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TMI Blog2021 (2) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as claimed by the assessee. - Decided in favour of assessee. - ITA No. 389/Bang/2020 - - - Dated:- 11-2-2021 - Shri Chandra Poojari , AM And Shri George George K , JM Appellant by : Sri. B. S. Balachandran, Advocate Respondent by : Sri. Kannan Narayanan, JCIT-DR ORDER Per George George K , JM : This appeal instance of the assessee is directed against the order of the CIT(A), dated 16.03.2020. The relevant assessment year is 2013-2014. 2. The grounds raised read as follows:- 1. The order of the lower authorities is not maintainable in law and liable to be reversed on facts and law appliable in so far as non-allowable of 15% of total income u/s 11(1)(a) of the Act is concerned. 2. The learned aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 11. Also, the assessments of trusts have to follow the provisions as per sections 11 and 13 of the Income Tax Act, 1961. Although these sections expressly allow for accumulation of surplus under sec.11(1)(a) and 11(2), it is to be noted that there is no provision available to the assessee for carry forward of losses arising due to excess application in a single year. Hence the carry forward of current years excess expenditure is not allowed. The assessee also has to follow the provisions of the Act in accumulation u/s 11(1)(a) and 11(2), only when there is surplus. 7. Assessee has relied on the decision of Jurisdictional Tribunal order in the case of Jyothi Charitable Trust in IT No.662/BNG/2015 dated 14.08.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is as to whether 15% accumulation for application in future has to be calculated on gross receipts 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.11(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mulated or set apart. The Special Bench of the ITAT on the issue held as follows:- 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 vs. Programme for Community Organization (supra). In the decision, their Lordships, after taking note of provisions of s. 11(1)(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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 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 matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been given by the Revenue authorities for deducting ₹ 2,17,126 in this case for purposes of s. 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 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. 8. In view of the co-ordinate Bench ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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