HP State Enviornment Protection and Pollution Control Board, Shimla V. DCIT, Shimla

ITA 78/CHANDI/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1590 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-08-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 21-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNIL VERMAC ITDR
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice; Deemed to accrue or arise in india; Revised return
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.RANO JAIN, ACCOUNTANT MEMBER ITA NO. 141/CHD/2015 ASSESSMENT YEAR: 2011-12 THE DCIT, VS H.P. STATE ENVIRONMENT CIRCLE, PROTECTION & POLLUTION SHIMLA. CONTROL BOARD, PHASE 3, SHIMLA. PAN: AAALH0191B & ITA NO. 78/CHD/2015 ASSESSMENT YEAR: 2011-12 H.P. STATE ENVIRONMENT VS THE DCIT, PROTECTION & POLLUTION CIRCLE, CONTROL BOARD, SHIMLA. PHASE 3, SHIMLA. PAN: AAALH0191B (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI SUNIL VERMA,C IT-DR ASSESSEE BY : SHRI AJAY JAIN DATE OF HEARING : 24.08.2015 DATE OF PRONOUNCEMENT : 01.09.2015 O R D E R PER BHAVNESH SAINI,JM BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORD ER OF LD. CIT(APPEALS) SHIMLA DATED 05.11.2014 FOR ASSESSMENT YEAR 2011-12. 2 2. THE REVENUE FILED THE APPEAL ON THE FOLLOWING GROUND: ON THE FACTS AND CIRCUMSTANCES, THE LD. CIT(APPEAL S) WAS RIGHT IN ALLOWING REGISTRATION UNDER SECTION 12A INSP ITE OF THE FACT THAT THE RECEIPTS OF THE ASSESSEE ARE IN CONTRAVENTION TO THE AMENDED PROVISIONS OF SECTION 2(15) OF THE IT ACT, 1961. 3. THE ASSESSEE HAS FILED THE APPEAL ON THE FOLLOWI NG GROUNDS : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEAL) IS AGAINST THE APPLICABLE LAWS AND CANONS OF NATURAL JUSTICE. 2. THE LEARNED CIT(A) HAS WRONGLY DENIED THE BENE FIT OF ACCUMULATION U/S LL(L)(A) TO THE EXTENT OF 15% OF THE INCOME, AMOUNTED TO RS 3,15,59,861.00 ON THE GROUND THAT EVEN FOR CLAIMING THE BENEFIT OF ACCUMULATION TO THE EXTENT O F 15% U/S 1L(L)(A), 85% OF THE RECEIPT SHOULD HAVE BEEN EX PENDED ON THE STATED CHARITABLE OR RELIGIOUS PURPOSES. THE APPLICATION OF SECTION 1L(L)(A) AND 11(2) HAS BEEN WR ONGLY INTERMINGLED WHEREAS THE PROVISIONS OF THESE SECTIO NS ARE MUTUALLY EXCLUSIVE AND ARE TO BE APPLIED INDEPENDENT OF EACH OTHER. THE CONDITIONS FOR CLAIMING BENEFIT OF ACCUMULATION U/S 11(2), WHICH ARE FOR OVER & ABOVE 15% ACCUMULATION U/S 1L(L)(A), NAMELY FILING OF FORM 10 AND INVESTMENT IN SPECIFIED MANNER, CAN'T BE IMPOSED FOR ACCUMULATION TO THE EXTENT OF 15% UNDER SECTION 11(1)(A) . 3. THE LEARNED ASSESSING OFFICER AND CIT(A) HAS COMPLETELY IGNORED THE FACT THAT OUT OF DECLARED DE EMED INCOME OF RS.6,80,07,390.00 U/S 11(3), THE INCOME OF RS . 6,12,1 1,694.00 HAS ALREADY BEEN TAXED IN THE ASSESSME NT YEAR 2005-06 WHEN IN THAT ASSESSMENT YEAR CLAIM FOR ACCUMULATION U/S 11(2) WAS DISALLOWED AND TAX WAS COLLECTED. THE INCLUSION OF RS.6,12,11,694.00 IN TAXABLE 3 INCOME DURING CURRENT ASSESSMENT YEAR AMOUNTED TO D OUBLE TAXATION (I.E. ONCE DURING ASSESSMENT YEAR 2005-06 AND SECOND TIME DURING ASSESSMENT YEAR 2011-12). THE M ATTER IS ALSO NOT IN APPEAL. 4. BRIEFLY THE FACTS AS NOTED IN THE IMPUGNED ORDER ARE THAT THE ORIGINAL RETURN OF INCOME DECLARING INCOME OF RS. 7.07 CR WAS FILED BY ASSESSEE ON 30.09.2011 WHICH W AS ACCOMPANIED BY AUDITED ACCOUNTS AND PHOTO COPIES OF TDS CERTIFICATES. THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FILED THE REVISED RETURN ON THE BASIS OF THE AUDITED ACCOUNTS IN WHICH TAXABLE INCO ME WAS DECLARED AT RS. 6.80 CR AS AGAINST THE INCOME OF RS . 7.07 CR DECLARED IN THE ORIGINAL RETURN OF INCOME. THE REASON FOR REDUCING THE RETURNED INCOME WAS THAT THE ACCUMULATED AMOUNT FOR THE FINANCIAL YEAR 2004-05 W AS GOT REDUCED BY AN AMOUNT OF RS. 27,76,036/-. THE RE TURN WAS SUPPORTED BY AUDITED ACCOUNTS AND COPIES OF THE TDS CERTIFICATES. THE ASSESSEE BOARD WAS CONSTITUTED B Y THE STATE GOVERNMENT UNDER THE WATER (PREVENTION & CONT ROL OF POLLUTION) ACT, 1974 WITH THE MAIN OBJECT OF PER FORMING THE DELEGATED POWER AND FUNCTION TO PROVIDE FOR PRE VENTION AND CONTROL OF WATER POLLUTION AND THE MAINTENANCE OR RESTORING OF WHOLESOMENESS OF WATER. 