Case Law Details
Shri Ram Sharnam Sabha Regd. Vs ITO (ITAT Delhi)
Facts- The assesse is a society, engaged in religious and charitable activities. This society is running Ashrams and Medication programmes and was duly granted registration u/s 12AA. The assessee filed its ITR for AY 2016-17 declaring a taxable income of Rs. Nil. The AO noticed that the assessee society was required to apply 85% of its income on the objectives of the society. As per AO, accumulation of income in excess of 15% of the income is allowed subject to certain conditions. The AO noticed that the application of income fall short of benchmark of 85% at Rs.21,23,372/-. Therefore, he called upon the assessee to explain as to why the benefit of exemption claimed u/s 11(2) of the Act be given to assessee.
Conclusion- Income derived from the trust property has also got to be computed on commercial principles and if commercial principles are applied then adjustment of expenses incurred by the trust for charitable and religious purposes in the earlier years against the income earned by the trust in the subsequent year will have to be regarded as application of income of the trust for charitable and religious purposes in the subsequent year in which adjustment has been made having regard to the benevolent provisions contained in the section 11 of the Act and that such adjustment will have to be excluded from the income of the trust under section 11(1)(a) of the Act. Accordingly, the claim of assessee regarding set off of excess utilization of funds and accumulation of income is allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the assessee for the assessment year 2016-17 is directed against the order of Ld. CIT(A), Karnal dated 24.09.2019. The assessee has raised following grounds of appeal:-
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