M/S VIDYANIDHI EDUCATION TRUST,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, BANGALORE

O R D E R

Per Shri A.K. Garodia, Accountant Member

by the assessee are as under. “1. The Order passed by the learned Hon'ble Commissioner of Income Tax [Appeal] -14 inso far as it is against the appellant is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case.

2. The appellant denies itself liable to be taxed on an income determined by the learned assessing officer amounting to Rs. 1,63,71,789/- as against the income returned by the appellant of Rs. NIL under the facts and circumstances of the case.

3. The learned CIT [A] failed to appreciate that the standard deduction of 15%under section 11 [1][a] is to be calculated on the gross receipts and not on amount left over after appropriation towards expenses incurred towards objects of the trust, under the facts and circumstances of the case.

4. The learned CIT [A] failed to appreciate that the issue whether the provisions of section 11 [1] being the accumulation of 15%available as per the statue is on the gross receipts or on the net receipts has Page 2 of 3 been decided by the Hon'ble Co-Ordinate Bench of decision of this Hon'ble Tribunal in the case of Jyothi Charitable Trust in 662/Bang/2015, order dated 14/08/2015, which has held that the accumulation of 15%under section 11[1][a] of the Act has to be computed on the gross receipts and not on the net receipts, which is squarely covered in favour of the appellant under the facts and circumstances of the case.

5. Without prejudice the order passed by learned Commissioner of Income-tax [Appeals] is bad in law as the appellant was not given a reasonable opportunity of hearing which is in grave violation of principles of natural justice under the facts and circumstances of the case.

6. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above.

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 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).

Page 3 of 3 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.

Order pronounced in the open court on the date mentioned on the caption page.