TaxTMI 
TaxTMI 
2026 (8) TMI 55
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....2434/Ahd/2017 and ITA No. 2378/Ahd/2017, decided by the Income Tax Appellate Tribunal, "B" Bench, Ahmedabad [for short, "the Tribunal"] challenging the order dated 16.06.2023 for the Assessment Year 2014-15, proposing the following substantial questions of law: Tax Appeal No. 278/2024 (i) Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal is justified in confirming the order of the Ld. CIT(A) holding that the activities of the assessee were not covered by the proviso to Section 2(15) r.w.s 13(8) of the Act and was eligible for the benefits of Section 11 and 12 of the Act ignoring the guidelines laid down by Hon'ble Supreme Court of India regarding significantly high mark-up in the case of ACIT Vs. Ahmedabad Urban Development Authority dated 19.10.2022 reported in [2022] 143 taxmann.com 278 and ACIT(E) Vs. AUDA dated (SC) 03.11.2022 in MA No. 1849 of 2022? (ii) Hon'ble Income Tax Appellate Tribunal, Ahmedabad has erred in not deciding ground of appeal No. 3 raised by the revenue holding that the issue becomes infructuous once the assessee is held to be entitled to the benefit of Section 11 and Section 12 of Income Tax Act....
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....in 449 ITR 1 (SC) to hold that activities of the assessee for advancement of any other object of general public utility "are for a charitable purpose". Therefore, the assessee would be entitled to exemption under section 11 of the Act. 4. Learned Senior Advocate Mr. Saurabh Soparkar appearing for the respondent submitted that insofar as Question Nos. (i) and (ii) are concerned, the same are covered in favour of the assessee in terms of Paragraph Nos. 195, 205 and 253 of the above referred decision of the Hon'ble Apex Court. 5. In view of the above submissions, both the appeals, qua Questions No. (i) and (ii) are dismissed. 6. With regard to Question No.(iii) and (iv) in Tax Appeal No. 284 of 2024 regarding allowing set off of a deficit carried forward from an earlier year before applying the amount of deficit of the year under consideration for computing allowance of 15% for the application of the amount of the current year, the brief facts of the case are as under: 6.1 The CIT(Appeals), while computing the deduction under sections 11(1)(a) and 11(1)(d) of the Act, directed the Assessing Officer to verify and apply the rate of depreciation on the basis of the normal com....
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....2 To delineate on the issue, it may be pertinent to note that in order to be eligible for claiming exemption, it is essential that the income of the trust is applied for charitable objects. A charitable trust or institution is required to apply at least 85% of income derived from trust property towards charitable purposes. If the income spent on charitable or religious purposes during the previous year falls short of 85% of the income derived during the year, such shortfall may be subjected to tax in certain circumstances. Hence, a statutory obligation has been cast on beneficiary trusts to utilize at least 85% of the income derived from the trust property unless accumulated or set apart for application in subsequent years subject to certain stipulated conditions. Section 11(1)(a) & (b) r.w.s. 11(2) of the Act however grants an entitlement to a charitable trust to retain or accumulate 15% of income derived from property held in trust without any time limit and is thus benevolent in nature. In this backdrop, it is not iced that the situation herein is quite opposite.The assessee in the instant case has, in fact, utilized its income for charitable purposes in excess of its receipts w....
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.... exemption and application of section 11(2) does not extend to nullify said absolute exemption if Where in relevant assessment year application of income, is more than receipts of year, excess application of income i.e., expenditure in hands of assessee, can be carried forward to succeeding year" 17.3. Respectfully following the above ratio of the decisions of the Co-ordinate Benches of the Tribunals, we hereby set aside the order passed by the Ld. CIT(A) and held that when application of income is more than receipts of year, excess application of income i.e., expenditure in the hands of the assessee can be carried forward to succeeding Year. Thus the ground no. 9 raised, by the assessee is hereby allowed." 7. Learned Senior Advocate Mr. Saurabh Soparkar appearing for the respondent submitted that the issue raised in Question No.(iii) and (iv) by the Revenue is no more res integra in view of the decision of this Court in case of Commissioner of Income Tax (Exemptions) vs. Dawat Properties Trust reported in [2022] 142 Taxmann.com 548 (Gujarat) wherein, in similar facts this Court has held as under: "6. Considering the submissions made by the learned Senior Advoc....