Try out our Premium Member services: Virtual Legal Assistant, Query Alert Service and an ad-free experience. Free for one month and pay only if you like it.
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH,CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND SHRI T.R.SOOD, ACCOUNTANT MEMBER
ITA No. 814 & 815/CHD/2014
A.Y. : 2007-08 & 2008-09
H.P. State Environment Protection Vs The ACIT,
& Pollution Control Board, Circle,
Phase - 3, New Shimla. Shimla.
PAN: AAALH0191B
(Appellant) (Respondent)
Appellant by : Shri Ajay Jain
Respondent by : Dr. Amarveer Singh,CIT-DR
Date of Hearing : 10.07.2015
Date of Pronouncement : 15.07.2015
O R D E R
PER BHAVNESH SAINI,JM This order shall dispose of both the appeals filed by the assessee against orders of ld. CIT(A) Shimla dated 23.07.2014.
2. We have heard ld. Representatives of both the parties and perused the findings of authorities below. Both appeals are decided as under.
ITA 814/CHD/2014 (A.Y. 2007-08)
3. The assessee in this appeal challenged the order of ld.
CIT(Appeals) in denying benefit of 15% accumulation amounted to Rs. 2,61,86,197/-.
4. Briefly the facts of the case are that the assessment under section 143(3)/147 of the Act was made at income of 2 Rs. 14,43,57,780/- treating the entire surplus of receipts over expenditure denying the benefit of 15% accumulation of Rs.2,61,86,197/- under section 11(1) of the Act as claimed by the assessee and benefit of 85% accumulation of Rs.
11,81,70,581/- under section 11(2) of the Act as claimed by assessee considering that requisite notice in statutory form No. 10 in terms of Section 11(2) of the Act was belatedly filed. The Ld. Commissioner of Income Tax, Shimla did not condone the delay in filing form No.10. The writ petition of the assessee was dismissed by Himachal Pradesh High Court. It is stated that assessee Board was constituted by the State Government under the Water (Prevention & Control of Pollution) Act, 1974 with the main object of performing the delegated power and function to provide for the prevention and control of water pollution and maintaining or restoring the wholesomeness of water. The assessee has been granted registration under section 12AA of the Act which was later on withdrawn. The withdrawal order was challenged before ITAT and appeal of assessee was allowed.
It is further stated that appeal of the department is pending before Himachal Pradesh High Court. The Assessing Officer reopened the assessment under section 148 of the Act. The assessee had declared gross income of Rs.17,45,74,646/-
out of which an amount of Rs. 3,02,17,868/- was claimed as applied to the charitable or religious purposes in India during the previous year and the balance amount of Rs.
11,81,70,581/- was set apart for future utilization in terms of Section 11(2)(ii) and Rs. 2,61,86,197/- was shown as 3 income accumulated or set apart upto to 15%. The Assessing Officer found the entire sum as excess of income over expenditure and made the addition of Rs. 14.43 Cr to the income of the assessee.
5. The assessee challenged the addition before ld.
CIT(Appeals) and it was submitted that assessee has been granted registration under section 12AA of the Act and that benefit of 15% of accumulation of Rs. 2.61 Cr. under section 11(1) should have been granted to the assessee as per law.
Other facts are not relevant in the present appeal.
Therefore, the same are not discussed.
6. The ld. CIT(Appeals), considering the submissions of the assessee found that assessee is registered under section 12AA of the Act and is therefore, entitled for exemption as per law. However, as regards the addition of Rs.2.61Cr claiming benefit of 15% accumulation under section 11(1), ld. CIT(Appeals) dismissed appeal of the assessee because the form No. 10 was not filed within time. The findings of ld. CIT(Appeals) in para 5.3 to 5.6 of the appellate order are reproduced as under :
"Assessee has claimed the benefit of 15% accumulation u/s 11(1) (a&b) and 85% accumulation u/s 11(2). As per section 11 reveals that (a) income derived from property held under trust wholly for char/table or religious purposes, to the extent to which such income is applied to such purposes in India and where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of [fifteen] percent of the income from such property, (b) income derived from property held under trust in part only for such purposes, the trust having been created before the commencement of this Act, to the extent to which such income is applied to such application to such purposes in India, to the 4 extent to which the income so set apart is not in excess of [fifteen] per cent of the income from-such property.
