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TMI Blog2024 (9) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... idered as application of income. Therefore, while arriving at income u/s 11, the AO needs to allow deduction towards actual repairs and maintenance expenses incurred - we direct the AO to allow deduction towards actual repairs and maintenance expenditure incurred before arriving at income available for accumulation u/s 11(2) / taxable income of the trust / institution. Deduction of amount of accumulation u/s. 11(2) - As decided in [ 2019 (4) TMI 762 - ITAT MUMBAI ] the facts with regard to the availability of funds for making investments are under dispute. The assessee failed to file any details with regard to the availability of funds for making investments in the modes specified u/s 11(5) of the Income-tax Act, 1961. Therefore, we are of the considered view that there is no merit in the argument of the assessee that it has accumulated income u/s 11(2) of the Act, for the purpose of object of the trust in compliance with provisions of section 11(5) of the Income-tax Act, 1961. Therefore, we reject the ground taken by the assessee. - SHRI. OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI. RAJ KUMAR CHAUHAN, JUDICIAL MEMBER For the Assessee Represented :Shri. Satyaprakash Singh For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of other Assessees as if income is not applied for objects of the Trust, the Trust will be charged on higher income by disallowing the deduction under Section 24(a) as compared to other Assessees as deduction under Section 24(a) is allowable to all the Assessees and therefore there is no provision in the Act to disallow statutory deduction under Section 24(a) of the Act. 4. The Learned CIT(A) erred in not following the principles settled by Hon'ble Bombay High Court in the case of Vodafone India Services Pvt. Ltd. 368 ITR 531 (Bom) (Page 544) wherein it is held that income chargeable to tax has to be computed u/s. 14 of the Act and therefore income from property has to be computed allowing deduction u/s.24(a) of the Act in the case of all Assessees including charitable trusts. 5. The Learned CIT(A) erred in not following judgement of Hon'ble Bombay High Court in the case of Director of Income-tax (Exemption) vs. Jasubhai Foundation (2015) 374 ITR 315 where in it is held that income which is not to be included in Total Income as per the provisions of Act cannot be included in Taxable Income of the Trust entitled to exemption of certain income u/s. 10 and u/s 11 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from house property . The assessee was asked to explain why standard deduction claimed u/s. 24(a) of the Act at 30% of Rs. 81,59,680/- in respect of the rental income derived from the property shall not be disallowed. The assessee filed the reply on 23.09.2016 and the Ld. AO after considering the submissions of the assessee and also following the decision of ITAT in ITA No. 6970/Mum/2011, ITA No. 199/Mum/2011 and ITA No. 1111/Mum/2011 has declined the claim of standard deduction of the assessee u/s. 24(a) of the Act and recomputed income available for the application u/s. 11 of the Act . Finally, the Ld. AO determined the total income of the assessee is Rs. 55,44,740/-, after considering the gross total income of Rs. 3,46,98,262/-. 5. Similarly, for the A.Y. 2015-16, the assessee was asked to explain why standard deduction claimed u/s. 24(a) of the Act at 30% of Rs. 75,50,731/- in respect of the rental income derived from the property shall not be disallowed. The assessee filed the reply on 23.09.2016 and the Ld. AO after considering the submissions of the assessee and also following the decision of ITAT in ITA No. 6970/Mum/2011, ITA No. 199/Mum/2011 and ITA No. 1111/Mum/2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when due to certain disallowances in Assessment Order under section 143(3) the Taxable Income has been increased, the accumulation under section 11(2) should also be allowed as per tax Taxable Income as per the Assessment Order and not the amount shown in Form No. 10 filed. It is further contended that the Ld. AO erred in not allowing deduction for actual repairs amounting to Rs. 18,65,693/- as shown in Income and Expenditure Account and also the Ld. AO erred in not allowing credit for TDS amounting to Rs.26,97,544. In the ITNS 150A the Ld. AO has erred in charging interest of Rs. 3,77,775/- u/s. 234B and Rs. 8,70,882/- u/s. 234C of the Act . 9. The Ld. CIT(A) after considering the rival submissions of the assessee and also following the decision of the ITA No. 106/Mum/2016 dated 29.03.2019 for A.Y. 2012-13 and that deduction u/s. 24A of the Act against the rental income is not in accordance with the scheme taxation provided for computation of income in respect of trust/institution claiming exemption u/s. 11 of the Act . Accordingly, he rejected the ground taken by the assessee and affirmed the findings of AO. Regarding the sum of Rs. 13,373/- on account of interest and including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under the provisions of the Act, and therefore, income from property has to be computed allowing deduction u/s. 24(a) of the Act, in the case of all assessee's including charitable trust. The Ld.AR further submitted that the Hon'ble Bombay High Court in the case of DIT (Exemption) vs Jasabai Foundation 374 ITR 315 (Bom) held that income which is not included in total income as per the provisions of the Act, cannot be included in taxable income of the trust entitled to exemption of certain income u/s 10 and section 11 of the Act and, therefore, 30% of income excluded from income from property u/s. 24(a) of the Act, cannot be charged to tax in the case of charitable trust for computing taxable income. 14. The Ld. DR on the other hand submitted that the issue is covered against the assessee by decision of ITAT for the A.Y. 2012-13, where the Tribunal after considering the relevant facts held that standard deduction of rental income @30% u/s. 24A of the Act cannot be allowed while computing income of interest claim u/s. 11 of the Act . The Ld. AR and the Ld. DR has submitted the copy of the Coordinate Bench judgment in ITA No. 106/Mum/2016 (A.Y. 2012-13) B Bench, Mumbai dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er IV (ss. 14 to 59) of the Act. The expenditure incurred in earning the same is, likewise, and only understandably, not to be taken into account in computing the total income under the Act, which represents trite law, and toward which a separate section (sec. 14 A) has since been inserted by Finance Act, 2001 with retrospective effect from 01.04. 