(2001) 248 ITR 001 (SC)

IN THE SUPREME COURT OF INDIA

CIT

Vs

Programme For Community Organisation

ORDER

The questions that were referred to the High Court (see [1997] 228 ITR 620 (Ker)) for 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 CIT (Appeals), dated November 18, 1983, the Tribunal is right in law in holding that the CIT (Appeals) has rightly interfered with the order of the ITO ?"

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 or 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 thereout 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 en-titled 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 costsCIT

Vs

Programme For Community Organisation

ion : 248 ITR 1

Dated 28/11/2000

Section(s) Referred : s 11(1)(a), Income-Tax Act, 1961

Judge(s) : S P BHARUCHA, MS RUMA PAL

Court : SUPREME Court

Keyword(s) : Charitable Trust, Exemption, Donations

Affirmed Case(s) : 228 ITR 620

ORDER

The questions that were referred to the High Court (see [1997] 228 ITR 620 (Ker)) for 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 CIT (Appeals), dated November 18, 1983, the Tribunal is right in law in holding that the CIT (Appeals) has rightly interfered with the order of the ITO ?"

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 or 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 thereout 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 en-titled 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