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TMI Blog2016 (1) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961 (in short 'the Act') to the extent available. 2.2 In the course of assessment proceedings the Assessing Officer noticed that the assessee had claimed accumulation under Section 11(1)(a) of the Act at 15% of the gross receipts of the educational institutions. After referring to CBDT's Circular No.5P(LLX-C) dt.19.6.1968, the Assessing Officer took the view that the income of the assessee trust is required to be computed on commercial principles. He, therefore, held that the accumulation under Section 11(1)(a) of the Act cannot be allowed on gross receipts but must be computed after reducing the expenses for earning such income. Therefore, however, in the computation of total income, the Assessing Officer did not allow any deduction towards accumulation under Section 11(1)(a) of the Act at all and the entire income computed after the application allowed was treated as accumulation under Section 11(2) of the Act, for which Form No.10 was filed. In this manner, the Assessing Officer completed the assessment under Section 143(3) of the Act vide order dt.30.1.2014 at NIL income but enhanced the accumulation under Section 11(2) of the Act to Rs. 1,10,01,235 instead of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs." 4. The Grounds at S.Nos.1 and 5 are general in nature and not being urged before us are rendered infructuous and accordingly dismissed. 5. Ground No.4 was not urged before us and is accordingly dismissed as infructuos. 6.1 In Grounds at S.Nos.2 and 3, the learned Authorised Representative for the assessee submitted that the Assessing Officer was not justified in refusing to allow accumulation under Section 11(1)(a) of the Act. It was further submitted that the accumulation under Section 11(1)(a) of the Act requires to be computed on the basis of gross receipts and not on the net income / net receipts, as held by the Assessing Officer and confirmed by the learned CIT (Appeals). In support of this proposition, the learned Authorised Representative placed reliance on the judgment of the Hon'ble Apex Court in the case of CIT V Programme for Community Organisation reported in 248 ITR 1 (SC) affirming the decision of the Hon'ble Kerala High Court reported in 228 ITR 620 (Ker). Reliance was also placed on the judgment of the Hon'ble Apex Court in the case of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be computed at 15% of the net income i.e., gross receipts minus revenue expenditure and not on the gross receipts as claimed by the Assessee. Since in the case of the Assessee, the gross receipts after revenue expenditure was nil, the AO denied the benefit of accumulation to the Assessee. 16. On appeal by the Assessee, the CIT(A) confirmed the order of the AO. Hence ground No.4 raised by the Assessee before the Tribunal. 17. The issue to be decided is therefore as to whether for the purpose of computing accumulation of income of 15% under Sec.11(1)((a) of the Act, one has to take the gross receipts or gross receipts after expenditure for charitable purpose i.e., the net receipts. This is issue is no longer res integra and has been decided by the Special Bench Mumbai in the case of Bai Sonabai Hirji Agiary Trust Vs. ITO 93 ITD 0070 (SB). The facts in the aforesaid case were that the assessee was a public charitable trust enjoying exemption under s. 11 of the IT Act. As per the requirement of s. 11(1) of the IT Act, as it prevailed at that point of time, the assessee had to apply 75 per cent of its income for the objects and purposes of the trust and the assessee was perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further that such income is not to be understood to be in excess of 25 per cent of the income from such properties. In other words, the very language of the statutory provision under consideration sets apart 25 per cent of the income from the source of property with reference to the extent to which such income is applied for such purposes, charitable or religious. In other words, for the purpose of s. 11(1)(a) of the Act, the income in terms of relevance would be the income of the trust from and out of which 25 per cent is set apart in accordance with the spirit of the statutory provision." This means that, when it is established that trust is entitled to full benefit of exemption under s. 11(1), the said trust is to get the benefit of twenty-five per cent and this twenty-five per cent has to be understood as income of the trust under the relevant head of s. 11(1). In other words, income that is not to be included for the purpose of computing the total income would be the amount expended for purposes of trust in India. Their Lordships in the above case have emphasized on the clear and unambiguous language of s. 11(1)(a) and decided the matter on the basis of the same. It has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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