5. AS PER INCOME & EXPENDITURE STATEMENT FURNISHED, ASSESSEE HAS SHOWN GROSS RECEIPTS OF RS. 21,03,99,0 53/- WHICH INCLUDES FEES AND OTHER RECEIPTS, MISCELLANEO US RECEIPTS AND INTEREST ON INVESTMENTS AND SHOWN EXCE SS OF 4 INCOME OVER EXPENDITURE OF RS. 14,93,58,890/-. IN THE COMPUTATION OF INCOME ATTACHED WITH THE REVISED RET URN, ASSESSEE HAS SHOWN INCOME OF RS. 6,80,07,390/- WHIC H IS ON ACCOUNT OF UNSPENT ACCUMULATED AMOUNT OF THE YEA R 2004-05. IN THE COMPUTATION OF INCOME, ASSESSEE HA S DECLARED GROSS RECEIPTS AT RS.21.03 CR, OUT OF WHIC H RS. 6.10 CR HAS BEEN SHOWN AS REVENUE EXPENSES AS APPLICATION OF INCOME AND RS. 11.77 CR WERE SHOWN U NDER SECTION 11(2) INCOME SET APART FOR APPLICATION FOR THE OBJECTS OF THE ASSESSEE BOARD FOR WHICH THE ASSESSE E HAS FURNISHED FORM NO. 10. FURTHER, A SUM OF RS. 3,15,59,858/- I.E. 15% OF THE GROSS RECEIPTS HAS BE EN SET APART BEING EXEMPT UNDER SECTION 11(1) OF THE ACT. 6. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED THAT ASSESSEE WAS GRANTED REGISTRATION UN DER SECTION 12A BY THE CIT SHIMLA WHICH WAS SUBSEQUENTL Y WITHDRAWN. THE ITAT CHANDIGARH BENCH ALLOWED THE APPEAL OF THE ASSESSEE AND REGISTRATION WAS RESTOR ED. THE MATTER IS PENDING BEFORE HON'BLE HIGH COURT OF HIMA CHAL PRADESH IN DEPARTMENTAL APPEAL. CONSIDERING THE FA CT THAT ASSESSEE IS NOT CARRYING OUT ANY ACTIVITY FOR WHICH REGISTRATION UNDER SECTION 12A HAD BEEN GRANTED, TH E ASSESSING OFFICER ASSESSED THE ENTIRE INCOME OVER EXPENDITURE TO DETERMINE THE NET TAXABLE INCOME AT RS. 21,73,66,280/-. 7. THE ASSESSEE CHALLENGED THE ORDER OF THE ASSESSI NG OFFICER BEFORE LD. CIT(APPEALS) AND WRITTEN SUBMISS ION OF 5 THE ASSESSEE IS REPRODUCED IN THE APPELLATE ORDER I N WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT ASSESSMENT HAS BEEN FRAMED IGNORING REGISTRATION GRANTED UNDER SECTION 12AA OF THE ACT. THE CLAIM OF ASSESSEE IS ADMISSIBLE UN DER SECTION 11(1) OF INCOME TAX ACT. THE ASSESSEE WAS E NTITLED FOR EXEMPTION UNDER SECTION 11(1)(A) TO THE EXTENT OF 15% OF THE RECEIPTS. THE DEDUCTION UNDER SECTION 11(2) TO THE EXTENT OF 85% OF INCOME HAS ALSO BEEN DENIED WITHOU T CONSIDERING THE MERIT BECAUSE FORM NO. 10 WAS FILED WITHIN STIPULATED PERIOD. IT WAS FURTHER SUBMITTED THAT DECLARED DEEMED INCOME UNDER SECTION 11(3) OF RS. 6,80,07,390/- WHICH HAS BEEN ADDED TO THE SURPLUS T AXED, RELATES TO ASSESSMENT YEAR 2005-06. THIS WAS CLAI MED EXEMPT UNDER SECTION 11(2) IN ASSESSMENT YEAR 2005- 06 BUT WHILE MAKING ASSESSMENT ORDER UNDER SECTION 143 (3), DISALLOWANCE OF RS. 6,12,11,694/- WAS MADE ON WHICH TAX HAS ALREADY BEEN PAID. THE MATTER IS ALSO NOT IN A PPEAL NOW. THE INCLUSION OF THIS AMOUNT IN THE TAXABLE I NCOME WILL AMOUNT TO DOUBLE TAXATION I.E. ONCE IT IS CONS IDERED IN ASSESSMENT YEAR 2005-06 AND NOW THE SAME AMOUNT IS CONSIDERED IN ASSESSMENT YEAR UNDER APPEAL. THEREF ORE, THE DEEMED INCOME UNDER SECTION 11(3) IS REQUIRED T O BE REDUCED BY THE AMOUNT OF RS. 6,12,11,694/-. THE ASSESSEE RELIED UPON CERTAIN CASE LAWS IN SUPPORT O F THIS CONTENTION. 8. THE LD. CIT(APPEALS) WITH REGARD TO CLAIM OF EXEMPTION UNDER SECTION 11 & 12 OF THE ACT FOUND TH AT THE 6 ISSUE HAS BEEN DECIDED BY ITAT CHANDIGARH BENCH IN THE CASE OF SAME ASSESSEE IN ITA 835/2012 WHEREIN THE DEPARTMENTAL APPEAL HAS BEEN DISMISSED ON IDENTICAL ISSUE. THE ORDER OF THE TRIBUNAL IS REPRODUCED IN THE APPELLATE ORDER IN WHICH THE TRIBUNAL DECIDED THE I SSUE REGARDING THE ACTIVITIES CARRIED OUT BY THE ASSESSE E BOARD HOLDING THAT CASE OF ASSESSEE BOARD IS NOT COVERED BY THE PROVISO TO SECTION 2(15) OF THE ACT. THE LD. CIT(A PPEALS), FOLLOWING THE ORDER OF THE TRIBUNAL HELD THAT ASSES SING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE ASSES SEE BOARD IS NOT ENTITLED FOR ANY EXEMPTION UNDER THE A CT IN VIEW OF THE AMENDED DEFINITION OF CHARITABLE PURPO SES IN SECTION 2(15) OF THE ACT. THUS, APPEAL OF THE ASSE SSEE WAS ALLOWED, AGAINST WHICH REVENUE IS IN APPEAL. 