TMI Blog2023 (2) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is a specific reason why this Circular was introduced and the purpose of introduction of the same is that the assessee should not be eligible to claim double deduction in respect of the same income i.e. recycle the same income, which remained unapplied after the end of the fifth year. Therefore, if exemption under section 11(1)(a)is allowable in respect of the deemed income u/s 11(3), then exemption u/s 11(2) is also allowable in respect of such deemed income as sub-section (2) of section 11 refers to the income referred to in section 11(1)(a). Thirdly, the Mumbai ITAT in the case of The Trustees, The B.N. Gamadia Parsi Hunnarshala [ 2001 (4) TMI 928 - ITAT MUMBAI] held that exemption under section 11 is available only on income within meaning of section and not on deemed income and, therefore, an assessee cannot claim benefit or accumulation with respect to deemed income . Fourthly, our view is also supported by Form No. 3A of the Income-tax Rules, 1962. Clause No. 10 of Part I of Form No. 3A prescribes the deemed income under section 11(3) to be added to the income arrived at after claiming exemption under section 11(1)(a) and 11(2). The form does not al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the same cannot be subject to provisions of section 11(1)(a) of the Act. The basic contention of the AO was that the assessee has already claimed deduction of the said deemed income in the assessment year in which such amount was computed under section 11(2) of the Act. The amount accumulated had to be spent within a period prescribed the Act. Therefore, bringing the deemed income under the fold of income eligible for deduction under section 11(1)(a) of the Act would tantamount to double deduction. 5. The assessee filed appeal against the order before Ld. CIT(Appeals), who dismissed the appeal of the assessee with the following observations: 5.0 Decision :- I have carefully considered the submission of the appellant and perused facts of the case in A.O's order. 5.1 Having considered the facts and circumstances of the case I find that only issue for consideration is whether the deemed income u/s 11(3) would be eligible for 15% accumulation u/s 11(2). In this regard the assessee placed reliance on decision of Calcutta high Court stating that there is no decision of any other High Court on this issue and therefore the decision of Kolkata High Court in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch income would be eligible to claim of deduction under section 11(1)(a) and 11(2) of the Act. The counsel for the assessee in support of his contention relied on the decision of Gujarat State Lion Consideration Society v. DCIT in ITA number 69/Rjt/ 2017 and also on the Kolkata High Court decision the case of CIT v. Natwarlal Chowdhury Charitable Trust 189 ITR 656 which held that deemed income under section 11 (3) would be subject to the computation provisions of section 11 of the Act. 7. In response, DR relied upon the observations made by Ld. CIT(Appeals) and AO in their orders. 8. We have heard the rival contentions and perused the material on record. After giving a thoughtful consideration to the facts before us and the issue for consideration, we are unable to accept the contention of the counsel for the assessee, for the following reasons: 8.1 Firstly, in the judicial precedents on which the counsel for the assessee has placed reliance, the Circular No. 29 [F. No. 20/22/69-IT(A-I)], dated 23-8-1969 was not brought to the attention of the Honourable High Court of Calcutta for its consideration. We observe that the language of the Circular is plain and unambiguous, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be lost. We observe that the above rulings on which reliance has been placed by the counsel for the assessee did not consider the above Circular i.e. the above Circular was not brought to the notice of the Court/ITAT for their consideration. Accordingly, we are unable to place reliance on the judicial precedents relied upon the counsel for the assessee on this issue. If the Natwarlal Chowdhury (cited supra) judgment is to be followed, it will result in undue benefit to the trusts and will defeat the legislative intent of section 11. 8.3 Secondly, in our considered view, there is a specific reason why this Circular was introduced and the purpose of introduction of the same is that the assessee should not be eligible to claim double deduction in respect of the same income i.e. recycle the same income, which remained unapplied after the end of the fifth year. Therefore, if exemption under section 11(1)(a)is allowable in respect of the deemed income under section 11(3), then exemption under section 11(2) is also allowable in respect of such deemed income as sub-section (2) of section 11 refers to the income referred to in section 11(1)(a). It would be useful to reproduce sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable only on income within meaning of section and not on deemed income and, therefore, an assessee cannot claim benefit or accumulation with respect to deemed income . The ITAT in the above case distinguished the decision of Natwarlal supra with the following observations: 11. In the case of CIT v. Natwarlal Chowdhury (cited supra), the Hon ble High Court, with due respect, has not analysed this section in the correct perspective. In our humble opinion the different expressions i.e., income derived from property and income , used by the legislation under sections 11 and 12 of the Act missed the attention of their Lordships or the impact of the difference in the expressions were not brought to their Lordships notice. In fact, a different view was expressed by the Hon ble Calcutta High Court in [1993] 199 ITR 215 (Cal.) (supra) in a later decision. Under these circumstances, and in the light of the decision of the Hon ble Bombay High Court in the case of CIT v. Thane Elec. Supply Co. [1994] 206 ITR 727 (Bom.) at 738 we hold that the assessee is not entitled to the benefit of accumulation of deemed income which is taxable under section 11(3) of the Act. 8.6 Fourt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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