TMI Blog2019 (8) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee trust, therefore, in the said circumstances and in view of above discussed law, no deemed rent is liable to be assessed in the case of the assessee, hence, the finding of the CIT(A) is not justifiable, hence, is hereby ordered to be set aside. Accordingly, all the issues are decided in favour of the assessee against the revenue. - I.T.A. Nos.1857 to 1859/Mum/2019 - - - Dated:- 7-8-2019 - Shri M. Balaganesh, AM And Shri Amarjit Singh, JM For the Assessee : Shri Percy Pardiwala/Sukhsagar Syal (AR) For the Revenue : Shri Mallikarjun Utture (DR) ORDER PER AMARJIT SINGH (JM): The above mentioned appeals have been filed by the assessee against the different order passed by the Commissioner of Income Tax (Appeals)-3, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Ys. 2011-12, 2013-14 2014-15. Since the common question of law and facts are involved in the present appeal, therefore, all the appeals are taken up together for adjudication. ITA. NO.1857/M/2019 2. The present appeal has been filed by the assessee against the order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 2,08,999/- (₹ 7 X 29,857 sq.ft. =₹ 2,08,999/-) Differential rent was assessed in sum of ₹ 4,55,02,068/- and added to the income of the assessee. The total income of the assessee was assessed to the tune of ₹ 5,16,28,330/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who confirmed the addition, therefore, the assessee has filed the present appeal before us. ISSUE Nos. 1 2 5. Both the issues are in connection with the confirmation of the addition of difference between the actual rent received by the appellant and the rent which should have been received by the assessee as deemed rental income . It is argued by the Ld. Representative of the assessee that the assessee has applied the income derived from property held under trust as per the objects of the trust but the AO applied the normal provisions of Income-tax Act and computed income u/s 14 of the I.T. Act, 1961 as stated in Chapter IV which has no relevance in computing the income of the assessee u/s 11 of the I.T. Act, 1961 as stated in Chapter III of the Income Tax Act, 1961, therefore, the assessing deemed rental income @ of ₹ 134 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1986) 29 Taxman 413 (Guj) which is reproduced as under:- There can be no actual application or setting apart or accumulation of income derived from trust property unless it is actually available for application or accumulation in the hands of the trustees. Where an assessee is following the mercantile system of accounting. income oat accrual basis may be reflected in the account books but such notional income is incapable of actual application or accumulation under section 11(1)(a) and the assessee-trust is called upon to pay income-tax for want of such application or accumulation, it would result it, rendering the benevolent provision fund in section 11(1)(a) nugatory. The Tribunal was, therefore, right in coming to the conclusion that the income' derived from trees) property he determined on commercial principles and in doing to all outgoings, including outgoing by wav/ of income-tax paid by the assessee-trust must be deducted and it was only from the surplus income in the hands of the trustees that the question of application or accumulation or accumulation or setting apart of income could arise, Regarding the change and the system of accounting. the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent to which such income is applied for the purposes of the trust in India and, where such income is accumulated or set apart for application to such purposes in India, to the extent to which the income is accumulated or set apart is not in excess of the income from such property. It is, therefore, clear that the income derived from property-must be such as can be applied for the purposes of the trust or accumulated or set apart for such application at a future date not exceeding 25 per cent of the income from such property. The word 'applied' was construed by the Supreme Court in H.E.H. Nizam's Religious Endowment Trust v. CIT [1966] 59 ITR 582 and the Supreme Court stated that it envisaged actual application of the income for the purposes of the trust. Similarly, the word 'accumulated' meant the income so set apart during the year for future spending on such purpose. There can be no actual application or setting apart or accumulation of income derived from trust property unless it is actually available for application or accumulation in the hands of the trustees. Where an assessee is following the mercantile system of accounting income on accrual bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upported by Circular No. 5-P (LXX-6) dated 19-5-1968 issued by CBDT's. The said circular made it clear that the word 'income' in section 11(1)(a ) must be understood in a commercial sense. In the instant case, the entire income of the trust, in the commercial sense, had been spent for the purpose of charity. There was no reason to deny the benefit of exemption granted by section 11 to that portion of the income which had been taken away by deduction at source on the ground that the amount had not been spent or accumulated for the purpose of charity. 8. On appraisal of the above mentioned decisions, we find that the provisions u/s 11(1)(a) of the Act speaks about the actual receipt of the income and actual expenses incurred for that and deemed income is not to be assessed. In the present case, the factual situation is not different such as land has been allotted by the Collector vide letter dated 24.07.1979 and the valuation has been done in view of the valuation report dated 27.01.1986 in which the valuation assessed of the carpet area which was accepted by Charity Commissioner as per the clause-8 of the order lies at page no 33 to 50 of the paper book. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