9. AS REGARDS THE ASSESSEE'S CLAIM OF BENEFIT OF 15 % ACCUMULATION UNDER SECTION 11(1)(A)(B) AND 85% ACCUMULATION UNDER SECTION 11(2) OF THE ACT, THE LD . CIT(APPEALS) REPRODUCED THE RELEVANT PARA AND NOTED THAT THE PRIMARY CONDITION FOR CLAIMING EXEMPTION EVEN F OR ACCUMULATION OF 15% OF INCOME IS THAT 85% OF THE RE CEIPTS SHOULD BE EXPENDED ON THE STATED CHARITABLE OR RELI GIOUS PURPOSES. THE LD. CIT(APPEALS), THEREFORE, HELD TH AT SINCE ASSESSEE HAS SHOWN TOTAL RECEIPTS OF RS. 21.03 CR O UT OF WHICH ASSESSEE HAS UTILIZED OR APPLIED RS. 6.10 CR, THUS ASSESSEE HAS NOT BEEN ABLE TO SPEND 85% OF THE RECE IPTS, HOWEVER, HAS FURNISHED FORM NO. 10 IN RESPECT OF SU M OF RS. 11.77 CR. THUS, ASSESSEE IS ENTITLED TO BENEFI T UNDER 7 SECTION 11(1) OF RS.6.10 CR AND RS. 11.77 CR UNDER SECTION 11(2) OF THE ACT. HOWEVER, THE BALANCE SUM OF RS.3,15,59,861/- HAS TO BE CHARGED TO THE TAX. THE APPEAL OF THE ASSESSEE WAS ACCORDINGLY, PARTLY ALLO WED. 10. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 11. IN THE DEPARTMENTAL APPEAL, REVENUE CHALLENGED THE ORDER OF LD. CIT(APPEALS) IN ALLOWING REGISTRATION UNDER SECTION 12A INSPITE OF THE FACT THAT THE RECEIPTS O F THE ASSESSEE ARE IN CONTRAVENTION TO THE AMENDED PROVIS IONS OF SECTION 2(15) OF THE ACT. THE LD. CIT(APPEALS) FOR ALLOWING EXEMPTION UNDER SECTION 11 AND 12 OF THE A CT FOUND THAT THE ISSUE HAS ALREADY BEEN DECIDED IN FA VOUR OF THE ASSESSEE BY ITAT BENCH IN THE CASE OF THE SAME ASSESSEE IN ITA 835/2012 DATED 16.04.2013 IN WHICH THE TRIBUNAL HELD THAT THE CASE OF ASSESSEE COMPANY IS NOT COVERED BY PROVISO TO SECTION 2(15) OF THE ACT. SI NCE REGISTRATION HAS ALREADY BEEN RESTORED BY THE TRIBU NAL IN FAVOUR OF THE ASSESSEE UNDER SECTION 12AA OF THE AC T, THEREFORE, MERELY THAT DEPARTMENTAL APPEAL IS PENDI NG IN HIGH COURT IS NO GROUND TO TAKE ADVERSE VIEW AGAINS T THE ASSESSEE. THE ISSUE IS, THEREFORE, COVERED IN FAVO UR OF THE ASSESSEE BY ORDER OF ITAT CHANDIGARH BENCH IN THE C ASE OF SAME ASSESSEE FOR ASSESSMENT YEAR 2009-10 DATED 16.04.2013 IN ITA 835/2012. THUS, WE DO NOT FIND AN Y ERROR IN THE ORDER OF LD. CIT(APPEALS) IN DECIDING THIS 8 ISSUE IN FAVOUR OF THE ASSESSEE. THE DEPARTMENTAL APPEAL THEREFORE, STANDS DISMISSED. 12. THE ASSESSEE ON GROUND NO. 2 CLAIMED EXEMPTION UNDER SECTION 11(1)(A) TO THE EXTENT OF 15% OF THE AMOUNT OF RS.3.15 CR. THE LD. COUNSEL FOR THE ASSESSEE, A T THE OUTSET SUBMITTED THAT THE IDENTICAL ISSUE HAS BEEN DECIDED IN THE CASE OF THE SAME ASSESSEE BY ITAT CHANDIGARH BENCH FOR ASSESSMENT YEAR 2007-08 AND 2008-09 IN IT A 814-815/2014 VIDE ORDER DATED 15.07.2015. THE FINDI NGS OF THE TRIBUNAL IN PARA 9 TO 11 OF THE ORDER ARE RE PRODUCED AS UNDER : 9. ON CONSIDERATION OF THE FACTS OF THE CASE, IN TH E LIGHT OF ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF BHARTIYA VIDYA MANDIR TRUST (SUPRA), WE FIND THAT T HE 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 DEPARTMENTAL APPEAL, THE REVENUE CHALLENGED THE ORDER OF THE LEARNED CIT (APPEALS) I N ALLOWING CREDIT FOR 15% OF THE GROSS RECEIPTS IN WORKING THE SHORT FALL OF THE AMOUNTS SPENT WHEN TH E ASSESSEE HAD NOT FULFILLED THE REQUIREMENTS BY GIVI NG A NOTICE UNDER SECTION 11(2)(A) OF THE INCOME TAX A CT FOR ACCUMULATION OF INCOME INTENDED TO BE APPLIED F OR CHARITABLE PURPOSES IN FUTURE YEARS. 14. THE ASSESSEE CHALLENGED THE ORDER OF THE ASSESSING OFFICER BEFORE THE LEARNED CIT (APPEALS) AGAINST THE DENIAL OF CREDIT FOR 15% OF THE GROSS RECEIPTS I.E. AN AMOUNT OF RS.1,47,80,028/-. THE FACTS ARE SAME AS NOTED ABOVE WHILE DISPOSING OF TH E CROSS OBJECTION OF THE ASSESSEE. IT WAS SUBMITTE D THAT AS PER THE PROVISIONS OF SECTION 11 OF THE ACT , IF A CHARITABLE TRUST INCURRED 85% OF ITS INCOME FOR T HE OBJECTIVES OF THE TRUST, THE BALANCE 15% IS FREE TO BE SET APART/ACCUMULATED WITHOUT ANY CONDITIONS AND NOTHING IS TAXABLE. THE ASSESSEE EXPLAINED THAT AS PER SECTION 11 OF THE ACT, A CHARITABLE INSTITUTION IS 9 NOT CHARGED TO TAX TO THE EXTENT OF 15% OF ITS INCO ME AND RELIED UPON THE DECISION OF THE HON'BLE APEX CO URT IN THE CASE OF ADDL.CIT VS. A.L.N. RAO CHARITABLE TRUST, 216 ITR 697. IT WAS SUBMITTED THAT FROM TH E ABOVE JUDGMENT, IT IS CLEAR THAT AN AMOUNT UPTO 15% OF THE INCOME IS EXEMPT FROM INCOME TAX AND CAN BE ACCUMULATED. THE ASSESSING OFFICER REITERATED THE FACTS STATED IN THE ASSESSMENT ORDER. THE LEARNED CIT (APPEALS) FOLLOWING THE PROVISIONS OF SECTION 1 1 OF THE ACT AND THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF A.L.N. RAO CHARITABLE TRUST (SUPRA) DIRECTED THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION OF 15% OF THE GROSS RECEIPTS AND ALLOWED THIS GROUND OF APPEAL OF THE ASSESSEE. THE FINDI NG OF THE LEARNED CIT (APPEALS) IN PARAS 5.5 TO 5.12 O F THE IMPUGNED ORDER ARE REPRODUCED AS UNDER : 5.5 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE APPELLAN T VIDE HIS SUBMISSIONS DATED 28.12.2012 HAD CLAIMED THAT TH ERE IS A BLANKET EXEMPTION OF 15% OF THE TOTAL INCOME FROM T HE UNSPENT AMOUNT OF THE TRUST. IN THIS REGARD, THE AP PELLANT HAD RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF 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 AP PELLATE PROCEEDINGS, THE APPELLANT ONCE AGAIN REFERRED TO T HE 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 YE AR. 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 GI VEN 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 C HARITABLE TRUST HAS HELD AS UNDER:- 'A MERE LOOK AT SECTION 11(1) (A) AS IT STOOD AT TH E RELEVANT TIME CLEARLY SHOWS THAT OUT OF THE TOTAL INCOME ACCRUING TO A TRUST IN THE PREVIOUS YEAR FROM PROPERTY HELD BY IT WHOLLY F OR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT THE INCOME IS APPLI ED FOR SUCH RELIGIOUS OR CHARITABLE PURPOSES, THE SAME WILL GET OU T OF THE TAX NET BUT SO FAR AS THE INCOME WHICH IS NOT SO APPLIED DURING THE 10 PREVIOUS YEAR IS CONCERNED AT LEAST 25 PER CENT, OF S UCH INCOME OR RS. 10,000, WHICHEVER IS HIGHER, WILL BE PERM ITTED TO BE ACCUMULATED FOR CHARITABLE OR RELIGIOUS PURPOSE AN D IT WILL ALSO GET EXEMPTED FROM THE TAX NET. THEN FOLLOWS SU B-SECTION (2) WHICH SEEKS TO LIFT THE RESTRICTION OR THE CEILIN G IMPOSED ON SUCH EXEMPTED ACCUMULATED INCOME DURING THE PREVIOU S 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 GOVE RNMENT SECURITIES, ETC., AS LAID DOWN BY CLAUSE (B) OF SUB -SECTION (2) OF SECTION 11 APART FROM THE PROCEDURE LAID DOWN BY CL AUSE (A) OF SECTION 11(2) BEING FOLLOWED BY THE ASSESSEE -TRUST. TO HIGHLIGHT THIS POINT WE MAY TAKE AN ILLUSTRATION. I F 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 DUR ING 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 UNDE R THE FIRST PART OF SECTION 11(1). SO FAR AS THE REMAINING RS. 80,000 ARE CONCERNED IF THEY COULD NOT BE ACTUALLY APPLIED FOR SUCH RELIGIOUS OR CHARITABLE PURPOSES DURING THE PREVIOU S 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 CONSIDE RED 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 TRU ST RS. 25,000 WILL EARN EXEMPTION FROM PAYMENT OF INCOME-T AX AS PER SECTION 11(1) (A), SECOND PART. THEN FOLLOWS SUB-SE CTION (2) WHICH STATES THAT THE CEILING OR THE LIMIT OR THE R ESTRICTION OF ACCUMULATION OF INCOME TO THE EXTENT OF 25 PER CENT , OF THE INCOME OR RS. 10,000, WHICHEVER IS HIGHER, FOR EARN ING INCOME-TAX EXEMPTION AS ENGRAFTED UNDER SECTION 11( 1) (A) WILL GET LIFTED IF THE MONEY SO ACCUMULATED IS INVE STED AS LAID DOWN BY SECTION LL(2)(B) MEANING THEREBY, OUT OF TH E TOTAL ACCUMULATED INCOME OF RS. 80,000 ACCRUING DURING TH E PREVIOUS YEAR AND WHICH COULD NOT BE SPENT FOR CHAR ITABLE 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 IN VESTMENT 11 AND IF SECTION 11(1) ALONE HAD APPLIED RS. 55,000 B EING THE BALANCE OF THE ACCUMULATED INCOME WOULD HAVE BEEN C OVERED BY THE TAX NET. LEARNED COUNSEL FOR THE REVENUE SUBMITTED THAT THE INVESTMENT AS CONTEMPLATED BY SU B- 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 T HE INVESTED ACCUMULATED INCOME TO THE EXTENT OF 75 PER CENT, WI LL 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 D IFFICULT TO APPRECIATE THIS CONTENTION. THE REASON IS OBVIOUS. SECTION 11, SUBSECTION (L)(A) OPERATES ON ITS OWN. BY ITS O PERATION TWO TYPES OF INCOME EARNED BY THE TRUST DURING THE PREV IOUS YEAR FROM ITS PROPERTIES ARE GIVEN EXEMPTION FROM INCOME -TAX: (I) THAT PART OF THE INCOME OF THE PREVIOUS YEAR WH ICH IS ACTUALLY SPENT FOR CHARITABLE OR RELIGIOUS PURPOSES IN THAT YEAR; AND II) OUT OF THE UNSPENT ACCUMULATED INCOME OF THE PR EVIOUS YEAR 25 PER CENT, OF