TaxTMI 
TaxTMI 
TaxTMI 
2020 (12) TMI 447
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....e is a Section 25 company under the Companies Act 1956 duly registered with Registrar of Companies, Maharashtra. The assessee is also registered u/s.12A of the Act in the status of public charitable trust. The assessee had filed its return of income on 30/09/2014 for the A.Y.2014-15 declaring total deficit i.e. excess of expenditure over income as per the income tax computation in the sum of Rs. 16,00,235/-. The manner of arriving said deficit figure of Rs. 16,00,235/- is worked out as under:- 3.1. We find that the ld. AO had completed the assessment u/s.143(3) of the Act dated 25/10/2016 determining total income of Rs. Nil. We find that the ld. AO had observed in the assessment that assessee had furnished the workings of arriving deficit of Rs. 8,22,922/- (without considering the 15% deduction towards accumulation) being the excess of expenditure over income and claimed the same to be carried forward to subsequent years. The ld. AO by placing reliance on the decision of Hon'ble Supreme Court in the case of Goetze India Ltd., reported in 284 ITR 323 observed that the assessee cannot make a fresh claim during the course of assessment proceedings without filing revised return and ac....
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....ns called for during the course of assessment proceedings held on 20/02/2015 - Sir, your honour has sought explanation as to why the general accumulation of 15% u/s 11(1)(a) be not restricted to the extent of income not utilized for the objects of the trust. Sir, in this connection, it is most respect fully submitted - (i) That the trust has been advised that two independent items are covered in the scope of Section 11 (1)(a)- (a) Actual amount applied for the objects of the trust (Rs. 7,99,18,102) and (b) general accumulation of not more than 15% of th e Income (Rs. 1,14,15,311 being 15% of Rs. 7,61,02,072); (ii) That from the plain language of the provisions of section 11(1)(a) it would be clear that : the income that is not to be included for the purpose of computing the total income would be the amount applied for charitable / religious purpose and 15 per cent of the total receipts (net of corpus donation) which is allowed to be carried forward. Accordingly, The assesses is of the view that since the total receipts (net of corpus donation) are Rs. 7,61,02,072/-, in accordance with the statutory provisions of section 11(1)(a), 15 per cent thereof is not to be tre....
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....essee and held that the assessee is correctly applied the provisions of Section 11(1)(a) of the Act and the AO was not justified in denying 15% of income out of receipt during the year for accumulation. For the sake of ready reference, the relevant operative paras of the order of the CIT(A) is reproduced hereunder: "4.3 I have carefully considered the contentions of the appellant and the observations of the A.O. It is observed that the A.O has restricted the excess expenditure incurred for the year under consideration (-) Rs. 38,16,030/- as against (-) Rs. 1,52,31,341/- as declared in the return of income. The appellant is aggrieved by the wrong application of Sec-11(1)(a) of the Act by the A.O. According to appellant the total receipts during the year including the corpus donation is Rs. 7,72,02,072/-. Out of this, an amount of Rs. 11,00,000/- was received as corpus which is exempted u/s.11(1)(d) of the Act, leaving behind income of Rs. 7,61,02,072/-. On this income from the property held under the trust the appellant claimed 15% for the purpose of accumulation u/s.11(1)(a) of the Act amounting to Rs. 1,14,15,311/-. Out of the remaining amount of Rs. 6,46,86,761/- the appellant....
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....ry ton-sard of the expenses for set off in the subsequent year?" The Hon. Court ruled as under - "..... In view of the above discussion, we are of the opinion that, on the facts and in the circumstances of the case, the assessee is entitled to carry forward expenses for set off in the subsequent year. The question referred to us is, therefore, answered in the affirmative, i.e., in favour of the assessee and against the Revenue." The photocopy of the said judgment of Hon. Gujarat HC is attached herewith. The appellant therefore most humbly prays that this ground of appeal may please be allowed." 5.2 It is observed that the A.O has not allowed the carry forward of deficit of the appellant amounting to Rs. 1,52,31,351/- being the excess application over income and eligible for set off in the future years. The appellant has relied upon the order of jurisdictional High Court in the case of CIT vs Shri Plot Shwetambar Murtipujak Jain Mandal 211 ITR 293(Guj.), CIT vs Maharana of Mewar Charitable Foundation 29 Taxman 476 (Raj) and Govindu Naicker Estate v. Asstt.DIT [2001] 248 ITR 368 (Mad). Hon'ble Gujarat High Court in the case of Shri Plot Shwetambar Murtipujak Jain Ma....
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....Act and will have to be excluded from the income of the trust under section 11(1)(a)." 5.3 I agree with the contention of the appellant as well as the reliance placed on the decision of Jurisdictional Gujarat High Court as above and hereby direct the A.O to allow the benefit of the deficit of earlier years against the future incomes. Accordingly, ground of appeal No.2 is allowed." 9. We find that the identical issue cropped up in assessee's own case in AY 2010-11 as well, wherein no error was found in the action of the CIT(A) for granting accumulation or set apart of income alread y applied in this year to the extent of 15% of the receipt and consequently, the deficit was suitably enhanced. The relevant operative para of the order of the co-ordinate bench in assessee's own case is reproduced hereunder: "3. With the assistance of the ld. representative, we have gone through the record carefully. The ld. counsel for the assessee has placed on record a copy of the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Programme for Community Organisation, 248 ITR 1 = 166 CR 401 (SC). We find that this decision has silenced the controversy. It is very small d....
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.... a charitable or religious trust is entitled to accumulated twenty-five percent of income derived from property held under trust. For the present purposes the donations the assessee received, in the sum of Rs. 2,57,376, would constitute its property and it is entitled to accumulate twenty five per cent thereout. It is unclear on what basis the revenue contended that it was entitled to accumulate only twenty-five per cent of Rs. 87,010. 5. For the aforesaid reasons, the civil appeal is dismissed. 6. No order as to costs." 4. In view of the above decision, we do not find any error in the order of the CIT(A). The appeal of the Revenue is dismissed." 10. In parity with the view already taken by the co-ordinate bench in assessee's own case in the earlier assessment year, the CIT(A) was justified in admitting the claim of the assessee for accumulation of income. The CIT(A) has rightly viewed that exemption under s.11(1)(a) of the Act i.e. 15% of the income is unfettered and not subject to any conditions. Hence, we do not see any perceptible reason for our indulgence with the order of the CIT(A). We thus decline to interfere. 11. In the result, appeal of the Revenue is di....