TMI Blog2020 (10) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby achieve the objective of the trust, so the expenditure incurred by the assessee trust, needs to be allowed. Therefore, the total expenses incurred as Administrative Establishment expenses are allowable expenses. Allowability of exemption u/s. 11(1)(a) (i.e. 15% accumulation of income is on Gross Receipt or not) - As per assessee, it is entitled to accumulate 15% of its gross receipt in case it is not applied for charitable purpose u/s. 11(1)(a) - HELD THAT:- the issue under consideration in respect of accumulation of income allowed u/s. 11(1)(a) of the Act is no longer res integra. For that, we rely on the decision of the coordinate bench of this tribunal (Bangalore bench) in the case of Greenwood High Trust [ 2018 (1) TMI 1105 - ITAT BANGALORE] we direct the AO to allow accumulation income u/s. 11(1)(a) of the Act @ 15% of the gross receipt as claimed by the assessee and consequently ground raised by the assessee is allowed. - ITA No.903/Kol/2019 - - - Dated:- 21-10-2020 - Shri P.M. Jagtap, Vice President (KZ) And Shri A. T. Varkey, JM For the Appellant : Shri Manish Tiwari, AR For the Respondent : Smt. Ranu Biswas, Addl. CIT ORDER PER A. T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tegra, since Hon ble jurisdictional High Court in CIT Vs. Birla Janahit Trust (1994) 208 ITR 372 (Cal) has held that salaries and miscellaneous expenses which are incurred for carrying out the object and purpose of the trust must be considered as application for charitable purpose. We note that the expenses of ₹ 2,18,020/- was on account of audit fee, bank charges, rates and taxes etc. Expense on account of audit fee is compulsory because assessee while filing the Return of Income needs to file Form 10B which is prepared by the Auditor. So, audit fee is necessary expense likewise bank charges, which assessee has to pay to the bank for running of its activities, and the expenses under the head rates and taxes are in the nature of municipal taxes etc. which are necessary for the survival and then only it can run the trust, thereby achieve the objective of the trust, so the expenditure incurred by the assessee trust, needs to be allowed. Therefore, the total expenses of ₹ 2,18,020/- incurred as Administrative Establishment expenses are allowable expenses. So by relying on the ratio of the decision of Hon ble jurisdictional High Court in Birla Janahit Trust, supra, we d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after expenditure for charitable purpose i.e., the net receipts. This is issue is no longer res integra and has been decided by the Special Bench Mumbai in the case of BaiSonabaiHirjiAgiary Trust v. ITO [2005] 272 ITR (AT) 67 (Mumbai) [SB] ;[2005] 93 ITO 70 (ITATMum) [SB]. The facts in the aforesaid case were that the assessee was a public charitable trust enjoying exemption under section 11 of the Income-tax Act. As per the requirement of section 11 (1) of the Income-tax Act, as it prevailed at that point of time, the asses see had to apply 75 per cent. of its income for the objects and purposes of the trust and the assessee was permitted to accumulate or set apart up to 25 per cent. of its income, which was subject to fulfilment of other conditions. While calculating the aforesaid 25 per cent., the important question which arose was as to whether for this purpose, the gross income earned by the assessee is relevant or the income as computed in accordance with the provisions of Income-tax Act. In other words, whether outgoings from out of gross income which are in the nature of application of income, should be first deducted from 6 I.T.A No. 2496/Kol/2019 A.Y 2012-13 Shree Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to which such income is applied for such purposes, charitable or religious, In other words, for the purpose of section 11 (1 )(a) of the Act, the income in terms of relevance would be the income of the trust from and out of which 25 per cent. is set apart in accordance with the spirit of the statutory provision. This means that, when it is established that trust is entitled to full benefit of exemption under section 11 (1), the said trust is to get the benefit of twenty-five per cent. and this twenty-five per cent. has to be understood as income of the trust under the relevant head of section 11 (1), In other words, income that is not to be included for the purpose of computing the total income would be the amount expended for purposes of trust in India. Their Lordships in the above case have emphasized on the clear and unambiguous language of section 11 (1 )(a) and decided the matter on the basis of the same. It has been held that as per the statutory language of the above section the income which is to be taken for purpose of accumulation is the income derived by the trust from property. If both the decisions are carefully read, it becomes evident that any expend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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