SUCH TOTAL PROPERTY INCOME OR RS. 10,000, WHICHEVER IS HIGHER, CAN BE PERMITTED TO BE ACCUMUL ATED BY THE TRUST, EARMARKED FOR SUCH CHARITABLE OR RELIGIOUS P URPOSES. SUCH 25 PER CENT, OF THE INCOME OR RS. 10,000, WHIC HEVER IS HIGHER, WILL ALSO GET EXEMPTED FROM INCOME-TAX. THA T EXHAUSTS THE OPERATION OF SECTION 11(1) (A). THEN FOLLOWS SU B-SECTION (2) WHICH NATURALLY DEALS WITH THE QUESTION OF INVESTME NT OF THE BALANCE OF ACCUMULATED INCOME WHICH HAS STILL NOT E ARNED EXEMPTION UNDER SUBSECTION (L)(A). SO FAR AS THAT B ALANCE OF THE ACCUMULATED INCOME IS CONCERNED, THAT ALSO CAN EARN EXEMPTION FROM INCOME-TAX MEANING THEREBY THE CEILI NG OR THE LIMIT OF EXEMPTION OF ACCUMULATED INCOME FROM INCOM E-TAX AS IMPOSED BY SUBSECTION (I) (A) OF SECTION 11 WOULD G ET LIFTED IF ADDITIONAL ACCUMULATED INCOME BEYOND 25 PER CENT, O R RS. 10,000, WHICHEVER IS HIGHER, AS THE CASE MAY BE, IS INVESTED AS LAID DOWN BY SECTION 11(2) AFTER FOLLOWING THE PROC EDURE LAID DOWN THEREIN. THEREFORE, SUB-SECTION (2) ONLY WILL HAVE TO OPERATE QUA THE BALANCE OF 75 PER CENT, OF THE TOTA L INCOME OF THE PREVIOUS YEAR OR INCOME BEYOND RS. 10,000, WHIC HEVER IS HIGHER, WHICH HAS NOT GOT THE BENEFIT OF TAX EXEMPT ION UNDER 12 SUBSECTION (L)(A) OF SECTION 11. IF LEARNED COUNSEL FOR THE REVENUE IS RIGHT AND IF 100 PER CENT, OF THE ACCUMU LATED INCOME OF THE PREVIOUS YEAR IS TO BE INVESTED UNDER SUB-SE CTION (2) OF SECTION 11 TO GET EXEMPTION FROM INCOME-TAX, THEN T HE CEILING OF 25 PER CENT, OR RS. 10,000, WHICHEVER IS HIGHER, WH ICH IS AVAILABLE FOR ACCUMULATION OF INCOME OF THE PREVIOU S YEAR FOR THE TRUST TO EARN EXEMPTION FROM INCOME-TAX AS LAID DOWN BY SECTION 11(1) (A) WOULD BE RENDERED REDUNDANT AND T HE SAID EXEMPTION PROVISION WOULD BECOME OTIOSE. IT HAS TO BE KEPT IN VIEW THAT OUT OF THE ACCUMULATED INCOME OF THE PREV IOUS YEAR AN AMOUNT OF RS. 10,000 OR 25 PER CENT, OF THE TOTA L INCOME FROM PROPERTY, WHICHEVER IS HIGHER, IS GIVEN EXEMPT ION FROM INCOME-TAX BY SECTION 11(1) (A) ITSELF. THAT EXEMPT ION IS UNFETTERED AND NOT SUBJECT TO ANY CONDITIONS. IN OT HER 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 IN COME AS GUARANTEED BY SECTION 11(1) (A) WOULD BECOME A REST RICTED EXEMPTION AS LAID DOWN BY SECTION 11(2). SECTION 11 (2) DOES NOT OPERATE TO WHITTLE DOWN OR TO CUT ACROSS THE EX EMPTION PROVISIONS CONTAINED IN SECTION 11(1) (A) SO FAR AS SUCH ACCUMULATED INCOME OF THE PREVIOUS YEAR IS CONCERNE D. IT HAS ALSO TO BE APPRECIATED THAT SUBSECTION (2) OF SECTI ON 11 DOES NOT CONTAIN ANY NON OBSTANTE CLAUSE LIKE ' NOTWITHS TANDING THE PROVISIONS OF SUB-SECTION (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 INCOM E-TAX EXEMPTION, SUB-SECTION (2) OF SECTION 11 CAN BE PRE SSED INTO SERVICE AND IF IT IS COMPLIED WITH THEN SUCH ADDITI ONAL ACCUMULATED INCOME BEYOND 25 PER CENT, OR RS. 10,00 0, WHICHEVER IS HIGHER, CAN ALSO EARN EXEMPTION FROM I NCOME-TAX ON COMPLIANCE WITH THE CONDITIONS LAID DOWN BY SUB- SECTION (2) OF SECTION 11. IT IS TRUE THAT SUB-SECTION (2) OF S ECTION 11 HAS NOT CLEARLY MENTIONED THE EXTENT OF THE ACCUMULATED INC OME 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 V IEW THAT UNDER THE EARLIER INCOME-TAX ACT OF 1922, EXEMPTION WAS A VAILABLE TO CHARITABLE TRUSTS WITHOUT ANY RESTRICTION UPON THE ACCUMULATED INCOME. THERE WAS A CHANGE IN THIS RESPECT UNDER TH E PRESENT 13 ACT OF 1961. UNDER THE PRESENT ACT, ANY INCOME ACCU MULATED 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 S ECTION 11(2) ARE COMPLIED WITH. IT IS CLEAR, THEREFORE, TH AT 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. 