9911796707
TMI Blog1974 (8) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... er filed an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner dismissed the appeal. But in the appeal preferred by the assessee before the Income-tax Appellate Tribunal, it was held that the assessee was a charitable trust and that, therefore, it was entitled to the exemptions under section 11of the Act. I am informed that a reference against the order of the Tribunal is pending before this court. After the Tribunal rendered its judgment in the appeal, the Income-tax Officer who was directed to pass an order of assessment in the light of the decision of the Tribunal, passed an order on January 21, 1972, holding that because 75% of the income in excess of the income actually applied for charitable pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Appellate Tribunal, Bangalore Bench, Bangalore, I.T.A.No. 775 (Bang.) of 1970-71, dated October 5, 1971, is erroneous inasmuch as it is preudicial to the interests of the revenue within the meaning of that expression occurring in section 263 of the Income-tax Act, 1961, for the following reasons : The Tribunal, by its order in I. T. A. No. 775 (Bang.) of 1970-71 dated, October 5, 1971, held that the assessee was a charitable trust and while giving effect to the said Tribunal's order, the Income-tax Officer should have applied his mind whether the assessee has not complied with the provisions of section 11(2). If he had applied his mind to the provisions of section 11 he would have seen that the assessee has not invested the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) and 11(2) of the Act, as they stood during the relevent period. Those provisions read as follows : " 11. (1) Subject to the provisions of sections 66 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income-- (a) Income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India ; and, where any such income is accumulated for application to such purposes in India, to the extent to which the income so accumulated is not in excess of twenty-five per cent. of the income from the property or rupees ten thousand, whichever is higher ;...... (2) Where the persons in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and the remaining Rs. 60,000 is allowed to be accumulated for application to charitable purposes in India. Under section 11(1)(a) a sum of Rs. 40,000 spent on the charitable purposes and a sum of Rs. 25,000 (which is 25% of the total income) out of the balance of Rs. 60,000 which is allowed to be accumulated would be exempt from taxation. The remaining Rs. 35,000 would be subject to taxation. Sub-section (2) provides that in the event of the trust complying with the requirements of clauses (a) and (b) thereto, it would be entitled to claim exemption in respect of any amount that is allowed to be accumulated for application to charitable purposes in India even though it may be in excess of 25% of the income or Rs. 10,000, whichever is hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurities as provided in clause (b) of section 11(2) of the Act, after issuing notice as required by clause (a) of section 11(2), the entire surplus amount would be liable to income-tax, the contention of the assessee is that if, in respect of any portion of the surplus amount, the assessee has complied with the requirements of clauses (a) and (b) of section 11(2), then the assessee would be entitled to exemption from payment of income-tax in respect of 25% of the income as provided in clause (a) of section 11(1) plus that portion of the income in respect of which the conditions prescribed under clauses (a) and (b) of section 11(2) have been complied with. In the instant case, according to the revenue, the entire surplus income is liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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