TaxTMI 
TaxTMI 
2010 (4) TMI 755
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....er which were squarely applicable to the case. (iv) The case law of Hon'ble Supreme Court in CIT v. Programme for Community Organisation [2001] 248 ITR 11 on the basis of which the appeal has been allowed by the CIT(A) is clearly not applicable in this case. 3. The facts in brief are as follows:- The assessee is an agricultural marketing committee established under Karnataka Agricultural Produce Marketing (Regulation) Act. It is a local authority in status, registered under section 12A of the IT Act. It filed the return of income on 22-9-2004, declaring NIL income. Return was processed under section 143(1). Later, the assessment was taken up for scrutiny and assessment under section 143(3) was completed on 27-10-2008. 4. In the assessment so completed, the Assessing Officer was of the view that assessee's claim of exemption under section 11(1)(a) of Rs. 14,22,876 on gross receipts is wrong for the reason, accumulation envisaged under the section is with reference to income computed in commercial sense and not with reference to gross receipts. The Assessing Officer, therefore, concluded that the claim of assessee to allow deduction at 15 per cent on Rs. 94,85,843 i....
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....out as discussed above therefore, Assessing Officer is directed to allow to the same. There is no concept of exemption of capital assets but it is exemption of income of property by trust". 8. The revenue being aggrieved is in appeal before us. 9. The learned DR strongly relied on the finding/conclusion of the Assessing Officer. She also relied on the decision of the Tribunal in the case of Gem & Jewellery Export Promotion Council v. Sixth ITO [1999] 68 ITD 95 (Bom.) for the proposition that income available for accumulation under section 11(1)(a) is the income as computed in commercial principles and not on the gross receipts. 10. The learned AR supported the finding of the CIT(A) in regard to the claim of exemption under section 11(1)(a) of the Act. As regards to accumulation/set apart of Rs. 8,37,974 under section 11(2) without furnishing Form No. 10, assessee submitted that Form No. 10 was furnished on 14-11-2008. It was submitted that the Assessing Officer was not correct in completing assessment without providing an opportunity to assessee to furnish Form No. 10. It was pointed out that prior to the assessment being completed, the assessee intimated the Assessing Off....
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....er application but on income before application and nowhere it was held that exemption is to be computed with reference to gross receipt. Therefore, we hold that the Assessing Officer is justified in allowing 15 per cent on Rs. 88,29,648 which works out to Rs. 13,24,447 as against assessee's claim of Rs. 14,22,876 (15 per cent on 94,85,843). 12. In the result, ground Nos. 1, 3 and 4 referred above are allowed and we reverse the order of the CIT(A). 13. As regards the issue of accumulation or set apart Rs. 8,37,974 under section 11(2), the basis on which the CIT(A) allowed the appeal of the assessee is not clear. The assessee claimed, it has filed Form No. 10 belatedly after completion of the assessment order. The Board vide Circular No. 273, dated 3-6-1980, had authorized the CIT to condone the delay in filing Form No. 10 when certain conditions are satisfied. The Circular reads as follows:- "Charitable and religious trusts - Applications for accumulation of income under section 11(2) of the IT Act, 1961 - Condonation of delay - Regarding - Charitable and religious trusts are entitled to exemption from income-tax under sections 11 to 13. These trusts are allowed to accumul....
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....e) that the accumulation or setting apart of income was necessary for carrying out the objects of the trust." 13.1 The learned AR had strongly relied on the decision of the Hon'ble Gujarat High Court in the case of Mayur Foundation (supra). The facts considered by the Gujarat High Court are as follows:- The assessee was a charitable trust, registered under the provisions of the Bombay Public Trusts Act, 1950. During accounting year relevant to the assessment year 1980-81, the assessee received voluntary contributions amounting to Rs. 2,04,468. The donations were treated as "income" within the meaning of section 2(24) of the Income-tax Act, 1961, by the Assessing Officer. The assessee contended that the donations of Rs. 1,74,432 and Rs. 9,036 included in the total amount of donations were towards the corpus of the trust and in support of the contention, submitted confirmation letters from two donors. The Assessing Officer did not accept this submission and after granting permissible accumulation of 25 per cent held the balance amount of Rs. 1,53,351liable to tax in the hands of the assessee. The Commissioner (Appeals) confirmed the order. The assessee preferred an appeal befor....