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TMI Blog2012 (10) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, the copy of this order has been placed on record. 2.2 We have gone through the Tribunal order which has not been controverted by the ld. DR with the help of any other decision on this issue. This decision has been rendered after following the decision of Hon'ble Jurisdictional High Court in the case of CIT vs Krishi Upaj Mandi Samiti, Gajsinghpur & Ors, 227 CTR 79. The para 2.3 of this Tribunal order is being reproduced for ready reference. ''2.3 We have heard both the parties. The Hon'ble Jurisdctional High Court in the case of CIT vs Krishi Upaj Mandi Samiti, Gajsinghpur & Ors, 227 CTR 79 had an occasion to consider as to whether the contributions paid by the Samiti to the Agricultural Marketing Board is an application of income. Krishi Upaj Mandi Samiti is established by the Govt. of Rajasthan under the provisions of Section 6 of Rajasthan Agricultural Produce Market Act, 1961(hereinafter referred to Act of 1961). The Agricultural Marketing Produce Board was established by the State Govt. u/s 22A of the Act of 1961 to carry out the purpose specified in Section 22J of the Act of 1961. Section 22H provides for creation of the marketing development fund to be administe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory provisions of the Income-tax Act for the purpose of computing assessable profits on the one hand and depreciation computed by a business concern for purpose of arriving at its true commercial profits. It is the latter which has to be taken into account for the purpose of computing divisible profits, and not the former. This distinction has been well brought out in Commissioner of Income-tax v. Bipinchandra Maganlal and Co. Ltd., where it has been observed that there is no definable relation between assessable income and profits of a business concern in a commercial sense and that the computation of income for the purposes of assessment of income tax is based on a variety of artificial rules and takes into account several fictional receipts, deductions and allowances; commercial profits, on the other hand, as stated in Commissioner of Income-tax v. Ahmedabhai Umarbhai and Co., are profits of a trade or business gained by the business. They are arrived at by a comparison between the state of business at two specific dates separated by an interval of an year and the fundamental margin is the amount of gain made by the business during the year and can only be ascertained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that in case of trust, income is to be arrived at in commercial manner without reference to section 14. Accumulation to be determined out of such income. The Hon'ble Madras High Court at Page 492 observed as under :- "Section 11 contemplates an application of the income for charitable purpose. The charity can accumulate 25 per cent. Of the income. The application as well as the accumulation has necessarily to be the income as accounted for in the accounts, and not as computed under the I.T.Act, subject of course to what is provided in sub-s. (4) of s. 11. This is because the Act sometimes deals with income attributed by some statutory fiction. There can be no distribution or accumulation of what is taxed under some fiction. The Supreme Court in CIT v. Bipinchandra Maganlal & Co. Ltd. [1961] 41 ITR 290 (SC) considered the question whether the expression "smallness of profits" has to be understood in the sense of smallness of assessable income. It was pointed out that a company normally distributes dividends out of its business profits and not out of its assessable income and that even though the assessable income of a company may be much, the commercial profits may be so s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g out whether the assessee has complied with the rule of accumulation to the extent of Rs. 10,000 or 25 per cent. Of the income, whichever is higher. 10. The Hon'ble Madras High Court in the casse of CIT Vs.Estate of V.L.Ethiraj 136 ITR 12 had an occasion to consider as to whether for the purpose of computing the accumulation in excess of 25% of the total income as laid down in section 11(1)(a) of the I.T.Act is to be done under the appropriate heads of income of the Act. The Hon'ble High Court held that computation should be in the normal commercial manner and not in accordance with section 14 of the Act. 13. The Hon'ble Gujrat High Court in the case of CIT V Ganga Charity Trust Fund 162 ITR 612 has an occasion to consider as to whether income tax liability is to be allowed as deduction under section 11(1)(a) of the I.T.Act. The Hon'ble High Court took the view that determining the income which could be actually applied or accumulated for the purpose of the trust under section 11(1)(a) of the Act, all outgoings including the outgoing in the nature of payment of Income Tax must be deducted. For this the Hon'ble High Court referred to the decisions of Hon'ble Andhra Pradesh Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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