5.4 Careful reading of section 11 suggested that only that part of income which is derived from the property held under trust for charitable or religious purposes would be exempt which is applied for such purpose and where such income is accumulated or set apart, not in excess of 15% of income from such property. Section 11(2) elaborates further that where 85% of the income under clause 11(1) ( a) & (b) is not applied but is accumulated the exemption shall be available only on fulfillment of conditions that Form No. 10 is duly submitted and the money is accumulated or deposited in the specified manner. 5.5 Hence primary condition for claiming exemption even for accumulation of 15% of income is that 85% of the receipts should be expended on the stated charitable or religious purposes or should have submitted Form 10 and invested in the specified manner.
5.6. In the present case assessee has a total receipt of Rs.17,45,74,646/- out of which assessee has utilized or applied only Rs.3,02,17,868/- thus assessee has not been able to spent 85% of the receipt and did not have requisite valid Form 10 for the year under consideration. Hence no benefit u/s 11 can be provided to the assessee. Keeping in view the facts stated in assessment order and above observations the action of A.O. is confirmed i.e. assessee's claim of allowing it the benefit under section 11(1) of 15% is not allowable and 85% of accumulation/s 11(2) is not allowed."
7. The ld. counsel for the assessee, at the outset submitted that the issue is covered in favour of the assessee by order of ITAT Chandigarh Bench in the case of ITO Vs Bhartiya Vidya Mandir Trust, Ludhiana in ITA No. 1093/2013 and CO No. 2/2014 for assessment year 2010-11 vide order dated 30.04.2015 and assessee would be entitled for statutory benefit of 15% accumulation under section 11(1)(a) of the Act amounting to Rs. 2.61 Crores.
8. On the other hand, ld. DR relied upon orders of the authorities below.
59. On consideration of the facts of the case, in the light of order of ITAT Chandigarh Bench in the case of Bhartiya Vidya Mandir Trust (supra), we find that the issue is covered in favour of the assessee by the above order in which the Tribunal in para 13 to 15 held as under :
"13. In the D e p a r t me n t a l appeal, the Revenue c h a l l e n g e d t h e o r d e r o f t h e l e a r n e d C IT ( A p p e a l s ) i n a l l o wi n g c r e d i t f o r 1 5 % o f t h e g r o s s r e c e i p t s i n wo r k i n g t h e s h o r t f a l l o f t h e a m o u n t s s p e n t wh e n t h e a s s e s s e e h a d n o t f u l f i l l e d t h e r e q u i r e me n t s b y g i v i n g a n o t i c e u n d e r s e c t i o n 1 1 ( 2 ) ( a ) o f t h e I n c o me T a x A c t f o r a c c u mu l a t i o n o f i n c o me i n t e n d e d t o b e a p p l i e d f o r charitable purposes in f uture years.