1962. This aspect stands abundantly clarified by the hon'ble apex court in the case of CIT vs. Harprasad Co. (P.) Ltd. [1975] 99 ITR 118 (SC) explaining that an income to come within its purview must satisfy the definition of total income u/s. 2(15) (of the Income-tax Act, 1922, which is para material with section 2(45) of the Act), prescribing two conditions. Firstly, it must comprise the total amount of income, profits and gains referred to in section4(1) and, two, must be computed in the manner laid down under the Act. The capital gain being not chargeable u/s.128 of the 1922 Act during the relevant period, the same would not enter the computation mechanism of the total income. This is as the capital gain or loss (which is only negative income) did not form part of the total income of the assessee which could be brought to charge, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting. The computation provisions of the Act do not come into play, so that the said computation of the would be de hors the same. This would of course be subject to the specific provisions of the Act, so that where specifically provide for, the income would be computed in the manner as provided; for example ss. 11(4) and 11(4A) specifically provide for the computation of income of a business t/i(/forming part of the property held under trust by charitable trust/institution in accordance with the provisions of the Act, even as pointed out by the hon'ble court in Rao Bahadur Calavala Cunnan Chetty Charities (supra). The Special Bench of the tribunal in Scientific Atlanta India Technology (P.) Ltd. vs. ACIT (2010) 2 ITR 66 (Trib) (Chennai) (SB) held that the profits of a unit eligible for deduction u's. 10A of the Act, i.e., to the extent not covered by the deduction there under, would stand to be taxed directly and not enter the computation mechanism inasmuch as the same do not form part of the gross total income, as section 10A falls under Chapter Hi of the Act, so that the provisions of Chapter VI-A and, consequently, s. 80AD would not be applicable thereto. Before parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y. 2012-13 in ITA No. 106/Mum/2016 (supra). For these reasons, the grounds no. 1 to 5 are accordingly decided against the appellant. 12. The ground no. 6 of ITA No. 650/Mum/2024 for A.Y. 2015-16 reads as under: 6. The Learned CIT(A) and Learned A.O. have erred in not allowing deduction for actual repairs amounting to Rs.18,65,693 as reflected in Income and Expenditure Account without considering that when the deduction for Statutory deduction u/s.24(a) claimed in the Return of Income is disallowed, the Appellant is entitled to deduction for actual repairs and maintenance expenses which was not claimed in Return of Income. 13. In view of the above findings, the ground no. 6 of ITA No. 650/Mum/2024 for A.Y. 2015-16 is decided against the appellant. 14. We have heard the Ld. AR and Ld. DR and it has been argued on behalf of the appellant by the Ld. AR that the decision of the Hon ble Coordinate Bench for the A.Y. 2012-13 has covered the said ground and the finding recorded in para no. 8 of the Ld. Coordinate Bench order is applicable to this ground and in the light of the said finding the ground needs to be allowed in favour of the assessee. The Ld. DR further has relied upon the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore will pursue the remedy for the relevant assessment year in this appeal also in the Hon'ble Court. Accordingly, we have considered the finding recorded in para 12 by the Ld. Coordinate Bench which reads as under: - 12. We have heard both the sides, perused the material available on record and gone through the orders of authorities below. It is an admitted fact that the assessee has filed form No.10 along with return of income filed for the year and accumulated a sum of Rs.210 lakhs for the objects of the Trust to be utilised in next five financial years. It is also an admitted fact that the AO has allowed accumulation of income u/s 11(2) as per the details filed by the assessee along with form 10. Now, the assessee has revised its claim and filed a revised form 10 along with copy of board resolution vide it s from 10 dated 07-09-2018. We find that the assessee has passed a resolution to accumulate additional income of Rs.63,81,840 for acquisition of land, building, structure for educational activities in additional to earlier accumulated income of Rs.210 lakhs vide its resolution dated 20-09-2012. The reason for filing revised form, along with board resolution is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit cannot be allowed. In this case, the assessee has tried to use the benefit of accumulation after exhausting all possible options available to it to contest the issue of deduction u/s 24(a). Further, no doubt, the Hon ble Gujarat High Court has considered revised form 10 filed by the assessee accumulating additional income after a gap of six years, but on perusal of the ratio rendered by the Hon ble Gujarat High Court, we find that in that case, there was no dispute with regard to availability of funds for accumulation u/s 11(2) and investment of such funds in the investments specified u/s 11(5) of the Income-tax Act, because, the disputed issue in that case is taxability of corpus donation received by the assessee under the provisions of section 11 of the Act. In this case, the facts with regard to the availability of funds for making investments are under dispute. The assessee failed to file any details with regard to the availability of funds for making investments in the modes specified u/s 11(5) of the Income-tax Act, 1961. Therefore, we are of the considered view that there is no merit in the argument of the assessee that it has accumulated income u/s 11(2) of the Act, for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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