TMI Blog2018 (3) TMI 1192X X X X Extracts X X X X X X X X Extracts X X X X ..... n this context means that the income is actually applied for the charitable or religious purposes of the trust but the word applied need not necessarily imply spent. Even if the income is irretrievably earmarked and allocated for the charitable or religious purposes or purposes it may be under section 11 (1)(a) of the Act. A sum of ₹ 66,24,580/- being 15% of the gross income even though the entire income has been applied on the object of the trust as an application of income and there left no income for accumulation. However, as requested by the learned Sr. DR that the facts are not cleared, the same can be verified by the AO but only verification of figures. Accordingly, we set aside the orders of the lower authorities and allow t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not considering the various case laws relied upon by your appellant. 3. On the facts and in the circumstances of the case and in law, the learned CIT (Appeals) erred in not set aside the reassessment order passed and treated as null and void as originally there was no assessment order passed and hence there cannot be a notice for re-assessment of Income. 3. Briefly stated facts are that the assessee is a public charitable trust registered with DIT (Exemption) Mumbai under section 12A of the Act. The assessee filed its return of income for AY 2010-11 along with income and expenditure account, balance sheet, audit report in form No. 10B and other annexure and claimed the deficit of ₹ 1,02,75,595/-. During the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under section 11(1)(a) can be made only if something remained unspent but if the entire income has already been spent, the same is fully exempt from tax, then there is nothing left to be accumulated. This view has taken by the Hon'ble Tribunal in its order ITA No 4309/ Mum/2005 dated 30-04-2013 for AY 2001-02 in the case of Dawat Institute of Dawoodi Bohra Community. In view of the same accumulation under section 11(1)(a) to the extent of ₹ 66,24,580/- cannot be allowed as the entire income has already been spent by the assessee. Aggrieved, assessee preferred the appeal before CIT(A). the CIT(A) confirmed the action of the Assessing Officer. 4. We have heard the rival contentions and gone through the facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, we are of the view that if the accounts of the assessee trust are properly maintained according to the principle of accountancy, the accumulation shall be up to 15% of the gross income as per accounts and not appearing as assessment order. We find that even CBDT has recognized this position in view of statutory language of section 11(1)(a) of the Act and also circular issued No. 5-P dated 19-06-1968, wherein it is held that the assessee is entitled to exemption at the rate of 25% (now after amendment 15%) on the gross receipts and not on the total income as determined by the AO under the Act. We also find that the issue is confirmed by Hon ble Supreme Court in CIT Vs. Programme for Community Organisation (2001) 248 ITR 1 (SC), wherein it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the income is irretrievably earmarked and allocated for the charitable or religious purposes or purposes it may be under section 11 (1)(a) of the Act. A sum of ₹ 66,24,580/- being 15% of the gross income even though the entire income has been applied on the object of the trust as an application of income and there left no income for accumulation. However, as requested by the learned Sr. DR that the facts are not cleared, the same can be verified by the AO but only verification of figures. Accordingly, we set aside the orders of the lower authorities and allow the appeal of the assessee. Consequently, the appeal for AY 2011-12 is exactly identical and hence, taking a consistent view, we allow this appeal also. 7. In the Result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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