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TMI Blog2017 (6) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... eph, CA ORDER Per Shri Vijay Pal Rao, J.M. : This appeal by the assessee is directed against the order dt.08.03.2016 of Commissioner of Income Tax (Appeals) for the Assessment Year 2011-12. 2. The revenue has raised various grounds in this appeal however the only issue is arises whether the permissible accumulation under Section 11(2) of the Income Tax Act, 1961 (in short 'the Act') @ 15% of the income would be considered on the gross receipts of the year or net receipts. 3. We have heard the learned Departmental Representative as well as learned Authorised Representative and considered the relevant material on record. The learned DR has submitted that expenditure necessarily incurred for earning the receipts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipts or net receipts after deduction of revenue expenditure. The Assessee claimed accumulation of income for application for charitable purpose at 15% of the gross receipts. The AO was of the view that accumulation will be allowed only to the extent of 15% of the income after revenue expenditure. In other words income to be set apart u/s.1 1(1)(a) of the Act has 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 grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming to the merits of the issue, we are of the view that the same is clearly covered by the decision of the Hon'ble Supreme Court in the case of CIT vs. Programme for Community Organization (supra). In the decision, their Lordships, after taking note of provisions of sec. 11(l)(a), have held as under: Having regard to the plain language of the above provision, it is clear that a charitable or religious trust is entitled to accumulate twenty-five per cent of its income derived from property held under trust. For the present purposes, the donations the assessee received, in the sum of ₹ 2,57,376, would constitute its property and it is entitled to accumulate twenty-five per cent thereout. It is unclear on what basis the Revenue con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 been held that as per the statutory language of the above section the income which is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on behalf of the Revenue did not take into account the decision of the Supreme ITA No.367/Bang/2015 Page 10 of 11 Court referred to above. The circular of CBDT has also been considered by the Hon'ble Kerala High Court in its decision referred to above. Accordingly, the question referred to is answered in the affirmative and in favour of the assessee. 18. The aforesaid decision clearly supports the plea of the Assessee. Following the same, we hold that the accumulation u/s 11(1)(a) of the Act should be allowed as claimed by the Assessee. Ground No.4 raised by the Assessee is accordingly allowed. 11. Following the decision of the co-ordinate bench of the Tribunal, we set aside the order of the CIT(A) . Following t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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