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2023 (2) TMI 257 - AT - Income TaxIncome from House property - grant of deduction u/s 24(a) of the Act on rental income earned by the assessee trust - HELD THAT:- The assessee during the year earned a rental income of Rs.79,15,551. While filing its return of income, the assessee reduced 30% as standard deduction from its rental income and declared as income from house property. Vide intimation issued u/s 143(1) of the Act, the standard deduction of 30% claimed by the assessee was disallowed, which was overturned by the learned CIT(A) granting relief to the assessee. Thus, the issue arises whether the assessee, being a trust, is entitled to claim a deduction of a sum equal to 30% of the annual value u/s 24(a) - We find that in CIT vs Rao Bahadur Calavala Cunnan Chetty Charities, [1979 (8) TMI 17 - MADRAS HIGH COURT] held that the income from property held under trust would have to be arrived at in a normal commercial manner without reference to the provisions which are attracted by section 14. We direct the AO to disallow the deduction of 30% claimed by the assessee on rental income. As a result, grounds no. 1 and 2 raised in Revenue's appeal are allowed. Computation of exemption u/s 11 of the Act - CIT(A) directed the AO to allow 15% exemption under section 11(1)(a) and also directed that expenses be allowed to be set off to the extent of the income - HELD THAT:- As per section 11 of the Act, the income derived from property held under trust wholly for charitable or religious purposes, to the extent applied to such purposes in India shall be excluded while determining the total taxable income of the trust for the year under consideration. The said exemption shall not be in excess of 15% of such income accumulated, as per the provisions of section 11 - Since vide intimation u/s 143(1) the claim for accumulation under section 11(1)(a) was taken as Nil, therefore, we find no infirmity in the order passed by the CIT(A) directing the AO to allow 15% exemption u/s 11(1)(a) as claimed by the assessee as per the law. Since the expenditure actually incurred by the assessee is much higher than the 85% of income which is required to be spent under section 11, therefore, we find no infirmity in the direction of the CIT(A) to allow the set off of expenses to the extent of the income. As a result, grounds raised in Revenue's appeal are dismissed.
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