2020 (7) TMI 846 - AT - Income Tax

Tax Exemption for Charitable Trusts: 15% Accumulation Allowed on Gross Receipts Under Section 11 Income Tax Act

M/s. Sahara Utsrga Welfare Society Versus Deputy Commissioner of Income Tax (E), Circle-1, Kolkata.

ITAT Kolkata ruled in tax appeal that charitable trust can accumulate 15% on gross receipts under Section 11 of Income Tax Act. Citing SC precedent and ... Assessment of trust - accumulation of 15% on the gross receipts OR 15% of the net receipt - HELD THAT:- As relying on PROGRAMME FOR COMMUNITY ORGANISATION [2000 (11) TMI 4 - SUPREME COURT] and assessee’s own case for the Assessment Year 2012-13 [2020 (1) TMI 1727 - ITAT KOLKATA] we hold that the assessee is entitled to the accumulation of 15% on the gross receipt as per provisions of Section 11 of the Act. The ITAT Kolkata, in appeal against the ld.CIT(A)'s order under Section 250 of the Income Tax Act, 1961 for AY 2013-14, addressed whether the assessee-trust is entitled to accumulate 15% on gross receipts or net receipts. Citing the Supreme Court's ruling in CIT vs. Programme for Community Organisation [2001] 248 ITR 1 (SC), which held that a charitable trust is entitled to accumulate a percentage 'of its income derived from property held under trust and not ... after application of income for charitable purposes,' the Tribunal emphasized that Section 11(1) refers to '15% of the income,' meaning gross income. The Tribunal also relied on its own precedent in ITA No. 2436/Kol/2018 (AY 2012-13), directing the Assessing Officer to allow 15% exemption on gross receipts. Accordingly, the Tribunal held that the assessee is entitled to accumulate 15% on gross receipts under Section 11 and allowed the appeal.