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2021 (2) TMI 414 - AT - Income TaxExemption u/s 11 - dividend income receipts - HELD THAT:- We find that this issue is squarely covered in assessee’s favor by the decision of this Tribunal in Jamshedji Tata Trust [2014 (5) TMI 890 - ITAT MUMBAI] wherein coordinate bench drawing analogy from the decision in CIT V/s Divine Light Mission [2004 (4) TMI 25 - DELHI HIGH COURT] held that dividend income being exempt u/s 10(34) could not be brought to tax by applying the provisions of Sec. 11 to 13 . We also note that amendment to Sec.11 by way of insertion of clause (7) by Finance Act, 2014 to nullify the effect of this decision is applicable only with effect from 01/04/2015 and do not apply to this year. Therefore, respectfully following the same, we would hold that dividend income being exempt u/s 10(34) could not be brought to tax by applying the provisions of Sec.11 to 13 of the Act. The amended provision restricting this exemption is applicable only from AY 2015-16. The assessee succeeds on this issue Accumulate or set apart trust income to the extent of 15% for utilization for charitable purposes in subsequent years - HELD THAT:- We find that the assessee had filed Form No.10 for AY 2010-11 wherein an amount of ₹ 410.84 Lacs has been set-apart for subsequent utilization up-to previous year 2014-15. The same is also evident from assessment order u/s 143(3) dated 27/12/2012. The amount of ₹ 410.84 Lacs has been spread by assessee equally over 5 years in the computation of income. However, if the said amount of ₹ 82.16 Lacs is excluded from Ld. AO’s computations, the assessee was required to spend an amount of ₹ 160.48 Lacs (₹ 91.48 Lacs plus ₹ 68 Lacs) during the year. Out of the same, The assessee has already applied the amount of ₹ 103.43 Lacs during the year towards the objects of the trust and the balance amount has been set aside u/s 11(1)(a) as well as under clause (2) of Explanation (renumbered as Explanation-1 by Finance Act, 2017) to Sec. 11(1) to be spent in immediately next year i.e. 2013-14. Hence, there is no underutilization as alleged by Ld.AO. The conclusion stem from erroneous assumption that the amount of ₹ 82.16 Lacs was to be spent in this year as against the correct fact that the amount was set apart for utilization in next 5 years. AO is directed to rework the assessee’s computation in the light of our above observations and re-determine the amounts to be set apart u/s 11(1)(a) as well as under Clause (2) of Explanation (renumbered as Explanation-1 by Finance Act, 2017) to Sec. 11(1). This ground stands allowed for statistical purposes. We find that the assessee had filed Form No.10 for AY 2010-11 wherein an amount of ₹ 410.84 Lacs has been set-apart for subsequent utilization up-to previous year 2014-15. The same is also evident from assessment order u/s 143(3) dated 27/12/2012. The amount of ₹ 410.84 Lacs has been spread by assessee equally over 5 years in the computation of income. If the said amount of ₹ 82.16 Lacs is excluded from Ld. AO’s computations, the assessee was required to spend an amount of ₹ 160.48 Lacs (₹ 91.48 Lacs plus ₹ 68 Lacs) during the year. Out of the same, The assessee has already applied the amount of ₹ 103.43 Lacs during the year towards the objects of the trust and the balance amount has been set aside u/s 11(1)(a) as well as under clause (2) of Explanation (renumbered as Explanation-1 by Finance Act, 2017) to Sec. 11(1) to be spent in immediately next year i.e. 2013-14. Hence, there is no underutilization as alleged by Ld.AO. The conclusion stem from erroneous assumption that the amount of ₹ 82.16 Lacs was to be spent in this year as against the correct fact that the amount was set apart for utilization in next 5 years. AO is directed to rework the assessee’s computation in the light of our above observations and re-determine the amounts to be set apart u/s 11(1)(a) as well as under Clause (2) of Explanation (renumbered as Explanation-1 by Finance Act, 2017) to Sec. 11(1). This ground stands allowed for statistical purposes.
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