2023 (3) TMI 212

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..... the Act. 3. Succinctly, the factual panorama of the case is that the assessee is a charitable trust engaged in educational activities. Return of income was filed declaring total income at Nil. During the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee claimed Rs.22,67,406/-, being the amount of TDS on interest income, as expenditure in its Income and expenditure account. On being called upon to justify its stand, the assessee submitted that deduction of tax at source was from the interest income, which was, in fact, accounted for on gross basis on the Income side. Not convinced, the AO held that the claim of TDS as application of income was wrong. He, therefore, made an addition of Rs.22,67,406/-. T .....

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..... he person in receipt of the income provided certain conditions are complied with. There is no doubt as to the fulfillment of such conditions. On a conjoint reading of sections 11(1)(a) and 11(2), it clearly transpires that the amount which is exempt from taxation is the income derived from property held under trust to the extent to which such income is either applied for such purposes in India or accumulated to the extent of 85% subject to certain conditions. The essence of the provisions is that there should, firstly, be the income available at the disposal of the trust capable of either application or accumulation for later application. Income available to a trust in such a scenario can only be its commercial income and not the income com .....

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..... come and expenditure account. On a specific query, the ld. AR pointed out that income-tax refund was granted to the assessee in the succeeding year for a sum of Rs.1,55,39,950/-, which was duly included on the income side of the Income and expenditure account. I have gone through the Income and expenditure account for the succeeding year ending 31-03-2017, in which the last item on the Income side is 'Income-tax refund" amounting to Rs.1,55,39,950/-. Computation of income for such later year has been done by including the amount of income-tax refund in the gross income available for application or accumulation. In view of the foregoing discussion, I am of the considered opinion that the authorities below were not justified in jettisoning th .....

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