TMI Blog2022 (12) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... arana of Mewar Charitable Foundation[ 1986 (7) TMI 56 - RAJASTHAN HIGH COURT] and in the case of CIT vs Shri Plot Swetamber Murti Pujak Jain Mandal ( 1993 (11) TMI 17 - GUJARAT HIGH COURT] wherein as answered the questions in favour of the assessee and against the Revenue. - SHRI KUL BHARAT, JUDICIAL MEMBER For the Appellant : None For the Respondent : Shri Sumesh Swani, Sr. DR ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee for the assessment year 2016-17 is directed against the order of Ld. CIT(A)-40, Delhi dated 29.05.2019. The assessee has raised following grounds of appeal:- 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) is bad both in the eyes of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred in law and on facts in not allowing 15% of income accumulated or set apart i.e. Rs. 38,05,443/- as per provisions of section 11(1)(a) rather restricting the deduction to surplus i.e. Rs. 20,34,215/- arbitrarily and without any justification. It is contended that 15% of income accumulated or set apart as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission are reproduced as under:- Before the Income Tax Appellate Tribunal, Bench- SMC-1, New Delhi: - Date of Hearing 09.05.2022. Re: SWAMI SATYANAND ALTERNATE THERAPY FOUNDATION Vs. ITO Ward Exemp. 2(2), New Delhi Sub: Appeal No. ITA 6232/DEL/2019 u/s 143(3) of the Income-tax Act, 1961 - Assessment Year 2016-17 The captioned Appeal No. ITA 6232/DEL/2019 for Assessment Year 2016- 17 has been filed by the assessee against the order of the Ld. ITO Exemp. 2(2), New Delhi dated 08.12.2018. The only ground of appeal in the matter is regarding accumulation or set apart of income u/s 11(1)(a) to the extent of 1 5% of income derived from trust property and allowability of net deficit amounting to Rs. 17,71,728/- and carry forward the same for set off in subsequent years. During the year under appeal, the appellant trust derived income from trust property to the tune of Rs. 2,53,69,619/- and claimed 15% accumulation to the tune of Rs. 38,05,443/- u/s 11(1)(a) of the Act. Further, after claiming application on income to the tune of Rs. 2,33,35.404/- the appellant trust had net deficit of Rs. 17.71,228/- which the trust claimed to be carried forwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or set apart of 25% of the income of the trust will get exemption from tax if the same is deposited in specified securities as per provisions of Section 11 (2)(b) of the IT Act, 1961, whereas in the present case, question is whether appellant trust is entitled or for accumulation or set apart 15% of income derived from trust property as per provisions of Section 11(1)(a) of the Act 15% of net surplus remaining after application of income as per provisions of Section 11 12 of the Act. To support its contention, the appellant trust has relied upon the following judgements: 1. CIT Vs. Maharna of Mewar Charitable Foundation 164 ITR 439 (Rajasthan) 2. CIT Vs. Shri Plot Swetamber Murti Pujak Jain Mandal (1995) 211 ITR 293 (Guji) 3. CIT Vs. Metriseva Trust 242 ITR 20 and Govindu Naicker Estate 248 ITR 368(Madras) 4. CIT Vs. Institute of Banking 264 ITR 1 10(Bom.)2003. 5. DIT Vs. Raghuvanshi Cahritable Trust, 197 Taxman 170(Delhi) 6. CIT Vs. Gujarat Samaj,349 ITR 559(MP)2012 7. ACIT(Exemption) Vs. Subros Educational Society, ITA No. 7326/Del./2017(ITAT Delhi) 16.07.2021. 8. In Seth Walchand Hirachand Memorial Trust Vs. ITO (ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umulated under section 11(2) or an option has to be exercised within the meaning of the Explanation to section 11(1). It is in such scenario where the application is less than 85% that the provisions pertaining to accumulation under section 11(2) or deemed application become operative and where accumulation beyond 15% is allowed. In the case under consideration, more than 85% of income derived from property held under been applied for charitable purposes leaving behind a surplus of Rs. 20,34,215/- and the Assessing Officer restricted the accumulation under section 11(1)(a) to the said amount as against the amount of Rs. 38,05,443/- claimed by the assessee. 4.2.3 The appellant has relied on the decision of the Hon'ble Supreme Court in the case of Programme for Community Organization (supra) in which the Hon'ble Supreme Court have held that the accumulation under section 11(1)(a) would be to the extent of 25% of income derived from property held under trust [the relevant provisions, at that particular time provided for 25% accumulation under section 11(1)(a)]. The operative part of the order is reproduced below: '3. The question that really requires considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Charitable Trust [(1995) 216 ITR 697]. 4.2.5 In view of the discussion above, it is held that there is no infirmity in the order of the Assessing Officer in restricting the amount to be accumulated under section 11(1)(a) to the extent of the surplus available after application of income. Ground of appeal No. 2 is dismissed. 4.3 Ground of appeal no. 3 challenges the not allowing of carry forward of net deficit. 4.3.1 From the computation of income it is seen that the deficit in the case of the assessee is on account of claim of 15% set apart of income before computing the amount to be applied for charitable purposes. As held above, since the amount to be accumulated under section 11(1)(a) has been restricted to the surplus available, there being no deficit on account of excess application, nothing can be carried forward. In the cases referred to by the appellant while claiming carry forward of deficit in the computation of income, it is to be noted that in all the cases the deficit was due to excess application of income. Hence, ground of appeal No. 3 is dismissed. 4.4 Ground of appeal no. 5 states that the appellant craves, leave, to add, alter, amend, and / ..... X X X X Extracts X X X X X X X X Extracts X X X X
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