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TMI Blog2019 (8) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... lding the action of the AO in assessing the difference between the actual rent received by the appellant and the rent which as per the AO should have been received as 'deemed rental income'. 2. On facts and circumstances of the case and in law, the CIT(A) failed to appreciate that there is no provision in the Act, which allows the AO to substitute the actual rent received with a notional rent, which according to the AO ought to have been received. 3. On the facts and circumstances of the case and in law, the CIT(A) erred in pass a nonspeaking order, whereby it upheld the order of the AO without giving any reasons for the same. The Appellant craves leave to add, to amend, to alter, to withdraw, to modify and/or to substitute any or all the foregoing grounds of appeal and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing." 4. The brief facts of the case are that the assessee filed its return of income on 30.09.2011 along with the income & Expenditure Account, Balance Sheet and Audit Report in Form No.10B declaring total income to the tune of Rs. Nil. The assessee is a registered Charitable Organization w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the appellant at Rs. 1 per year along with the annual license fee of Rs. 3,25,000/- based on the recovery of Rs. 7 as rent which is not veriable at the instance of the assessee, therefore, the assessing the deemed (notional rent) by AO which has been confirmed by the CIT(A) is not justifiable, hence, the finding of the CIT(A) is liable to be set aside in the interest of justice and in support of these contention, the Ld. Representative of the assessee has placed reliance upon the Circular No.5-P(LXX-6) of 1968 dated 19.06.1968 and the decision of the Hon'ble Gujarat High Court in case of CIT Vs. Ganga Charity Trust Fund (1986) 29 Taxman 413 (Guj). It is specifically argued that the assessee was not entitled to claim the standard deduction in view of the provisions u/s 24(a) of the Act because the assessee is only entitled to claim the expenses which has actually been incurred, therefore, assessing deemed rent is not justifiable in view of the decision of Hon'ble ITAT Mumbai Bench 'B' in case of titled as ACIT, Central Circle Vs. Nandlal Tolani Charitable Trust (2014) 42 taxmann.com 154 (Mum). However, on the other hand, the Ld. Representative of the Revenue has strongly relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so. There was no finding of fact that the switch over to that cash system of accounting in the previous year relevant to the assessment year 1972-73 was no! bona fide. Besides, it was not shown by department that the change lacked durability or regularity and was merely a stop-gap arrangement to avoid payment of tax. In such a situation one jailed to understand why a bona Mc assessee should be precluded from switching over to another system of accounting which he found convenient rind whit-h would reflect his real income. Circumstances had compelled the trustees to switch over to cash system of accounting which was the only course open to a prudent trustee for preserving the property of the trust. Thus, the assessee was entitled to switch over to the cash method of accounting." 6. The Hon'ble High Court has interpreted the provisions u/s 11(1)(a) of the Act and also interpreted the application of income held under trust for Charitable or religious purpose which is described as under: - "5. Section 11(1)(a ) with which we are concerned reads as under: " (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 86) 159 ITR 280 (Cal) has also specifically held as under:- "The words of a statute must be construed so as to give a sensible meaning to them. The words ought to be construed utres magis valeat quam pereat. The entire object of section 11 is to grant immunity to the income of a charitable trust from income-tax. The immunity, however, is confined "to the extent to which such income is applied to such purposes in India". The exemption will be denied if the income is not actually applied for charitable purpose. Only 25% of the income or Rs. 10,000, whichever is lower, can be accumulated for application to charitable purpose. If a portion of the income of a charitable trust is not applied for charitable purposes or is accumulated beyond the permitted limit, that portion will not qualify for the immunity from taxation under section 11. This exclusion from the immunity must be confined to the real income of the trust. The amount of income which is taken away by deduction at source under section 194 is not available to the trust for application to charitable purposes. Section 198 provides that the amounts deducted by way of income-tax shall be deemed to be "income received". What is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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