TMI Blog2021 (9) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 11(1)(a) of the Act has to be computed on the income (gross receipts) before application i.e., on the gross receipts and not on the amount remaining after expenditure for charitable purpose (net income). Case followed PROGRAMME FOR COMMUNITY ORGANISATION [ 2000 (11) TMI 4 - SUPREME COURT] In the CBDT s Circular No.68 dated 17.11.1971 supports the plea of the assessee that an interpretation of law by the Supreme Court if not followed in an assessment could constitute a mistake apparent from the record and therefore rectifiable under section 154 of the Act. In this background of facts, we are of the view that there was a mistake apparent on the face of the record which ought to have been rectified under section 154. It is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 15,94,43,856/-. The assessee claimed a sum of ₹ 2,39,16,578/- as accumulation of income for charitable purpose in future as permitted under section 11(1)(a) of the Income Tax Act, 1961(hereinafter called 'the Act'). The said provisions permits accumulation of income to the extent of 15% for application for charitable purpose in future. The audit report in Form 10B was also filed along with the return of income. 3. The AO issued an intimation under section 143(1) of the Act dated 16.03.2016 in which the accumulation claimed at 15% of ₹ 15,94,43,856/- amounting to ₹ 2,39,16,578/- was not allowed by the AO and only a sum of ₹ 69,33,919/- was allowed as accumulation under section 11(1)(a) of the Act in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o error apparent on record your request for rectification of the above order cannot be considered and our application for rectification u/s 154 dated 21.02.2019 is hereby rejected. 6. Aggrieved by the aforesaid order of the AO, assessee preferred appeal before the CIT(A) contending that accumulation at 15% has to be computed on the gross receipts in terms of section 11(1)(a) of the Act and not on the net receipts as computed by the AO. assessee also pointed out that the gross receipts on which accumulation was claimed by the assessee was supported by the financial statements annexed with audit report filed by the assessee along with the return of income. The assessee also pointed out that it filed Form No.10B on the same date of fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Hon ble Supreme Court in the case of CIT Vs. Programme for Community Organisation (2001) 116 taxman 608 (SC). Learned Counsel also brought to our notice of the CBDT s Circular No.204 dated 24.07.1976 wherein the aforesaid aspect was clarified by the CBDT. He also relied on CBDT s Circular No.68 dated 17.11.1971 wherein the CBDT directed that the mistake arising as a result of a subsequent interpretation of law by the Supreme Court would constitute a mistake apparent from the record and therefore would be rectifiable under section 154 of the Act. It was submitted that since it is settled law that 15% deduction u/s 11(1)(a) should be allowed on income before application and not on the net income, the allowance of the deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,082,791 159,443,856 11. These figures are supported by the receipts and payments account of the assessee which is placed at pages 39 and 40 of the assessee s Paper Book. In Form 10B, copy of which is at page 55 of the assessee s Paper Book, the accumulation under section 11(1)(a) of the Act has been claimed at ₹ 2,39,16,578/-. In the light of the above factual position, we find no basis for the AO to have made the impugned adjustment under section 143(1) of the Act. The law is well settled that the accumulation of 15% under section 11(1)(a) of the Act has to be computed on the income (gross receipts) before application i.e., on the gross receipts and not on the amount remaining after expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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