14. The assessee challenged the order of the Assessing O f f i c e r b e f o r e t h e l e a r n e d C IT ( A p p e a l s ) a g a i n s t t h e denial of credit f or 15% of the gross receipts i.e. an amount of Rs.1,47,80,028/-. T h e f ac t s a r e s a m e a s n o t e d a b o v e wh i l e d i s p o s i n g o f t h e C r o s s O b j e c t i o n o f the assessee. I t wa s s u b m i t t e d t h a t a s p e r t h e provis ions of section 11 of the Act, " if a char itabl e trust i n c u r r e d 8 5 % o f i t s i n c o me f o r t h e o b j e c t i v e s o f t h e trust, the balance 15% is free to be set a p a r t / a c c u mu l a t e d wi t h o u t a n y c o n d i t i o n s a n d n o t h i n g is taxable". The assessee explained that as per section 11 of the Act, a charitable institution is not charged to t a x t o t h e e x t e n t o f 1 5 % o f i t s i n c o me a n d r e l i e d u p o n the decision of the Hon'ble Apex Court in the case of A d d l . C IT V s . A . L . N . R a o C h a r i t a b l e T r u s t , 2 1 6 I T R 6 9 7 . I t wa s s u b m i t t e d t h a t f r o m t h e a b o v e j u d g me n t , i t i s c l e a r t h a t a n a m o u n t u p t o 1 5 % o f t h e i n c o me i s e x e mp t f r o m i n c o me t a x a n d c a n b e a c c u mu l a t e d . The Assessing Off icer reiterated the f acts stated in the a s s e s s me n t o r d e r . T h e l e a r n e d C I T ( A p p e a l s ) f o l l o wi n g t h e p r o v i s i o n s o f s e c t i o n 1 1 o f t h e A c t a n d t h e j u d g me n t o f t h e H o n ' b l e S u p r e me C o u r t i n t h e c a s e o f A.L.N. Rao Charitable Trust (supra) directed that the assessee is eligible f or exemption of 15% of the gross receipts and a l l o we d t h i s g r o u n d o f a p p e a l o f t h e a s s e s s e e . The f i n d i n g o f t h e l e a r n e d C IT ( A p p e a l s ) i n p a r a s 5 . 5 t o 5 . 1 2 of the impugned order are reproduced as under :
" 5 . 5 I have carefully considered the rival submissions. It is seen from the assessment order that the appellant vide his submissions dated 28.12.2012 had claimed that there is a blanket exemption of 15% of the total income from the unspent amount of the trust. In this regard, the appellant had relied upon the decision of the Hon'ble Supreme Court in the case of 6 A.L.N. Rao Charitable Trust reported in 216 ITR 697. The AO did not discuss this issue in the assessment order while rejecting the appellant's claim. During the course of appellate proceedings, the appellant once again referred to the provision of Section 11 of the Income Tax Act and reiterated his reliance on the case of A.L.N.
Rao Charitable Trust(Supra). The appellant once again claimed that there is blanket exemption of 15% of total income from the unspent amount for charitable purposes out of the income of the Trust for that previous year. The AO in his counter comments dated 30.08.2013 merely mentioned that the details had already been considered in the assessment order at Page-11. No submissions were given by the AO as to why this case is not applicable in the appellant's case.
The Hon'ble Supreme Court in the case of A.L.N. Rao Charitable Trust has held as under:-
"A mere look at section 11(1) (a) as it stood at the relevant time clearly shows that out of the total income accruing to a trust in the previous year from property held by it wholly for charitable or religious purposes, to the extent the income is applied for such religious or charitable purposes, the same will get out of the tax net but so far as the income which is not so applied during the previous year is concerned at least 25 per cent, of such income or Rs. 10,000, whichever is higher, will be permitted to be accumulated for charitable or religious purpose and it will also get exempted from the tax net. Then follows sub-section (2) which seeks to lift the restriction or the ceiling imposed on such exempted accumulated income during the previous year and also brings such further accumulated income out of the tax net if the conditions laid down by sub-section (2) of section 11 are fulfilled meaning thereby the money so accumulated is set apart to be invested in the Government securities, etc., as laid down by clause (b) of sub-section (2) of section 11 apart from the procedure laid down by clause (a) of section 11(2) being followed by the assessee-trust. To highlight this point we may take an illustration. If Rs. 1,00,000 are earned as the total income of the previous year by the trust from property held by it wholly for charitable and religious purposes and if Rs. 20,000 are actually applied during the previous year by the said trust to such charitable or religious purposes the income of Rs.20,000 will get exempted from being considered for the purpose of income-tax under the first part of section 11(1). So 7 far as the remaining Rs. 80,000 are concerned if they could not be actually applied for such religious or charitable purposes during the previous year then as per section 11 (1) (a) at least 25 per cent, of such total income from property or Rs. 10,000, whichever is higher, will also earn exemption from being considered as income for the purpose of income-tax, that is, Rs. 25,000 will thus get excluded from the tax net. Thus out of the total income of Rs. 1,00,000 which has accrued to the trust Rs. 25,000 will earn exemption from payment of income-tax as per section 11(1) (a), second part. Then follows sub-section (2) which states that the ceiling or the limit or the restriction of accumulation of income to the extent of 25 per cent, of the income or Rs. 10,000, whichever is higher, for earning income- tax exemption as engrafted under section 11(1) (a) will get lifted if the money so accumulated is invested as laid down by section ll(2)(b) meaning thereby, out of the total accumulated income of Rs. 80,000 accruing during the previous year and which could not be