Case Law Details
ITAT Tribunal held that it is clear from section 11(1)(a) that income derived from property held under trust wholly for charitable purposes or religious purposes shall not be included in the total income to the extent of 15% is unqualified. It was held that exemption available u/s.11(1)(a) i.e. 15% of income is unfettered and not subject to any conditions and thus allowed this issue in favour of the assessee and deleted the addition confirmed by the CIT(A).
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Under this issue the assesse has chalenged the confirmation of the order of the Assessing Officer by the CIT(A) in which the CIT(A) has confirmed the order of the Assessing Officer for not allowing the accumulation of the 15% and the income was allowed u/s.11(1)(a) of the Act. The learned representative of the assessee has argued that this issue has been covered by the order passed by the Hon’ble Income Tax Appellate Tribunal, Mumbai bench in case of ADIT(E) 1(2) Vs. Sayaji Ubakhin Memorial Trust (ITA No.5646/Mum/2011) dated 17.05.2013. However, on the other hand the learned representative of the department has strongly relied upon the order passed by the CIT(A) in question. Before going further, it is necessary to advert the finding of the ADIT(E) 1(2) Vs. Sayaji Ubakhin Memorial Trust (ITA No.5646/Mum/2011) dated 17.05.2013 on record:-
“5. With regard to Ground No. 2 of appeal, the Assessing Officer observed that if the trust has not left with surplus and there is deficit, then there can be no accumulation made. AO has stated that accumulation or setting apart of 15% of income has been allowed by virtue of provision of section 11(1)(a) of the Act when assessee is not able to spend the entire amount and when the entire amount has been spent, there is no surplus left that can be accumulated. Aggrieved, assessee filed appeal before ld. CIT(A).
On behalf of assessee, it was submitted that as per section 1 1(1)(a), the expenditure incurred by a trust or institute on the objects of the trust by way of application of income derived from the property held for religious or charitable purposes is deductible from the income. It was submitted that there is no bar in law and there are no specific provisions in the Act which says that such deduction of 15% for accumulation will not be allowed in case of deficit. Such 15% accumulation is allowable irrespective of whether 85% of the income have been applied to charitable purposes or not. Ld. CIT(A) after considering the submission of the assessee stated that AO is not justified in denying the claim of the assessee for the accumulation of income and, accordingly, allowed the claim of the assessee. Being aggrieved, department is in appeal before the Tribunal.
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