2001 PLP 2347 (PTD)

S. Muralidhar, Advocate for Respondent. The question that were referred to the High Court (see (1997) 228 consideration, at the instance of the Revenue, read thus "(1) Whether, on the facts and in the circumstances of the case and on an interpretation of the relevant provisions of the Income‑tax Act, the assessee is entitled to exemption at 25 per cent. on Rs.2,57,376 or only on Rs.87,010? (2) Whether, on the facts and in the circumstances of the case, should not the Tribunal have accepted the view of the Revenue expressed in the circular, the same being consistent with the relevant provisions of the Income Tax Act, 1961? (3) Whether, on the facts and in the circumstances of the case, and also considering the scope of the earlier order of the Commissioner of Income‑tax (Appeals), dated November 18, 1983, the Tribunal is right in law .in holding that the Commissioner of Income‑tax (Appeals) has rightly interfered with the order of the Income‑tax Officer?" The answers being in favour of the assessee, the Revenue is in appeal by special leave. The question that really requires consideration is whether, for the purposes of section 11(1)(a) of the Income Tax Act, 1961, the amount for the grant of exemption of twenty‑five per cent. should be the income of the trust of it should be its total income as determined for the purposes of assessment to income‑tax. This question has to be answered in the light of these facts: The assessee‑trust received donations in the aggregate sum of Rs.2,57,376. It applied there out for its charitable purposes the aggregate sum of Rs.1,70,369 leaving a balance of Rs.87,010. The question is whether the assessee is entitled to accumulate twenty‑five per cent. of Rs.2,57,376 as it contends, or twenty‑five per cent. of Rs.87,010, as the Revenue appeared to contend. Section 11(1)(a) reads thus: "11(1)(a). Income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of twenty‑five per cent. of the income from such property." Having regard to the plain language of the above provision, it is clear that a charitable or religious trust is entitled to accumulate twenty‑five per cent. of its income derived from property held under trust. For the present purposes, the donations the assessee received, in the sum of Rs.2,57,376, Would constitute its property and it is entitled to accumulate twenty‑five per cent thereout. It is unclear on what basis the Revenue contended that it was entitled to accumulate only twenty‑five per cent. of Rs.87,010. For the aforesaid reasons, the civil appeal is dismissed. No order as to costs. M.B.A./932/FC Appeal dismissed.