TaxTMI 
TaxTMI 
2021 (2) TMI 583
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.... reversed on facts and law appliable in so far as non-allowable of 15% of total income u/s 11(1)(a) of the Act is concerned. 2. The learned authorities erred in not allowing statutory 15% allowance u/s 11(1)(a) on the premise that there is no surplus left after allowance of application of income for the objects of the trust. 3. The learned authorities failed to consider and appreciate that statutory allowance of 15% of total income u/s 11(1)(a) has to be allowed before deduction of the actual application of income for the objects of the trust and this settled view is supported by the decision of the local ITAT which is binding on the local authorities and as such should have allowed the deduction of 15% of gross income u/s....
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....us. 7. Assessee has relied on the decision of Jurisdictional Tribunal order in the case of Jyothi Charitable Trust in IT No.662/BNG/2015 dated 14.08.2015 and other judicial decision. However the order of Hon'ble ITAT has not been accepted by department and further appeal is filed and not reached finality. Therefore depreciation is disallowed." 4. Aggrieved, the assessee preferred an appeal to the first appellate authority. The learned CIT(A) upheld the view taken by the A.O. 5. The assessee being aggrieved, has filed this appeal before the Tribunal. The learned AR submitted that it is settled law that 15% allowance u/s 11(1)(a) of the I.T. Act has to be allowed on the total income before allowing deduction for application of ....
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....by the Assessee. Since in the case of the Assessee, the gross receipts after revenue expenditure was nil, the AO denied the benefit of accumulation to the Assessee. 16. On appeal by the Assessee, the CIT(A) confirmed the order of the AO. Hence ground No.4 raised by the Assessee before the Tribunal. 17. The issue to be decided is therefore as to whether for the purpose of computing accumulation of income of 15% under Sec.11(1)((a) of the Act, one has to take the gross receipts or gross receipts after expenditure for charitable purpose i.e., the net receipts. This is issue is no longer res integra and has been decided by the Special Bench Mumbai in the case of Bai Sonabai Hirji Agiary Trust Vs. ITO 93 ITD 0070 (SB). The fact....
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....erived 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. For the aforesaid reasons, the civil appeal is dismissed." It is clear from the above that deduction of twenty-five per cent was held to be allowable not on total income as computed under the IT Act. Any amount or expenditure, which was application of income, is not to be considered for determining twenty five per cent to be accumulated. Their Lordships, as noted earlier, affirme....
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....be the amount expended for purposes of trust in India. Their Lordships in the above case have emphasized on the clear and unambiguous language of s. 11(1)(a) and decided the matter on the basis of the same. It has been held that as per the statutory language of the above section the income which is to be taken for purpose of accumulation is the income derived by the trust from property. If both the decisions are carefully read, it becomes evident that any expenditure which is in the shape of application of income is not to be taken into account. Having found that trust is entitled to exemption under s. 11(1), we are to go to the stage of income before application thereof and take into account 25 per cent of such income. Their Lords....