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TMI Blog2020 (10) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated 28.12.2017 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2015-16. 2. The substantive ground of appeal raised by assessee read as under : "1. On the facts and in the circumstances of the case and in law, the Commissioner of Income- tax (Appeals) erred in holding that the 15% of gross receipts allowed to be accumulated under sect ion 11(1)(a) ought to be reduced from the amount allowed to be carried forward as deficit." 3. The assessee is a public charitable trust engaged in educational activities and registered under s.12AA of the Act. In the course of assessment proceedings for the AY 2015-16, it was noticed by the AO that assessee has claimed carried forward deficit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has preferred appeal before the Tribunal. 6. The learned senior counsel for the assessee while adverting to the issue, made reference to the decision of the co-ordinate bench in Maharshi Karve Stree Shikshan Samstha Karvenagar vs. ITO 174 ITD 591 (Pune) which, in turn, inter alia relied upon the observations made by the Hon'ble Supreme Court in the case of CIT vs. Programme for Community Organisation [2001] 248 ITR 1 (SC) and Addl.CIT vs. A. L. N. Rao Charitable Trust [1995] 216 ITR 697 (SC). It was thus contended on behalf of the assessee that trust is entitled to whole of the deficit resulting from excess application of its income without any artificial reduction equivalent to 15% entitlement contemplated under s.11(1)(a) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver receipts, a peculiar situation has arisen in the present case towards the manner of computation of quantum of deficit eligible to be carried forward for set off in subsequent assessment years having regard to statutory permission towards 15% accumulation under s.11(1) (a)/11(1)(b) of the Act without any time limit. 8.2 To delineate on the issue, it may be pertinent to note that in order to be eligible for claiming exemption, i t is essential that the income of the trust is applied for charitable objects. A charitable trust or institution is required to apply at least 85% of income derived from trust property towards charitable purposes. If the income spent on charitable or religious purposes during the previous year falls short of 85% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eof. Where an assessee trust has made excess application of its income, the option or entitlement vested upon an assessee to accumulate 15% for indefinite period in our view cannot operate as an obligation enforceable against it in the absence of accumulation. The method of computation of deficit to be truncated artificially 15% based on an entitlement (opposed to an obligation) as suggested by first appellate authority is totally devoid of any logic. This would tantamount to application of concession conferred on assessee in a reverse manner and thus put the assessee in a worser position in the event of accelerated application of receipts for salutary purposes. The action directed by CIT(A) has the effect of deprivation of concession grant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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