spent for charitable or religious purposes by the trust, the balance of Rs. 55,000 if invested as laid down by sub-section (2) of section 11 will also get excluded from the tax net. But for such investment and if section 11(1) alone had applied Rs. 55,000 being the balance of the accumulated income would have been covered by the tax net. Learned counsel for the Revenue submitted that the investment as contemplated by sub-section (2)(b) of section 11 must be investment of all the accumulated income in Government securities, etc., namely, 100 per cent of the accumulated income and not only 75 per cent, thereof. And if that is not done, then only the invested accumulated income to the extent of 75 per cent, will get excluded from income-tax assessment. But so far as the remaining 25 per cent, of the accumulated income is concerned, it will not earn such exemption. It is difficult to appreciate this contention. The reason is obvious. Section 11, subsection (l)(a) operates on its own. By its operation two types of income earned by the trust during the previous year from its properties are given exemption from income-tax:
(i) that part of the income of the 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 per cent, of such total property income or Rs. 10,000, 8 whichever is higher, can be permitted to be accumulated by the trust, earmarked for such charitable or religious purposes. Such 25 per cent, of the income or Rs. 10,000, whichever is higher, will also get exempted from income-tax. That exhausts the operation of section 11(1) (a). Then follows sub-section (2) which naturally deals with the question of investment of the balance of accumulated income which has still not earned exemption under subsection (l)(a). So far as that balance of the accumulated income is concerned, that also can earn exemption from income- tax meaning thereby the ceiling or the limit of exemption of accumulated income from income-tax as imposed by subsection (I) (a) of section 11 would get lifted if additional accumulated income beyond 25 per cent, or Rs. 10,000, whichever is higher, as the case may be, is invested as laid down by section 11(2) after following the procedure laid down therein. Therefore, sub-section (2) only will have to operate qua the balance of 75 per cent, of the total income of the previous year or income beyond Rs. 10,000, whichever is higher, which has not got the benefit of tax exemption under subsection (l)(a) of section 11. If learned counsel for the Revenue is right and if 100 per cent, of the accumulated income of the previous year is to be invested under sub-section (2) of section 11 to get exemption from income-tax, then the ceiling of 25 per cent, or Rs. 10,000, whichever is higher, which is available for accumulation of income of the previous year for the trust to earn exemption from income-tax as laid down by section 11(1) (a) would be rendered redundant and the said exemption provision would become otiose. It has to be kept in view that out of the accumulated income of the previous year an amount of Rs. 10,000 or 25 per cent, of the total income from property, whichever is higher, is given exemption from income-tax by section 11(1) (a) itself. That exemption is unfettered and not subject to any conditions. In other words, it is an absolute exemption. If sub section (2) is so read as suggested by learned counsel for the Revenue, what is an absolute and unfettered exemption of accumulated income as guaranteed by section 11(1) (a) would become a restricted exemption as laid down by section 11(2). Section 11(2) does not operate to whittle down or to cut across the exemption provisions contained in section 11(1) (a) so far as such accumulated income of the previous year is concerned. It has also to be appreciated that subsection (2) of section 11 does not contain any non obstante clause like " notwithstanding the provisions of sub-
9section (1) ". Consequently, it must be held that after section 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 considered for the purpose of income-tax exemption, sub-section (2) of section 11 can be pressed into service and if it is complied with then such additional accumulated income beyond 25 per cent, or Rs. 10,000, whichever is higher, can also earn exemption from income-tax on compliance with the conditions laid down by sub-section (2) of section 11. It is true that sub-section (2) of section 11 has not clearly mentioned the extent of the accumulated income which is to be invested. But on a conjoint reading of the aforesaid two provisions of sections 11(1) and 11(2), this is the only result which can follow. It is also to be kept in view that under the earlier Income-tax Act of 1922, exemption was available to charitable trusts without any restriction upon the accumulated income. There was a change in this respect under the present Act of 1961. Under the present Act, any income accumulated in excess of 25 per cent, or Rs. 10,000, whichever is higher, is taxable under section 11(1)
(a) of the Act, unless the special conditions regarding accumulation as laid down in section 11(2) are complied with. It is clear, therefore, that if the entire income received by a trust is spent for charitable purposes in India, then it will not be taxable, but if there is a saving, that is to say, an accumulation of 25 per cent, or Rs. 10,000, whichever is higher, it will not be included in the taxable income. Section 11(2) quoted above further liberalizes and enlarges the exemption. A combined reading of both the provisions quoted above would clearly show that section 11(2), while enlarging the scope of exemption, removes the restriction imposed by section 11(1) (a), but it does not take away the exemption allowed by section 11(1) (a). On the express language of sections 11(1) and 11(2) as they stood on the statute book at the relevant time, no other view is possible.
