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| The Tax Publishers2020 TaxPub(DT) 4106 (Ahd-Trib) : (2020) 185 ITD 0543 INCOME TAX ACT, 1961
Section 11
Needless to say, the statutory postulations towards accumulation of 15% of income for indefinite period is an entitlement or a right of absolute nature vested upon the assessee but, however, cannot be regarded as an obligation envisaged in law. The law applicable to accumulation of income cannot be extended to application thereof. Where an assessee trust has made excess application of its income, the option or entitlement vested upon an assessee to accumulate 15% for indefinite period cannot operate as an obligation enforceable against it in the absence of accumulation. The method of computation of deficit to be truncated artificially 15% based on an entitlement (opposed to an obligation) as suggested by first appellate authority was totally devoid of any logic. This would tantamount to application of concession conferred on assessee in a reverse manner and thus put the assessee in a worser position in the event of accelerated application of receipts for salutary purposes.
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Charitable trust - Application of income - Carry over of deficit - Mandatory accumulation of 15% to be allowed
Assessee an public charitable trust engaged in educational activities claimed carried forward deficit on the ground that it had incurred excess expenditure over voluntary contributions received by it. AO while passing assessment order denied carry forward of excess application over such contributions being 'deficit ' for the purposes of set off against the contributions to be received in the subsequent assessment years on the ground of observing the same to be not a real deficit but a notional deduction. Held: Where an assessee-trust had made excess application of its income, the option or entitlement vested upon an assessee to accumulate 15% for indefinite period. It cannot operate as an obligation enforceable against it in the absence of accumulation. The method of computation of deficit to be truncated artificially 15% based on an entitlement (opposed to an obligation) as suggested by AO was totally devoid of any logic. This would tantamount to application of concession conferred on assessee in a reverse manner and thus put the assessee in a worser position in the event of accelerated application of receipts for salutary purposes.
Followed:Maharshi Karve Stree Shikshan Samstha Karvenagar v. ITO [(2019) 174 ITD 591 (Pune-Trib) : 2019 TaxPub(DT) 725 (Pune-Trib)].
REFERRED :
FAVOUR : In favour of assessee.
A.Y. : 2015-16
IN THE ITAT, AHMEDABAD BENCH
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