TMI Blog2015 (11) TMI 1857X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 11(1)(a)of the Act, could not have been restricted and was eligible for accumulation of 15% of gross receipt from all streams of its income. Appeal of assessee allowed. - I.T.A No. 975/Bang/2015 - - - Dated:- 27-11-2015 - Shri. Abraham P. George, Accountant Member And Shri. Vijaypal Rao, Judicial Member For the Petitioner : Shri. Suresh Muthukrishnan, CA For the Respondent : Shri. Sunil Kumar Agarwala, JCIT ORDER Per Abraham P. George, Accountant Member In this appeal filed by assessee it is aggrieved that accumulation of income u/s.11(1)(a) of the Income-tax Act, 1961 [ the Act in short] was computed at 15% of the net income from property held under trust and not from the gross income from property held unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er net receipts had to be reckoned while applying 15% to work out the accumulation available to the assessee u/s.11(1)(a) of the Act. 04. Now before us, Ld. AR strongly assailing the order of the CIT (A) submitted that accumulation can be applied only on the gross income irrespective of the source and cannot be restricted to the net amount. 05. Per contra, Ld. DR supported the orders of CIT (A), 06. We have perused the orders and heard the rival contentions. We find that the issue raised before us is squarely covered by the judgment of Hon ble Apex High Court in the case of Addl.CIT v. A. L. N. Rao Charitable Trust [216 ITR 697]. Same view has been taken by us in the case of DCIT v. M/s. Rashtrothana Parishat [ITA Nos.896 897/Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d if ₹ 20,000 are actually applied during the previous year by the said trust to such charitable or religious purposes the income of ₹ 20,000 will get exempted from being considered for the purpose of income-tax under first part of s. 11(1). So far as the remaining ₹ 80,000 are concerned if they could not be actually applied for such religious or charitable purposes during the previous year then as per s. 11(1)(a) at least 25% of such total income from property or ₹ 10,000 whichever is higher will also earn exemption from being considered as income for the purpose of income-tax, that is, ₹ 25,000 will thus get excluded from the tax net. Thus out of the total income of ₹ 1,00,000 which has accrued to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come earned by the trust during the previous year from its properties are given exemption from income-tax, (i) that part of the income of previous year which is actually spent for charitable or religious purposes in that year; and (ii) out of the unspent accumulated income of the previous year 25% of such total property income or ₹ 10,000 whichever is higher can be permitted to be accumulated by the trust, earmarked for such charitable or religious purposes. Such 25% of the income or ₹ 10,000 whichever is higher will also get exempted from income-tax. That exhausts the operation of s. 11(1)(a). Then follows sub-s. (2) which naturally deals with the question of investment of the balance of accumulated income which has still not e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an absolute exemption. If sub-s. (2) is so read as suggested by the learned counsel for the Revenue, what is an absolute and unfettered exemption of accumulated income as guaranteed by s. 11(1)(a) would become a restricted exemption as laid down by s. 11(2). Sec. 11(2) does not operate to whittle down or to cut across the exemption provisions contained in s. 11(1)(a) so far as such accumulated income of the previous year is concerned. It has also to be appreciated that sub-s. (2) of s. 11 does not contain any non obstante clause like notwithstanding the provisions of sub-s. (1) . Consequently, it must be held that after s. 11(1)(a) has full play and if still any accumulated income of the previous year is left to be dealt with and to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scope of exemption removes the restriction imposed by s. 11(1)(a) but it does not take away the exemption allowed by s. 11(1)(a). On the express language of s. 11(1) and 11(2) as they stood on the statute book at the relevant time no other view is possible. 11. In the light of the aforesaid discussion and keeping in view the illustration which we have given earlier the combined operation of s. 11(1)(a) and s. 11(2) as applicable at the relevant time would yield the following result : (i) If the income derived from property held under trust wholly for charitable or religious purposes during the previous year is ₹ 1,00,000 and if ₹ 20,000 therefrom are actually applied to such purposes in India then those ₹ 20,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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