) of the Act and adjudicate the tax liability of the assessee. (ii) That the Tribunal was correct in holding that the assessee was entitled to the benefits allowable under section 11(2). 13.3 From the above, it is clear; the assessee in the case of the Hon ble Gujarat High Court had applied for condonation of delay in filing Form No. 10. The Administrative CIT rejected the application of condonation and assessee moved to the High Court and the Hon ble High Court directed the CIT to reconsider afresh the condonation application. Thereafter, on rejection of the condonation application by the CIT, the assessee filed an a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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