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TMI Blog2019 (1) TMI 1340X X X X Extracts X X X X X X X X Extracts X X X X ..... . D.R. For The Respondent : Shri Pramod B. Kedia, CA ORDER PER PRADIP KUMAR KEDIA - AM: The captioned appeal has been filed at the instance of the Revenue against the order of the Commissioner of Income Tax (Appeals)-9, Ahmedabad ( CIT(A) in short), dated 15.06.2016 arising in the assessment order dated 06.03.2015 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning assessment year 2012-13. 2. The grounds of appeal raised by the Revenue read as under: (i) The Ld. Commissioner of Income-Tax (Appeals) has erred in law and on facts in allowing the assessee s claim of 15% accumulation of income u/s.11(1)(a) of the I.T. Act, although there was no income left after allowing various expenses incurred for the object of the Trust. (ii) The Ld. Commissioner of Income-Tax (Appeals) has erred in law and on facts in holding that exemption available u/s.11(1)(a) i.e. 15% of income is unfettered and to be given even when no income is available. 3. When the matter was called for hearing, the learned AR for the assessee at the outset pointed out that the identical issue has cropped up in AY 2010-11 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total receipts (net of corpus donation) are ₹ 7,61,02,072/-, in accordance with the statutory provisions of section 11(1)(a), 15 per cent thereof is not to be treated as the income of the trust and it is only after deducting such 15 per cent (Rs.1,14,15,311) one has to proceed further to determine the total taxable income and deduct ₹ 7,99,18,102/- being the amount applied to charitable / religious purpose. The assessee has, therefore, filed the return of income as per this contention and as per the statement of computation attached with the ITR, the trust has returned an excess expenditure of current year of ₹ 1,52,31,341/-. (iii) That there is nothing in the language employed in Section 11(1)(a) which restricts the general accumulation u/s 11(1)(a) to a lower amount. (iv) That the courts (including Hon. Supreme Court) have held that general accumulation of 15% u/s 11(1)(a) is unfettered and not subject to any conditions (v) That in the assessee's own case, for AY: 2010-11, the Hon. CIT(A) has held that the A.O. was not justified in denying the claim of 15% u/s 11(1)(a); It is most respectfully submitted that the assessee-trust is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act by the A.O. According to appellant the total receipts during the year including the corpus donation is ₹ 7,72,02,072/-. Out of this, an amount of ₹ 11,00,000/- was received as corpus which is exempted u/s.11(1)(d) of the Act, leaving behind income of ₹ 7,61,02,072/-. On this income from the property held under the trust the appellant claimed 15% for the purpose of accumulation u/s.11(1)(a) of the Act amounting to ₹ 1,14,15,311/-. Out of the remaining amount of ₹ 6,46,86,761/- the appellant had applied ₹ 7,99,18,1027- towards the objects of the trust resulting into the deficit of (-) ₹ 1,52,31,341/-. In my considered opinion the appellant has correctly applied the provision of sec.11(1)(a)and A.O was not justified in denying 15% of income out of the receipts during the year for accumulation. Thus, the A.O is directed to reduce ₹ 1,14,15,311/- as 15% of amount u/s.11(1)(a) of the Act and thereafter reduce the amount applied for the objects of the trust. Thus, ground of appeal No.1 is allowed. 5. Ground no.2 raised by the appellant is against not allowing the carry forward of excess expenses for set off in the subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2 It is observed that the A.O has not allowed the carry forward of deficit of the appellant amounting to ₹ 1,52,31,351/- being the excess application over income and eligible for set off in the future years. The appellant has relied upon the order of jurisdictional High Court in the case of CIT vs Shri Plot Shwetambar Murtipujak Jain Mandal 211 ITR 293(Guj.), CIT vs Maharana of Mewar Charitable Foundation 29 Taxman 476 (Raj) and Govindu Naicker Estate v. Asstt.DIT [2001] 248 ITR 368 (Mad). Hon'ble Gujarat High Court in the case of Shri Plot Shwetambar Murtipujak Jain Mandal has held as follows :- A bare perusal of section 11 of the Income-tax Act, 1961, shows that the income derived from property held under trust wholly for charitable or religious purposes to the extent to which such income is applied to such purposes in India is to be excluded for the purposes of computing the income of the trust for the purpose of assessment. There are no words of limitation in this section providing that the income should have been applied for charitable or religious purposes only in the year in which the income had arisen. The word apply means to put to use or to turn t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this year to the extent of 15% of the receipt and consequently, the deficit was suitably enhanced. The relevant operative para of the order of the co-ordinate bench in assessee s own case is reproduced hereunder: 3. With the assistance of the ld.representative, we have gone through the record carefully. The ld.counsel for the assessee has placed on record a copy of the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Programme for Community Organisation, 248 ITR 1 = 166 CR 401 (SC). We find that this decision has silenced the controversy. It is very small decision. It read as under: 1. The questions that were referred to the High Court for consideration, at the instance of the revenue, read thus : I. Whether, on the facts and in the circumstances of the case and on an interpretation of the relevant provisions of the Income-tax Act, 1961, the assessee is entitled to exemption at 25 per cent on ₹ 2,57,376 or only on ₹ 87,010 ? 2. Whether, on the facts and in the circumstances of the case, should not the Tribunal have accepted the view of the revenue expressed in the circular, the same being consistent with the relevant provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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