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2020 (10) TMI 302 - HC - Income TaxExemption u/s 11 - Determination of application of income and accumulation of income - claim of deduction of the claim of assessee for an amount u/s 24(a) on the ground that the income of the trust has to be computed in a commercial manner and not as per the Act - HELD THAT:- The object of Section 11 of the Act is to grant immunity to the income of a charitable trust from income tax. The immunity however, is confined to the extent to which such income is applied to such purposes in India. The exemption will be denied if the income is not actually applied for charitable purposes. This exclusion from immunity, which has been granted by Section 11 has to be confined to the real income of the trust. The application or accumulation can only be of real income which has actually been received by an assessee. It is pertinent to note that Central Board of Direct Taxes has issued a Circular No.5-P dated 19.05.1968, which provides that the word ‘income’ in Section 11(1a) of the Act must be understood in commercial sense and the entire income of the trust in the commercial sense has been spent for the purpose of charity. The real income of the trust is exempt to the extent to which some income is applied to such purposes in India. The aforesaid view has been taken by in JAYASHREE CHARITY TRUST [1984 (12) TMI 30 - CALCUTTA HIGH COURT]as well as GANGA CHARITY TRUST [1985 (10) TMI 67 - GUJARAT HIGH COURT] with which we respectively agree. From perusal of the order passed by the CIT(Appeals) as well as the Tribunal, we find that neither the CIT (Appeals) nor the Tribunal has examined the case of the assessee on the touchstone of aforesaid well settled legal principles. In the facts of the case left with no option but to quash the order of the Tribunal and remit the matter to the Tribunal afresh for consideration in the light of observations made supra. Since, the matter is being remitted to the Tribunal, therefore, it is not necessary for us to answer the substantial questions of law. Appeal is disposed of.
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