In the light of the aforesaid discussion and keeping in view the illustration which we have given earlier, the combined operation of section 11(1) (a) and section 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 Rs. 1,00,000 and if Rs. 20,000 therefrom are actually applied to such purposes in India then those Rs. 20,000 will get exempted 10 from payment of income-tax as per the first part of section ll(l)(a).
(ii) Out of the remaining accumulated income of Rs. 80,000 for the previous year, a further sum of Rs. 25,000 will get exempted from payment of income-tax as per the second part of section 11(1) (a). Thus, out of the total income derived from property as aforesaid during the previous year, that is, Rs. 1,00,000, Rs. 45,000 in all will get excluded from the tax net on a combined operation of the first and the second part of section 11(1) (a).
(iii) The aforesaid ceiling of Rs. 25,000 of the accumulated income from property of the previous year, will get lifted under section 11(2) to the extent the balance of such accumulated income is invested as laid down by section 11(2). To take an illustration if, say, an additional amount of Rs. 20,000 out of the balance of accumulated income of Rs. 55,000 is invested as per section 11(2), then this additional amount of Rs. 20,000 of accumulated income will get excluded from the tax net as per section 11 (2).
(iv) The remaining balance of the accumulated income out of Rs. 55,000, that is, Rs. 35,000 if not invested as per sub-section (2) of section 11, will be added to the taxable income of the trust and will not get exempted from the tax net.
(v) If, on the other hand, the entire remaining accumulated income of Rs. 55,000 is wholly invested as per section 11 (2), the said entire amount of Rs. 55,000 will get exempted from the tax net. "
5.7 This decision of the Hon'ble Supreme Court clearly held that there is a blanket exemption with regard to the 25% (now 15%) of gross receipts as per second part of Section ll(l)(a) of the Income Tax Act. This exemption of 25% is not dependent on any other condition except that the trust or society should be registered u/s 12AA of the Income Tax Act. The only issue to be examined here is whether the provisions of section 11(1) (a) and 11(2) have been since amended and if so, whether the aforesaid decision would apply to the amended provisions also?
5.8 The provisions of section ll(l)(a) and 11 (2) as they were in force in the year 1968-69 relevant to AY 69-70, i.e the year to which 11 the case of A.L.N. Rao Charitable Trust (supra) relates have been reproduced in the order of the Hon'ble Supreme Court itself as under:
"These provisions as they stood at the relevant time read as under:
"11. (1) Subject to-the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income--
(a) income derived from property held under trust wholly for charitable or religious purposes to the extent to which such income is applied to such purposes in India ; and, where any such income is accumulated for application to such purposes in India, to the extent to which the income so accumulated is not in excess of twenty-five per cent, of the income from the property or rupees ten thousand, whichever is higher,...
(2) Where the persons in receipt of the income have complied with the following conditions, the restriction specified in clause
(a) or clause (b) of sub-section (1) as respects accumulation or setting apart shall not apply for the period during which the said conditions remain complied with--
(a) such persons have, by notice in writing given to the Income- tax Officer in the 'prescribed manner, specified the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed ten years.
(b) the money so accumulated or set apart is invested in any Government security as defined in clause (2) of section 2 of the Public Debt Act, 1944 (18 of 1944), or in any other security which may be approved by the Central Government in this behalf."
