TaxTMI 
TaxTMI 
2013 (4) TMI 897
X X X X Extracts X X X X
X X X X Extracts X X X X
....ome by the assessee. 2. The facts in brief are that the assessee trust which was registered u/s 12A of the IT Act had shown income from voluntary contributions at Rs. 316013264/-. The assessee had also received income from house property of Rs. 58208560 and after deducting expenses of Rs. 1,97,62,715/-, net income from house property had been shown as Rs. 3,94,45,845/-, The assessee had also received miscellaneous income of Rs. 5,62,992/-. The total income received was then Rs. 35,60,82,101/- against which the assessee had incurred expenses on the objects of trust at Rs. 34,27,58,555/-. The assessee had also incurred capital expenditure of Rs. 28904532 towards the objects of trust which had been treated by the AO as application of income. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....accumulated. In fact there was deficit and, therefore, CIT (A) held that the claim of the assessee was not permissible in law and therefore the claim was rejected by him, aggrieved by which the assessee is in appeal before tribunal. 4. Before us, the learned AR for assessee submitted that the legal position was settled by the judgment of Hon'ble Supreme Court in case of CIT Vs Prgoramme for Community Organization (248 ITR 01) in which it has been held that the assessee trust is entitled to accumulation at the rate of 25% of gross income and not net income. Therefore, it was argued that even if the entire income had been applied or the income applied exceeded the income earned, the statutory accumulation of the 25% of the gross income was r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation at the specified rate only from the income earned and in case the entire income had already been applied, there was no question of accumulation. It was also submitted that the judgments cited by the learned AR were not applicable to the issue under reference. The learned CIT (DR) further submitted that the assessee trust was also not entitled to depreciation on the property as the expenditure on the property had already been considered as application of income and, therefore, allowing depreciation would amount to double deduction which was not permissible in view of the judgment of Hon'ble Supreme Court in case of Escort Ltd. and another & Unions of India (199 TTR 43). 5. We have perused the records and considered the rival contentio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d with respect to gross income. There was no issue before the Hon'ble Supreme Court as to whether accumulation had to be allowed or not even if the entire income had been applied and nothing had been left during the year. 5.1 The learned AR for the assessee has argued that accumulation u/s 11(1)(a) was absolute and unfettered irrespective of the fact whether some income was left for application or not. Reliance has been placed on the judgment of Hon'ble Supreme Court in case of additional CIT Vs. ALN Rao Charitable Trust (Supra) and on the judgment of Hon'ble High Court of Bombay in case of CIT Vs. Trustees of Bhat Family Research Foundation (Supra). We have carefully perused the said judgments but do not found any ruling to the effect tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lar was the position in case of CIT Vs. Trustees of Bhat Family Research Foundation (Supra) in which the foundation had earned income of Rs. 41,513/- against which it had applied the sum of Rs. 8,150/- leaving a balance of Rs. 33,363/-. The Assessing Officer held that for allowing exemption, the entire balance amount of Rs. 33363/- has to be invested in Government securities and bonds as provided in section 11(2). The High Court held that the conditions of investment in Government Securities and bonds was only in relation to any accumulation beyond the accumulation of 25% or 10 thousand whichever was more as provided in section 11(1)(a). It was thus held that in so far as accumulation of 25% of income i.e. Rs. 10,378/- was concerned, condit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the special bench of Tribunal (Supra). in case of Bai Sonabai Hirji Trust Vs. ITO The decision was thus based on incorrect assumption of facts. Such subsistentio order of the Tribunal cannot be considered as binding precedent. The said decision of Tribunal was also followed by another bench of Tribunal in the assessee's own case in the assessment years 97-98- & 98-99 (Supra) in which the Tribunal also referred to the judgment of Hon'ble Supreme Court in case of Programme for Community Organization (Supra) but as pointed out earlier the issue decided by the apex court in case of Programme for Community Organization (Supra) was not whether accumulation had to be allowed even if there was no income left for application but the issue was whethe....