10,0 00, WHICHEVER IS HIGHER, IT WILL NOT BE INCLUDED IN THE TAXABLE INCOME. SECTION 11(2) QUOTED ABOVE FURTHER LIBERALI ZES AND ENLARGES THE EXEMPTION. A COMBINED READING OF BOTH THE PROVISIONS QUOTED ABOVE WOULD CLEARLY SHOW THAT SEC TION 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 EXPR ESS 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 KEEPIN G IN VIEW THE ILLUSTRATION WHICH WE HAVE GIVEN EARLIER, THE COMBI NED OPERATION OF SECTION 11(1) (A) AND SECTION 11(2) AS APPLICABLE A T 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 PRE VIOUS YEAR IS RS. 1,00,000 AND IF RS. 20,000 THEREFROM ARE ACT UALLY APPLIED TO SUCH PURPOSES IN INDIA THEN THOSE RS. 20 ,000 WILL GET EXEMPTED FROM PAYMENT OF INCOME-TAX AS PER THE FIRS T 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 SECO ND PART OF SECTION 11(1) (A). THUS, OUT OF THE TOTAL INCOME DERIVED FROM PROPERTY AS AFORESAID DURING THE PREVIOUS YEAR, THA T 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 AC CUMULATED INCOME FROM PROPERTY OF THE PREVIOUS YEAR, WILL GET LIFTED UNDER SECTION 11(2) TO THE EXTENT THE BALANCE OF SUCH ACC UMULATED INCOME IS INVESTED AS LAID DOWN BY SECTION 11(2). T O TAKE AN 14 ILLUSTRATION IF, SAY, AN ADDITIONAL AMOUNT OF RS. 2 0,000 OUT OF THE BALANCE OF ACCUMULATED INCOME OF RS. 55,000 IS INVESTED AS PER SECTION 11(2), THEN THIS ADDITIONAL AMOUNT O F RS. 20,000 OF ACCUMULATED INCOME WILL GET EXCLUDED FROM THE TA X NET AS PER SECTION 11 (2). (IV) THE REMAINING BALANCE OF THE ACCUMULATED INCOM E 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 INC OME OF THE TRUST AND WILL NOT GET EXEMPTED FROM THE TAX NET. (V) IF, ON THE OTHER HAND, THE ENTIRE REMAINING ACC UMULATED INCOME OF RS. 55,000 IS WHOLLY INVESTED AS PER SECT ION 11 (2), THE SAID ENTIRE AMOUNT OF RS. 55,000 WILL GET EXEMP TED FROM THE TAX NET. ' 5.7 THIS DECISION OF THE HON'BLE SUPREME COURT CLEA RLY 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 B E REGISTERED U/S 12AA OF THE INCOME TAX ACT. THE ONLY ISSUE TO BE EX AMINED HERE IS WHETHER THE PROVISIONS OF SECTION 11(1) (A) AND 11( 2) HAVE BEEN SINCE AMENDED AND IF SO, WHETHER THE AFORESAID DECISION W OULD APPLY TO THE AMENDED PROVISIONS ALSO? 5.8 THE PROVISIONS OF SECTION LL(L)(A) AND 11 (2) A S THEY WERE IN FORCE IN THE YEAR 1968-69 RELEVANT TO AY 69-70, I.E THE YEAR TO WHICH THE CASE OF A.L.N. RAO CHARITABLE TRUST (SUPRA) REL ATES HAVE BEEN REPRODUCED IN THE ORDER OF THE HON'BLE SUPREME COUR T ITSELF AS UNDER: 'THESE PROVISIONS AS THEY STOOD AT THE RELEVANT TIM E READ AS UNDER: '11. (1) SUBJECT TO-THE PROVISIONS OF SECTIONS 60 T O 63, THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE I NCOME (A) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST W HOLLY 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 S UCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOM E SO ACCUMULATED IS NOT IN EXCESS OF TWENTY-FIVE PER CEN T, OF THE 15 INCOME FROM THE PROPERTY OR RUPEES TEN THOUSAND, WH ICHEVER IS HIGHER,... (2) WHERE THE PERSONS IN RECEIPT OF THE INCOME HAVE COMPLIED WITH THE FOLLOWING CONDITIONS, THE RESTRICTION SPEC IFIED IN CLAUSE (A) OR CLAUSE (B) OF SUB-SECTION (1) AS RESPECTS AC CUMULATION 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 T O THE INCOME- TAX OFFICER IN THE 'PRESCRIBED MANNER, SPECIFIED TH E PURPOSE FOR WHICH THE INCOME IS BEING ACCUMULATED OR SET AP ART AND THE PERIOD FOR WHICH THE INCOME IS TO BE ACCUMULATE D OR SET APART, WHICH SHALL IN NO CASE EXCEED TEN YEARS. (B) THE MONEY SO ACCUMULATED OR SET APART IS INVEST ED IN ANY GOVERNMENT SECURITY AS DEFINED IN CLAUSE (2) OF SEC TION 2 OF THE PUBLIC DEBT ACT, 1944 (18 OF 1944), OR IN ANY O THER SECURITY WHICH MAY BE APPROVED BY THE CENTRAL GOVER NMENT IN THIS BEHALF.' 5.9 THE PROVISIONS OF SECTION LL(L)(A) AND 11 (2) A S 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 RE LIGIOUS PURPOSES. (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 W HOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA; AND, W HERE ANY SUCH INCOME IS ACCUMULATED OR SET APART FOR APPLICA TION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOME SO ACCUMULATED OR SET APART IS NOT IN EXCESS OF FIFTEE N PER CENT OF THE INCOME FROM SUCH PROPERTY; (2) WHERE EIGHTY-FIVE PER CENT, OF THE INCOME REFER RED TO IN CLAUSE (A) OR CLAUSE (B) OF SUB-SECTION (1) READ WI TH THE EXPLANATION TO THAT SUBSECTION IS NOT APPLIED, OR I S NOT DEEMED TO HAVE BEEN APPLIED, TO CHARITABLE OR RELIGIOUS PU RPOSES IN 16 INDIA DURING THE PREVIOUS YEAR BUT IS ACCUMULATED O R SET APART, EITHER IN WHOLE OR IN PART, FOR APPLICATION TO SUCH PURPOSES IN INDIA, SUCH INCOME SO ACCUMULATED OR SET APART SHAL L NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR O F THE PERSON IN RECEIPT OF THE INCOME, PROVIDED THE FOLLOWING CO NDITIONS ARE COMPLIED WITH, NAMELY (A) SUCH PERSON SPECIFIES, BY NOTICE IN WRITING GIV EN TO THE ASSESSING OFFICER IN THE PRESCRIBED MANNER, THE PUR POSE 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 INVEST ED OR DEPOSITED IN THE FORMS OR MODES SPECIFIED IN SUB-SE CTION (5): PROVIDED THAT IN COMPUTING THE PERIOD OF TEN YEARS REFERRED TO IN CLAUSE (A), THE PERIOD DURING WHICH THE INCOME C OULD NOT BE APPLIED FOR THE PURPOSE FOR WHICH IT IS SO ACCUMULA TED OR SET APART, DUE TO AN ORDER OR INJUNCTION OF ANY COURT, SHALL BE EXCLUDED: PROVIDED FURTHER THAT IN RESPECT OF ANY INCOME ACCU MULATED OR SET APART ON AFTER THE 1ST DAY OF APRIL, 2001, THE PROVISIONS OF THIS SUB-SECTION SHALL HAVE EFFECT AS IF FOR THE WO RDS 'TEN YEARS ' AT BOTH THE PLACES WHERE THEY OCCUR, THE WORDS 'FIV E YEARS ' HAD BEEN SUBSTITUTED. 5.10 IT IS APPARENT FROM THE READING OF PROVISIONS REFERRED TO ABOVE THAT SECTION11 (A) WAS ALMOST IDENTICAL DURIN G 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 EXEMPT ION PROVISIONS CONTAINED IN SECTION LL(L)(A)SO FAR AS SUCH ACCUMUL ATED 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 (S UPRA),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 TH AT AFTER SECTION LL(L)(A) HAS FULL PLAY AND IF STILL ANY ACCUMULATED INCOME OF THE 17 PREVIOUS YEAR IS LEFT TO BE DEALT WITH, AND TO BE C ONSIDERED 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, C AN ALSO EARN EXEMPTION FROM INCOME-TAX ON COMPLIANCE WITH THE CO NDITIONS 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 EFF ECT OF SUCH PROVISIONS, EXCEPT THOSE OF SUB-SECTION (1A) DEALT SEPARATELY HEREUNDER, VIS-A-VIS EXEMPTION AND TAXABILITY OF IN COME DERIVED FROM PROPERTY HELD UNDER CHARITABLE OR RELI GIOUS TRUST, IN A TABULAR FORM SUBJECT-WISE. THUS:- INCOME DERIVED FROM PROPERTY HELD UNDER TRUST OF OT HER LEGAL OBLIGATION WHOLLY FOR CHARITABLE PURPOSES AND SUCH INCOME OR PART THEREOF IS NOT APPLIED TO SUCH PURPO SES 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 PROVISIONS 1961 ACT PROVISIONS APPLICABLE FOR AY 1962-63 TO 1970-71 1961 ACT PROVISIONS APPLICABLE FOR AY 1971-72 TO 1975-76 1961 ACT PROVISIONS APPLICABLE FROM 1976 ONWARDS UNCONDITIONALLY EXEMPT {S.4(3)(I)}. CONDITIONALLY EXEMPTION - (A) IF A NOTICE IN FROM NO. 10 IS GIVEN TO THE 1TO IN ACCORDANCE WITH RULE 17 AND INCOME SO ACCUMULATED {MINUS ACCUMULATION PERMITTED UNDER (B), BELOW} IS INVESTED IN GOVERNMENT SECURITIES, OR OTHER APPROVED SECURITIES, THE ACCUMULATION UP TO A PERIOD OF TEN YEARS IS EXEMPT [S. LL(L)(A), LATTER PART, CONDITIONALLY EXEMPT - (A) IF A NOTICE IN FORM NO. 10 IS GIVEN TO THE 1TO IN ACCORDANCE WITH RULE 17 AND INCOME SO ACCUMULATED ACCUMULATION PERMITTED UNDER (B), BELOW] IS INVESTED IN THE GOVERNMENT SECURITIES OR OTHER APPROVED SECURITIES OR IS DEPOSITED IN POST OFFICE SAVINGS BANK ACCOUNTS OR CONDITIONALLY EXEMPT - (A) SAME AS IN COL. (3), FOR ASSESSMENT YEARS 1976-77 TO 1982- 83. FOR AND FROM ASSESSMENT YEAR 1983-84, INVESTMENT OR DEPOSIT IS TO BE MADE IN THE FORMS OR MODES SPECIFIED IN SECTION 11(5). (B) IF CONDITIONS AT (A) ARE NOT FULFILLED, ACCUMULATION TO THE EXTENT OF 25% 18 READ WITH S. 11(2)}; AND (B) IF CONDITIONS AT (A) ARE NOT FULFILLED, ACCUMULATION TO THE EXTENT OF 25 PER CENT OF THE INCOME FROM THE PROPERTY OR RS. 10,000/- WHICHEVER IS HIGHER, IS EXEMPT. IN COMPUTING THE 25 PER CENT., THE INCOME FROM SUCH PROPERTY FOR THE RELEVANT PREVIOUS YEAR OR THE IMMEDIATELY PRECEDING PREVIOUS YEAR, WHICHEVER IS HIGHER, MAY BE TAKEN [S. 11(1) (A), LATTER PART, READ WITH THE EXPLANATION]. _____________ UNDER THE POST OFFICER (TIME DEPOSITS) RULES, 1970, OR IN A BANKING COMPANY TO WHICH THE BANKING REGULATION ACT, 1949, APPLIES OR CO- OPERATIVE LAND MORTGAGE BANK OR A COOPERATIVE LAND DEVELOPMENT BANK, OR DEPOSITED IN AN ACCOUNT WITH AN APPROVED FINANCIAL CORPORATION, THE ACCUMULATION UP TO A PERIOD OF TEN YEARS IS EXEMPT [S. 11(2)]. [(B) NO SUCH EXEMPTION]. ONLY IS EXEMPT. IN COMPUTING THE 25%, ANY VOLUNTARY CONTRIBUTIONS REFERRED TO IN S. 12 SHALL BE DEEMED TO BE PART OF THE INCOME [S. 11(1)(A), LATTER PART READ WITH EXPL. (1)]. 