EASTERN ZONAL CULTURAL CENTRE,KOLKATA vs. I.T.O.,WARD-1(2)(EXEMPTION), KOLKATA

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ITA 1870/KOL/2019Status: DisposedITAT Kolkata24 July 2020AY 2014-153 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee is entitled to accumulate 15% of its gross receipts as per Section 11(1) of the Act, not 15% of the net receipts. This decision was based on previous rulings of the Tribunal and the Supreme Court.

What were the facts?

The assessee, Eastern Zonal Cultural Centre, filed an appeal against the order of the CIT(A) for AY 2014-15. There was a delay of 9 days in filing the appeal, which was condoned by the Tribunal.

What were the issues?

The key issue was whether the 15% accumulation for charitable purposes should be calculated on gross receipts or net income after expenses.

Which sections of the Income-tax Act were involved?

Section 11(1)

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Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA

Before: Sri J. Sudhakar Reddy, Hon’ble & Sri Aby T. Varkey, Hon’ble

Appearances by: Shri Gautam Banerjee, FCA, appeared on behalf of the assessee. Shri Supriyo Pal, JCIT D/R, appearing on behalf of the Revenue. Date of concluding the hearing : July 20th, 2020 Date of pronouncing the order : July 24th, 2020 ORDER Per J. Sudhakar Reddy, AM :-

This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) – 25, Kolkata, (hereinafter the “ld.CIT(A)”), passed u/s. 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 10/05/2019 for the Assessment Year 2014-15.

2.

At the outset we find that there is a delay of 09 (nine) days in filing of this appeal by the assessee. After perusing the petition for condonation, we are convinced that the assessee was prevented by sufficient cause from filing the appeal in time. Hence the delay is condoned and the appeal is admitted.

3. After hearing rival contentions we find that the issue is covered in favour of the assessee and against the revenue by the decision of the ‘SMC’ Bench of the Tribunal in the case of M/s. Sahara Utsrga Welfare Society vs. DCIT in order dt. July 13th, 2020, while deciding the identical issue held as follows:- “2. After hearing rival contentions, I find that the sole issue is whether the assessee is entitled to accumulation of 15% on the gross receipts and whereas the Assessing Officer held that the assessee is entitled to 15% of the net receipt.

3.

The Hon’ble Supreme Court of India in the case of CIT vs. Programme for Community Organisation reported in [2001] 248 ITR 0001 (SC) has held as follows:- “Charitable trust- Accumulation of income- Charitable trust is entitled to accumulate 25 per cent of its income derived from property held under trust and not 25 per cent of the income remaining after application of income for charitable purposes – therefore, assessee-trust was entitled to accumulate 25 per cent of donations received by it and not merely 25 per cent of unspent balance.”

Assessment Years: 2014-15 Eastern Zonal Cultural Centre Eastern Zonal Cultural Centre The ‘B’ Bench of the ITAT in the assessee’s own case in order dt. The ‘B’ Bench of the ITAT in the assessee’s own case in ITA No. 2436/Kol/2018, order dt. The ‘B’ Bench of the ITAT in the assessee’s own case in ITA No. 2436/Kol/2018, order dt. 22/01/2020, for the Assessment Year 2012 22/01/2020, for the Assessment Year 2012-13, on the same issue held as follows: e same issue held as follows:- “.....We note that in the provisions of section 11(1) it has been clearly mentioned “… 15% of the We note that in the provisions of section 11(1) it has been clearly mentioned “… 15% of the We note that in the provisions of section 11(1) it has been clearly mentioned “… 15% of the income”, hence it is gross income of the assessee trust and not the net income. Therefore, based on income”, hence it is gross income of the assessee trust and not the net income. Therefore, based on income”, hence it is gross income of the assessee trust and not the net income. Therefore, based on this factual position as me this factual position as mentioned in Section 11(1) as noted above, we direct the Assessing Officer ntioned in Section 11(1) as noted above, we direct the Assessing Officer to allow 15% exemption on gross receipts. to allow 15% exemption on gross receipts.

4. Respectfully following the same, we hold that the assessee is entitled to the Respectfully following the same, we hold that the assessee is entitled to the Respectfully following the same, we hold that the assessee is entitled to the accumulation of 15% on the gross receipt as per provisions accumulation of 15% on the gross receipt as per provisions of Section 11 of the Act. of Section 11 of the Act.

4.

Consistent with the view taken therein, we hold that, the set apart amount u/s. Consistent with the view taken therein, we hold that, the set apart amount u/s. Consistent with the view taken therein, we hold that, the set apart amount u/s. 11(1) of the Act, should be calculated on gross revenue income and not on net income 11(1) of the Act, should be calculated on gross revenue income and not on net income 11(1) of the Act, should be calculated on gross revenue income and not on net income after expenses.

5.

In the result, appeal of the assessee is In the result, appeal of the assessee is allowed. Kolkata, the Kolkata, the 24th day of July, 2020.

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