TMI Blog1980 (3) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1)(a) and section 11 (2)of the Income-tax Act, 1961, the Income-tax Appellate Tribunal is right in law in holding that, in order to avail of the exemption under the said provisions, it is enough if the assessee invests in Government securities only that part of the unspent balance which is over and above 25% of the total income derived from the property held under trust? " The assessees in these cases are charitable trusts. The assessment years concerned in I.T.R. Nos. 5 to 8, 14 and 15 of 1977 are 1969-70 and 1970-71. In I.T.R. No. 9 of 1977 the relevant assessment year is 1970-71. The assessees in these cases had claimed exemption under s. 11 of the Act, in respect of income not spent by them during the relevant accounting period, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessees that, on combined reading of the provisions of sub-ss. (1) and (2) of s. 11, it was clear that the assessees would be entitled to exemption in respect of the amount of accumulation falling outside the limit specified in cl. (a) of sub-s. (1) of s. 11, if that part of the unspent balance which is in excess of 25% of the total income is invested in approved Govt. securities. It is the correctness of this view that is really under challenge in those references that have been made by the Tribunal at the instance of the revenue. We shall extract the provisions of sub-ss. (1) and (2) of s. 11 as they stood at the material time in so far as they are relevant for our present purpose: " 11. (1) Subject to the provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under trust wholly for charitable or religious purposes is exempt from tax to the extent to which such income is applied in India during the relevant accounting period to such charitable or religious purposes. It is further provided that if a trust has unspent balance income in its hands and such unspent balance is accumulated for application to charitable or religious purposes in India, the trust shall be entitled to exemption in respect of so much of such accumulated income as is not in excess of 25% of the income of the trust derived from property or Rs. 10,000, whichever is higher. Thus, in respect of income accumulated by a trust for application to its charitable or religious purposes in India, which does not exceed 25% of the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch of the amount of accumulation as is in excess of the limits specified in sub-s. (1)(a) of s. 11. It was strongly urged by the counsel for the revenue that the expression " money so accumulated " can be understood as having reference only to the income accumulated under cl. (a) of sub-s. (1) of the section. It is significant that the words used in cl. (a) of sub-s. (1) are " where any such income is accumulated ", whereas Parliament has deliberately employed a totally different expression in cl. (it) of sub-s. (2), namely, the " money so accumulated". If Parliament had intended to refer to the income accumulated by the person under cl. (a) of sub-s. (1), one should have expected it to use the words " the income accumulated " under sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided for in sub-s. (2) the assessee has to invest in Govt. security or other approved securities the entirety of the accumulated income and not merely so much thereof as is in excess of the limit laid down by cl. (a) of sub-s. (1) is to be accepted, it will lead to the unreasonable result of wholly depriving the trust of the benefit of user for charitable and religious purposes of even that part of its accumulated income which falls within the limit specified in cl. (a) of sub-s. (1). This will be defeating the very object and purpose underlying the grant of the exemption provided for in cl. (a) of sub-s. (1). In our opinion, it will not be right to place such a construction on the provisions contained in cl. (b) of sub-s. (2). We are s ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