5.12 AS SUCH, THIS JUDGEMENT OF THE HON'BLE SUPREME COURT IS SQUARELY APPLICABLE TO THE APPELLANT'S CASE. T HE 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. 15. AFTER HEARING THE RIVAL CONTENTIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE LEARNED CIT (APPEALS) ON PROPER APPRECIATION OF FACTS IN THE LIGHT OF THE PROVISION S OF SECTION 11 OF THE ACT AND THE JUDGMENT OF THE HON'B LE SUPREME COURT IN THE CASE OF A.L.N. RAO CHARITABLE TRUST (SUPRA) RIGHTLY DECIDED THE ISSUE IN FAVOUR O F THE ASSESSEE. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HON'BLE SUPREME COURT NOTED ABOVE IN THE FINDINGS OF THE LEARNED CI T (APPEALS). THE LEARNED D.R FOR THE REVENUE DID NO T CONTRIBUTE MUCH ON THIS ISSUE AND MERELY RELIED UPO N THE ORDER OF THE ASSESSING OFFICER WITHOUT POINTING OUT ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT (APPE ALS) IN ALLOWING THE EXEMPTION OF 15% ON THE GROSS RECEIPTS. THUS WE DO NOT FIND ANY JUSTIFICATION T O 19 INTERFERE IN THE ORDER OF THE LEARNED CIT (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 TH E ORDERS OF AUTHORITIES BELOW AND DIRECT THE ASSESSIN G 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 ALLOWE D. 13. CONSIDERING THE FINDINGS OF THE TRIBUNAL IN THE EARLIER ORDER DATED 15.07.2015, WE SET ASIDE THE OR DERS OF AUTHORITIES BELOW AND DIRECT ASSESSING OFFICER TO A LLOW BENEFIT OF 15% OF ACCUMULATION AMOUNTING TO RS. 3,15,59,861/- AS PER LAW. 14. IN THE RESULT, GROUND NO. 2 OF APPEAL OF THE AS SESSEE IS ALLOWED. 15. ON GROUND NO. 3, THE ASSESSEE CLAIMED THAT OUT OF THE DECLARED INCOME OF RS. 6.80 CR UNDER SECTION 11(3), THE AMOUNT OF RS. 6.12 CR HAS ALREADY BEEN TAXED IN ASSESSMENT YEAR 2005-06, THEREFORE, IT WOULD AMOUNT TO DOUBLE ADDITION. THE LD. COUNSEL FOR THE ASSESSEE FILED COPY OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 20 05-06 DATED 23.12.2011 IN WHICH THE ASSESSING OFFICER MAD E ADDITION OF RS. 6,12,11,694/- AS DEEMED INCOME UNDE R SECTION 11(3) OF THE ACT. THIS ADDITION IS CONFIRM ED BY LD. CIT(APPEALS) VIDE ORDER DATED 29.12.2014. THE ASSE SSEE, THOUGH FILED FRESH APPEAL BUT HAS NOT CLAIMED THE 20 DEDUCTION OF THE SAME AMOUNT. THE LD. COUNSEL FOR THE ASSESSEE, HOWEVER, ADMITTED THAT THE AUTHORITIES BE LOW HAVE NOT GIVEN FINDINGS OF THE SAME, THEREFORE, MAT TER COULD BE REMANDED TO THE ASSESSING OFFICER FOR RE- CONSIDERATION. THE LD. DR ALSO SUGGESTED THAT SINC E NO FINDINGS HAVE BEEN GIVEN ON THIS ISSUE, THEREFORE, MATTER COULD BE REMANDED TO THE ASSESSING OFFICER FOR RE- CONSIDERATION. 16. ON CONSIDERATION OF THE SUBMISSIONS OF BOTH THE PARTIES, WE FIND THAT THIS ISSUE RAISED IN GROUND N O. 3 OF THE APPEAL OF ASSESSEE REQUIRES RE-CONSIDERATION AT THE LEVEL OF THE ASSESSING OFFICER. THIS ISSUE HAS NOT BEEN SPECIFICALLY DEALT WITH BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE ASSESSEE, THOUGH HAS RAISED THIS ISSUE BEFORE LD. CIT(APPEALS), BUT THE LD. CIT(APPE ALS) HAS NOT GIVEN ANY FINDING OF THE SAME. THE CLAIM OF LD . COUNSEL FOR THE ASSESSEE FIND SUPPORT FROM THE COPY OF THE ASSESSMENT ORDER FILED FOR ASSESSMENT YEAR 2005-06 AND ORDER OF THE APPELLATE AUTHORITIES. SINCE NO SPECI FIC FINDINGS HAVE BEEN GIVEN ON GROUND NO. 3 BY THE AUTHORITIES BELOW, WE RESTORE THIS ISSUE TO THE FIL E OF ASSESSING OFFICER WITH DIRECTION TO RE-DECIDE THIS ISSUE IN ACCORDANCE WITH LAW BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASS ESSING OFFICER SHALL TAKE INTO CONSIDERATION THE ASSESSMEN T ORDER PASSED FOR ASSESSMENT YEAR 2005-06, APPELLATE ORDER AND ORDER OF THE TRIBUNAL, IF ANY IN THIS REGARD. 21 17. IN THE RESULT, GROUND NO. 3 OF APPEAL OF THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 18. GROUND NO. 1 IS GENERAL AND NEED NO ADJUDICATIO N. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 20. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED AND APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST SEPT.,2015. SD/- SD/- (RANO JAIN) (BHAVNES H SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 ST SEPT.,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH