Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (2) TMI 963 - AT - Income TaxExemption u/s 11 - claiming benefit of accumulation u/s 11(2) over deemed income u/s 11(3) - non application of income - AO was that the assessee has already claimed deduction of the said deemed income in the assessment year in which such amount was computed u/s 11(2) - HELD THAT:- Intention of the Act is quite clear that when the unapplied amount is deemed to be the income of the assessee u/s 11(3) of the Act, then the benefit of section 11(1)(a) would be lost. We observe that the above rulings on which reliance has been placed by the counsel for the assessee did not consider the above Circular i.e. the above Circular was not brought to the notice of the Court/ITAT for their consideration. Accordingly, we are unable to place reliance on the judicial precedents relied upon the counsel for the assessee on this issue. If the Natwarlal Chowdhury [1989 (8) TMI 19 - CALCUTTA HIGH COURT] judgment is to be followed, it will result in undue benefit to the trusts and will defeat the legislative intent of section 11. Secondly, in our considered view, there is a specific reason why this Circular was introduced and the purpose of introduction of the same is that the assessee should not be eligible to claim double deduction in respect of the same income i.e. recycle the same income, which remained unapplied after the end of the fifth year. Therefore, if exemption under section 11(1)(a)is allowable in respect of the deemed income u/s 11(3), then exemption u/s 11(2) is also allowable in respect of such deemed income as sub-section (2) of section 11 refers to the income referred to in section 11(1)(a). Thirdly, the Mumbai ITAT in the case of The Trustees, The B.N. Gamadia Parsi Hunnarshala [2001 (4) TMI 928 - ITAT MUMBAI] held that exemption under section 11 is available only on ‘income’ within meaning of section and not on ‘deemed income’ and, therefore, an assessee cannot claim benefit or accumulation with respect to ‘deemed income”. Fourthly, our view is also supported by Form No. 3A of the Income-tax Rules, 1962. Clause No. 10 of Part I of Form No. 3A prescribes the “deemed income” under section 11(3) to be added to the income arrived at after claiming exemption under section 11(1)(a) and 11(2). The form does not allow the assessee to claim exemption under sections 11(1)(a)and 11(2) in respect of deemed income under section 11(3). Thus we are of the considered view that the assessee Trust is not eligible to claim exemption under Section 11(1)(a) and Section 11(2) of the Act in respect of “deemed income” under section 11(3) of the Act. Appeal of the assessee is dismissed.
|