2026 (6) TMI 333

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....rievance of the assessee is against the action of the lower authorities in excluding the Government Salary Grant from the eligible income for the purpose of computing accumulation under section 11(1)(a) of the Act. 3. Briefly stated, the assessee is a charitable trust engaged in the field of education and is registered under the provisions of the Act. The assessee filed its return of income declaring total income of Rs. 2,46,583 after claiming exemption under section 11. The case was selected for scrutiny. During the assessment proceedings, the Assessing Officer noticed that the assessee had received Government Salary Grant amounting to Rs. 12.26 crore. The said amount was credited to the Income & Expenditure Account and the assessee cla....

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....that the grant is a tied-up receipt and hence cannot be considered as income for the purpose of accumulation. 7. We have heard the rival submissions and perused the material available on record. The issue for consideration is whether the Government Salary Grant received by the assessee can be regarded as "income derived from property held under trust" so as to form part of the base for computing permissible accumulation under section 11(1)(a) of the Act. 8. The scheme of section 11(1)(a) restricts the exemption to income derived from property held under trust which is either applied or accumulated for charitable purposes. The provision presupposes that such income is at the disposal of the assessee and capable of being applied or set ....

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....cretion. The Government Salary Grant, therefore, lacks the essential attributes of "income derived from property held under trust", inasmuch as it does not arise from property of the trust, does not vest beneficial ownership in the assessee, and is not available for discretionary application or accumulation. 11. The reliance placed by the assessee on the decision of the Hon'ble Bombay High Court in the case of Gem & Jewellery Export Promotion Council has been considered. In the said case, the issue before the Hon'ble Court was whether the grants received constituted voluntary contributions so as to be treated as income under section 12(1). The controversy therein was confined to the characterisation of the receipt as income. The issue in....