M/S. VIDYANIDHI EDUCATION TRUST,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, BANGALORE

The present appeal is filed by the assessee trust against the order of the CIT (A)-14, LTU, Bengaluru, dt.06.03.2017, for the assessment year 2012-13, on the following grounds :

The issue of deduction of 15% u/s.11(1)(a) whether to be calculated on the gross receipts and not on amount left after application towards expenses incurred for objects of the trust, had come up before the coordinate bench of this Tribunal in the assessee’s own case, in for the assessment year 2011-12, which was decided in favour of the assessee. The Tribunal in paras 3 to 5 had observed as under : 3. It was submitted by ld. AR of assessee that although the assessee has raised as many as 7 grounds of appeal but the only issue involved in this appeal is this that whether the assessee is eligible for accumulation u/s. 11(1)(a) of the IT Act to the extent of 15% of gross receipts or net receipts. In this regard, he placed reliance on tribunal order rendered in the case of Jyothy Charitable Trust Vs. DCIT (Exemptions) in ITA No. ITA.1380/Bang/2017 Page - 3 662/Bang/2015 dated 14.08.2015. He submitted a copy of this tribunal order and drawn our attention to page nos. 10 & 11 of this tribunal order and pointed out that the tribunal in this case has followed the decision of special bench of the tribunal rendered in the case of Bai Sonabai Hirji Agiary Trust Vs. ITO as reported in 93 ITD 70 (SB). He also submitted that the relevant portion of this tribunal order has been reproduced by the tribunal and as per the same, the tribunal has followed the judgment of Hon’ble Kerala High Court rendered in the case of CIT vs. Programme for Community Organisation as reported in 228 ITR 620 (Kerala).

The ld. DR of revenue supported the order of authorities below.

We have considered the rival submissions. We find that as per the assessment order, this is the only objection of the AO that instead of the assessee’s claim for accumulation u/s. 11(1)(a) of the IT Act to the extent of 15% of gross receipts of the assessee, the assessee is eligible for such accumulation only to the extent of 15% of net receipts. On this aspect, the judgment of Kerala High Court rendered in the case of CIT vs. Programme for Community Organisation (supra) supports the case of the assessee because it was held in this case that the accumulation u/s. 11(1)(a) of the IT Act has to be computed at 25% of gross receipts. Now as per the amendments in the law, percentage is reduced to 15% but the other things remains same. Therefore, respectfully following this judgment of the tribunal and in turn following the judgment of special bench of the tribunal and in turn following the judgment of Hon’ble Kerala High Court, we direct the AO to allow accumulation u/s. 11(1)(a) of the IT Act to the extent of 15% of gross receipts in place of 15% of net income allowed by him.