TaxTMI 
TaxTMI 
2001 (4) TMI 928
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....st. yr. 1993-94 the AO observed that the aforementioned unutilised amount is taxable under s. 11(3) of the Act as deemed income of the assessee. There is no grievance about the applicability of deeming provision s. 11(3) of the Act, in the instant case. However, the assessee claimed that such deemed income should be included as the income earned by the assessee in the relevant previous year and on such total income assessee should be allowed to accumulate under s. (2) of the Act in addition to deduction of 25 per cent of the unutilised amount. This claim was not accepted by the AO. He, therefore, completed the assessment on a total income of Rs. 1,98,756. It may be noted that he allowed accumulation under s. 11(1)(a) of the Act to the extent of Rs. 1,08,740 only which is arrived as under : Rs. Income from other sources as declared 7,54,861 Less : 6,46,121 1,08,740 4. Aggrieved assessee, challenged the order of AO before of the CIT(A). The CIT(A) confirmed the action of the AO. The operative portion of his order reads as under : CIT(A)'s order : "3. I have considered the facts and I find that the income which is derived ....
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....T vs. Surat Cotton Spg. and Wvg. Mills (P) Ltd. (Bom) (1993) 114 CTR (Bom) 382: (1993) 202 ITR 932(Bom), at 940; and (iii) A.S. Glittre D/5 I/S Garonne & Ors. vs. CIT (1997) 140 CTR (SC) 97: (1997) 225 ITR 739(SC) On the strength of the aforesaid judgments, learned counsel submitted that the income as computed by the assessee deserves to be accepted. The mode of assessee's computation is extracted here for immediate reference : Income from other sources as declared 7,54,861 Add : 1,98,756 9,56,617 Less : 1,54,127 7,99,490 Less : 1,99,872 5,99,618 Less : 4,91,994 1,07,625 Less : 1,07,624 Total income NIL Claim under dispute 6. On the other hand, learned, Departmental Representative relied upon the orders of the tax authorities and also Circular No. 29, dt. 23rd Aug., 1969, issued by the CBDT wherein the Board expressed the opinion that the assessee would not be entitled to the benefits of accumulation of 25 per cent of income which is brought to tax under s. 11(3) of the Act. 7. We have carefully considered the rival submissions and perused the record. We ....
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....o, or (b) ceases to remain invested or deposited in any of the forms or modes specified in sub-s. (5), or (c) is not utilised for the purposes for which it is so accumulated or set apart during the period referred to in cl.(a) of that sub-section or in the year immediately following the expiry thereof, shall be deemed to be the income of such person of the previous year in which it is so applied or ceases to be so accumulated or set apart or ceases to remain so invested or deposited or, as the case may be, of the previous year immediately following the expiry of the period aforesaid." [underline, italicised in print, is ours] 8. It may be noted that wherever the legislature intended to confer any benefit to the assessee under s. 11 of the Act, the benefit was restricted to the 'income derived from property' as could be seen from s. 11(1)(a), (b) and (c) of the Act. Sec. 11(1)(d) uses the expression 'income' in the form of voluntary contributions. However, specific exemption was granted if such income is received with a specific direction that they shall form part of the corpus of the trust. In other words, voluntary contributio....
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....th an intention to apply it for a rightful purpose. Thus, even on the limited count the assessee cannot claim the benefit of accumulation because the accumulation is allowed only if the intention of the assessee is to apply the same for a specific purpose. Thus, assessee cannot claim the benefit of accumulation with respect to the deemed income. In the case of Director of Income-tax vs. G. Shewnarain Tantia (1993) 199 ITR 215(Cal), the Hon'ble High Court of Calcutta analysed the meaning of the word 'income' used in s. 11 of the Act. The Hon'ble Calcutta High Court observed that the 'income' contemplated by the provisions of s. 11 is the real income and not income as assessed or assessable. They have also followed the earlier decision of the same High Court in the case of CIT vs. Jayshree Charity Trust (1985) 47 CTR (Cal) 27: (1986) 159 ITR 280(Cal) wherein the Hon'ble Court observed that what is deemed to be income can neither be spent nor accumulated for charitable purposes and the word 'application' or accumulation' can only be of real income which has actually been received by assessee. Their Lordships further observed that the deeming pro....