9911796707
TMI Blog2020 (10) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... maining is only ground nos. 2 and 3, which according to Ld. AR are interconnected and which are reproduced below: "2. That on the facts and in the circumstances of the case, Ld. CIT(A) has erred in allowing exemption u/s. 11(1)(a) of Income Tax Act at Rs. 21,80,879/- only as against allowability of such exemption at Rs. 22,13,582/- calculated @ 15% of gross receipt of Rs. 1,47,57,215/- as per Audited Accounts. 3. That on the facts and in the circumstances of the case, Ld. CIT(A) has erred in upholding AO's view that Administrative and Establishment expense of Rs. 2,18,020/- are excludible for considering application of income for charitable purposes." 4. Brief facts of the case in respect of ground nos. 2 and 3 are that the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as application for charitable purpose. We note that the expenses of Rs. 2,18,020/- was on account of audit fee, bank charges, rates and taxes etc. Expense on account of audit fee is compulsory because assessee while filing the Return of Income needs to file Form 10B which is prepared by the Auditor. So, audit fee is necessary expense likewise bank charges, which assessee has to pay to the bank for running of its activities, and the expenses under the head 'rates and taxes' are in the nature of municipal taxes etc. which are necessary for the survival and then only it can run the trust, thereby achieve the objective of the trust, so the expenditure incurred by the assessee trust, needs to be allowed. Therefore, the total expenses of Rs. 2,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses under section 11 (1 )(a) of the Act is to be allowed at 15 per cent. of the gross receipts or the net receipts i.e. ; gross receipts less revenue expenditure. We find that the issue in question was considered and adjudicated by a coordinate bench of the Tribunal in the case of Mary Immaculate Society an in its order in I. T. A. Nos. 240 and 241/Bang/2015 dated June 23, 2015 held that the assessee is to be allowed accumulation of income for application for charitable purposes under section 11 (1 )(a) of the Act at 15 per cent. of the gross receipts following the decision of the Income-tax Appellate Tribunal Special Bench in the case of Bai Sona bai Hirji Agiary Trust v. ITO [2005] 272 ITR (AT) 67 (Mumbai) [SB] ; [2005] 93 ITO 70 (ITATM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13 Shree Ram Trust the gross income and 25 per cent. of only the remaining amount should be allowed to be accumulated or set apart. The Special Bench of the Income-tax Appellate Tribunal on the issue held as follows (page 73 of 272 ITR (AT)) : '9. Coming 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 v. Programme for Community Organisation [2001] 248 ITR 1 (SC). In the decision, their Lordships, after taking note of provisions of section 11 (1 )(a), have held as under (page 2 of 248 ITR) : "Having regard to the plain language of the above provision, it is clear that a charitable or religious trust is entitled to accumulate twen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uage 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 section 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 section 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 section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income available to the assessee before it was applied is directed to be taken and the same in the present case is Rs. 3,42,174. Twenty-five per cent. of the above income is to be allowed as a deduction. Similar view has also been taken by the hon'ble Madhya Pradesh High Court in ParsiZorastrianAnjuman Trust Mhow v. CIT [1987] 163 ITR 832 (MP). No reason whatsoever has been given by the Revenue authorities for deducting Rs. 2,17,126 in this case for purposes of section 11(1)(a). The decision cited on behalf of the Revenue did not take into account the decision of the Supreme Court referred to above. The circular of the Central Board of Direct Taxes has also been considered by the hon'ble Kerala High Court in its decision referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
