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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: HON’BLE SHRI AMARJIT SINGH, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
सुनवाई की तारीख/ : 22/12/2020 Date of Hearing घोषणा की तारीख / : 04/01/2021 Date of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2012-13 contests the order of learned Commissioner of Income Tax (Appeals)-3, Mumbai [CIT(A)], Appeal No.CIT(A)-3/IT-10823/18-18 dated 18/03/2019 on following grounds: -
A. Accumulation to be allowed and wrongly taken at Rs.28,47,860 as income of the current year
1. The CIT(A) has grossly erred in confirming the unspent amount of last year’s accumulation of Rs.28,47,860 which was brought to tax in the current year that is assessment year 2012-13. 2 Currimbhoy Ebrahim Khoja Orphanage Assessment Year: 2012-13
2. The CIT(A) came to the wrong conclusion and failed to appreciate that the accumulation had to be utilized within a span of 5 years and that the appellant had correctly utilized the same within the statutory period as per the law of accumulation u/s 11 read with Form No.10. B. Dividend Exempt
1. On the facts and circumstances and in law the CIT(A) grossly erred in rejecting the claim of the appellant that dividend income of Rs.1,72,169 is exempt from tax.
2. The issue of exemption of dividend income is squarely covered by various decisions of the court and is covered u/s 11(5) and is permissible as per law.
2. We have carefully heard the rival submissions and perused relevant material on record including documents placed in the paper- book. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. 3.1 The assessee, being AOP trust regd. u/s 12A, was assessed u/s 143(3) on 27/03/2015 wherein the income was determined at Rs.28.47 Lacs as against returned income of Rs.1.14 Lacs. The first issue is related with the fact that the assessee earned dividend income of Rs.1.72 Lacs and claimed the same to be exempt u/s 10(34). The Ld. AO denied the same in view of the fact that dividend was earned on property held under trust and it was available for application of income. It would not be optional for the assessee trust to avail exemption. 3.2 The second issue stem from the fact that the assessee offered an amount of Rs.68 Lacs as last year’s accumulation for which option under clause (ii) of explanation to Section 11(1) was exercised by the assessee trust for spending it during AY 2012-13. The trust also offered Rs.82.16 Lacs which was set apart as per Form No.10 out of earlier years’ accumulation to be spent in current year. Accordingly, the trust had to spend in all Rs.150.16 Lacs out of last year’s accumulation. However, the assessee trust only spent Rs.103.43 Lacs as well incurred administrative expense of Rs.18.25 Lacs and failed to spend balance 3 Currimbhoy Ebrahim Khoja Orphanage Assessment Year: 2012-13 amount of Rs.28.47 Lacs. Accordingly, this amount was brought to tax and an assessment was framed determining total income at Rs.28.47 Lacs. The stand of Ld. AO, upon confirmation by Ld. CIT(A), is under challenge before us.
So far as the issue of dividend is concerned, we find that this issue is squarely covered in assessee’s favor by the decision of this Tribunal in Jamshedji Tata Trust V/s Jt.DIT (E) (44 Taxmann.com 447) wherein coordinate bench drawing analogy from the decision of Hon’ble Delhi High Court in CIT V/s Divine Light Mission (278 ITR 659) held that dividend income being exempt u/s 10(34) could not be brought to tax by applying the provisions of Sec. 11 to 13 of the Act. We also note that amendment to Sec.11 by way of insertion of clause (7) by Finance Act, 2014 to nullify the effect of this decision is applicable only with effect from 01/04/2015 and do not apply to this year. Therefore, respectfully following the same, we would hold that dividend income being exempt u/s 10(34) could not be brought to tax by applying the provisions of Sec.11 to 13 of the Act. The amended provision restricting this exemption is applicable only from AY 2015-16. The assessee succeeds on this issue.
So far as the second issue is concerned, we find that the provisions of Sec. 11(1)(a) enables the assessee trust to accumulate or set apart trust income to the extent of 15% for utilization for charitable purposes in subsequent years. In such a case, the provision of Sec. 11(2) mandates the assessee to furnish a statement in the prescribed manner i.e. Form No. 10 to the assessing officer stating the purposes and period for which such income was being accumulated or set apart. This period in no case