2022 (6) TMI 1512

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....Tax (Appeals) in so far it is prejudicial to the interests of the appellant is bad and erroneous in law and against the facts and circumstances of the case. 2. That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in not allowing the deduction of 15% u/s 11(1)(a) of the Act on gross receipts on the ground that the balance surplus is taken care of accumulation made u/s. 11(2) of the Act and restricting the same to the extent of surplus. 3. That the learned Commissioner of Income-Tax (Appeals) ought to have held that the deduction u/s. 11(1)(a) of the Act has to be allowed on gross receipts before application of income and accumulation u/s. 11(2) of the Act. 4. The assessee is a charitable trust ....

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....is no balance left to accumulate 25% at gross receipts. The AR also submitted that manner of computation done by AO is not correct and that the deduction under section 11(1)(a) should be adjusted first before considering any other deduction. In this regard, the learned AR placed reliance on the decision of the Coordinate Bench of the Tribunal in the case of Shraddha Trust, ITA No. 899/Bang/2016 dated 07.04.2017. The learned DR supported the order of the lower authorities. 6. We heard the rival submissions and perused the material on record. Before we go into the merits, we will look into the provisions of section 11(1)(a) which reads as under: "(a)^3 income derived from property held under trust wholly for charitable or religiou....

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....anisation (supra) is that for the purpose of accumulation of income, the gross receipts of the Trust need to be considered. We notice that the assessee in the computation of income has claimed the deduction u/s. 11(1)(a) on the net income. We also notice that the AO in the computation disallowing depreciation did not give deduction under section 11(1)(a) and has directly gone into 11(2) deduction. This in our view is not the right way. In the light of the above discussion, we remand the issue back to the AO to recompute the income of the assessee as per the law. The AO is directed to consider the ratio laid down by the Hon'ble Supreme Court while recomputing the total income of the assessee and give a reasonable opportunity of being heard t....