TaxTMI 
TaxTMI 
2007 (11) TMI 1
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....ircumstances of the case, the Tribunal was correct in law in directing that the accumulation of the trust in previous years prior to the previous year relevant to the asstt. Year 1980-81 shall also qualify for deductions of 75% allowable u/s 11(2) of the Income-tax Act 3. Whether, on the facts and in the circumstances of the case, the ITAT was correct in law in treating a sum of Rs.50,000/- deposited with Shriram Centre for Art and Culture as application of income whereas it was a loan to the said concern 2. The Assessee Trust was created on 15th February, 1978 by the Indian National Theatre, a society registered under the Societies Registration Act, 1860. The objects of the Trust are, inter alia, to promote artistic and cultural expr....
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....96. 6. The ITO, while computing the assessment for the Assessment Year 1980-81 by his assessment order dated 4th August, 1983 rejected the contention that the accumulated amount had been set apart by way of investments in the manner indicated in Section 11(2) (b) of the Act. The ITO held that the Assessee had invested only Rs.2,80,000/- during the period 1st January, 1979 to 31st December, 1979. He allowed the accumulation only to that extent while finalising the assessment. Further he held that Rs.50,000/- shown as loan to Shriram Centre for Art and Culture cannot be held to be an application of the income of the Trust for the purposes of the Trust. 7. The appeal filed by the Assessee was dismissed by the CIT(A) who concurred with th....
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....of Rs.1 lakh could be regarded as having accumulated out of the present year's income or not, if that amount of Rs.1 lakh also is regarded as a shortfall, then the total amount of Rs.1,81,509/- should be deemed to be the amount in respect of which the option was exercised. 9. The Tribunal further held that the amount of Rs.50,000/- which was advanced as a loan to Shriram Centre for Art and Culture, was an application of the income of the Trust for the purposes of the the Trust and therefore should be construed as such for the purposes of the exemption under Section 11 of the Act. 10. The questions as framed for our opinion, which have been set out hereinabove require us to examine three specific issues. The first is whether the Assess....
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....rcised its option, we are inclined to agree with the Tribunal that the wording of the letter dated 26^th June, 1980 cannot be said to be vague. The letter in fact says that the accumulation was being made in order to enable the trustees to accumulate sufficient funds for carrying out the following purposes of the trust..... . However, we are unable to read the letter to mean that the Assessee had exercised the option in relation to a sum of Rs.1,81,509. The Tribunal has held that even though it was said in the letter that it was only in regard to Rs.81,509 , it should be construed as if the option had been exercised for accumulation of Rs.1,81,509. This to our mind is a conjecture unsupported by the record. If therefore the shortfall was....
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....modes specified in sub-section (5). 14. The above portion in turn refers to Section 11(1)(a) and (b) which read as under: 11. Income from property held for charitable or religious purposes. (1) Subject to the provisions of sections 60 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 or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of [fifteen] per cent of the inc....