5.9 The provisions of section ll(l)(a) and 11 (2) as they were in force in the year 2009-2010, i.e the year to which the present case relates are reproduced as under:
"11. Income from property held for charitable or religious purposes.
12(1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income-
(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property;
(2) Where eighty-five per cent, of the income referred to in clause
(a) or clause (b) of sub-section (1) read with the Explanation to that subsection is not applied, or is not deemed to have been applied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to such purposes in India, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely -
(a) such person specifies, by notice in writing given to the Assessing Officer in the prescribed manner, the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed ten years;
(b) the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5):
Provided that in computing the period of ten years referred to in clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded:
Provided further that in respect of any income accumulated or set apart on after the 1st day of april, 2001, the provisions of this sub-section shall have effect as if for the words "ten years " at both the places where they occur, the words "five years " had been substituted.
135.10 It is apparent from the reading of provisions referred to above that section11 (a) was almost identical during the AY 69-70 and during AY 20010-11. As regards the provisions of section 11(2) are concerned, even the amended sub section (2) operates qua the balance of 85 per cent, of the total income of the previous year which has not got the benefit of tax exemption under sub-section(l)(a) of section 11. Section 11(2), as amended, does not operate to whittle down or to cut across the exemption provisions contained in section ll(l)(a)so far as such accumulated income of the previous year is concerned. As held by the Hon'ble Supreme Court in the case of A.L.N. Rao Charitable Trust (supra),it has to be appreciated that sub-section (2) of section 11 does not contain any non obstante clause like "notwithstanding the provisions of sub- section(1)".Consequently, it must be held that after section ll(l)(a) has full play and if still any accumulated income of the previous year is left to be dealt with, and to be considered for the purpose of income- tax exemption, sub-section (2) of section 11 can be pressed into service and if it is complied with then such additional accumulated income beyond 15 per cent, can also earn exemption from income-tax on compliance with the conditions laid down by sub-section (2) of section 11.
5.11 It may also be relevant to refer to the views expressed by 'Chaturvedi and Pithisaria' on this issue. These views read as under:
"Section 11 has undergone amendments more than once. In order to be able to better grasp the provisions as applicable from time to time, it will be better to put the effect of such provisions, except those of sub-section (1A) dealt separately hereunder, vis- a-vis exemption and taxability of income derived from property held under charitable or religious trust, in a tabular form subject-wise. Thus:-
Income derived from property held under trust of other legal obligation wholly for charitable purposes and such income or part thereof is not applied to such purposes in India during the previous year wherein it is derived, but is accumulated for application to such purposes in India: -1 2 3 4
1922 Act 1961 Act provisions 1961 Act provisions 1961 Act provisions provisions applicable for AY applicable for AY applicable from 14 1962-63 to 1970-71 1971-72 to 1975-76 1976 onwards Unconditionally exempt Conditionally Conditionally Conditionally exemption - (a) if a exempt - (a) if a exempt - (a) same {s.4(3)(i)}. notice in From No. notice in Form No. as in col. (3), for 10 is given to the 10 is given assessment years 1TO in accordance to the 1TO in 1976-77 to 1982- with rule 17 and accordance with 83. For and from income so rule 17 and assessment year accumulated {minus income so 1983-84, investment accumulation accumulated or deposit is to be permitted under (b), accumulation made in the forms below} is invested in permitted under (b), or modes specified Government below] is invested in in section 11(5).
securities, or other the Government
approved securities or other (b) if conditions at
securities, the approved (a) are not fulfilled,
accumulation up to securities or is accumulation to
a period of ten deposited in Post the extent of 25%
years is exempt [s. Office Savings only is exempt. In
ll(l)(a), latter part, Bank accounts or computing the
read with s. 11(2)}; under the Post 25%, any
and Officer (Time voluntary
(b) if conditions at Deposits) Rules, contributions
(a) are not 1970, or in a referred to in s. 12
fulfilled, banking company to shall be deemed to
accumulation to which the Banking be part of the
the Regulation Act, income [s. 11(1)(a),
extent of 25 per 1949, applies or co- latter part read with
cent of the operative land Expl. (1)].
income from the mortgage bank or
property or Rs. a cooperative land
10,000/- whichever development bank,
is higher, is or deposited in an
exempt. In account with an
computing the 25 per approved financial
cent., the income corporation, the
from such accumulation up to a
property for the period of ten years is
relevant previous exempt [s. 11(2)].
year or the [(b) No such
immediately exemption].
preceding
previous year,
whichever is higher,
may be taken
[s. 11(1) (a), latter
part, read with
the Explanation]._____________
5.12 As such, this judgement of the Hon'ble Supreme Court is squarely applicable to the appellant's case. The appellant is thus eligible for exemption of 15% of gross receipts i.e. 15% of Rs.9,85,33,522/- u/s ll(l)(a) of the Income Tax Act. The AO is accordingly directed to allow this exemption of 15% of the gross receipts amounting to Rs.1,47,80,028/-. This ground of appeal is accordingly allowed.
1515. A f t e r h e a r i n g t h e r i v a l c o n t e n t i o n s , we d o n o t f i n d a n y me r i t i n t h i s g r o u n d o f a p p e a l o f t h e R e v e n u e . The learned CIT (Appeals) on proper appreciation of f acts in the light of the provisions of section 11 of the A c t a n d t h e j u d g me n t o f t h e H o n ' b l e S u p r e me C o u r t i n the case of A.L.N. Rao Charitable Trust (supra) rightly decided the issue in f avour of the assessee. The issue is covered in f avour of the assessee by the judgment of t h e H o n ' b l e S u p r e me C o u r t n o t e d a b o v e i n t h e f i n d i n g s of the learned CIT (Appeals). The learned D.R for the R e v e n u e d i d n o t c o n t r i b u t e mu c h o n t h i s i s s u e a n d merely relied upon the order of the Assessing Off icer without pointing out any inf irmity in the order of the l e a r n e d C IT ( A p p e a l s ) i n a l l o wi n g t h e e x e m p t i o n o f 1 5 % on the gross receipts. T h u s we d o n o t f i n d a n y j u s t i f i c a t i o n t o i n t e r f e r e i n t h e o r d e r o f t h e l e a r n e d C IT (Appeals). This ground of Departmental appeal is accordingly dismissed."
10. In view of the above decisions in the case of Bhartiya Vidya Mandir Trust (supra) we set aside the orders of authorities below and direct the Assessing Officer to allow benefit of 15% accumulation amounting to Rs.
2,61,86,197/- as per law.
11. In the result, appeal of the assessee is allowed.
ITA No. 815/CHD/2014 : (A.Y. 2008-09)
12. This appeal by assessee is directed against the order of ld. CIT(Appeals) Shimla dated 23.07.2014 for assessment year 2008-09.
13. Ground No. 1 is general. The same is dismissed.
14. The ld. counsel for the assessee did not press ground No. 3. Same is also dismissed as not pressed.
15. The only ground left for consideration is claim under section 11(1)(a) with regard to benefit of 15% accumulation 16 amounting to Rs. 2,39,40,595/-. Both the parties stated that the findings of authorities below are same as have been considered in assessment year 2007-08 and the issue is identical. Therefore, order in assessment year 2007-08 may be followed for deciding this appeal as well.
16. We find that parties are justified in contending that the issue is identical which have been considered in I TA 814/CHD/2014 for assessment year 2007-08. Therefore, following the reasons for decision in assessment year 2007-
08 above, we set aside the orders of authorities below and direct to grant benefit to the assessee under section 11(1)(a) of the Act of 15% accumulation of the amount in question.
This ground of appeal of assessee is accordingly, allowed.
17. In the result, appeal of assessee is partly allowed.
18. In the result, ITA 814/CHD/2014 is allowed and ITA 815/CHD/2014 is partly allowed.
Order pronounced in the Open Court on 15th July,2015.
Sd/- Sd/-
(T.R.SOOD) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 15th July,2015.
'Poonam'
Copy to:
The Appellant, The Respondent, The CIT(A), The CIT,DR Assistant Registrar, ITAT Chandigarh