Commissioner Of Income Tax-I, Coimbatore v. Mis. G.r. Govindarajulu & Sons

[2015] 9 S.C.R. 289 COMMISSIONER OF INCOME TAX-I, COIMBATORE MIS. G.R. GOVINDARAJULU & SONS (Civil Appeal No.4916 of2006) SEPTEMBER 03, 2015 [A.K. SIKRI AND R. F. NARIMAN, JJ.] --Income Tax Act, 1961 s. 11(1)(a) Deduction from .income-Assessment of Charitable T rust-Assessee sought deduction from income, of (1) the amount actually spent for C the objects of the Trust, (2) the amount set apart to be spent for charitable purposes and showed his taxable income as 'nil' - Assessing Officer granted deduction of the amount -actually spent However, denied the deduction on the 0 amount set apart by the assessee, on the ground that no option for this purpose was exercised by the assessee before -filing of the return The appellate authority allowed the set apart amount to be deducted - The order in appeal was confirmed by the appellate Tribunal and the High Court -E On appeal, held: High Court and the authorities below rightly allowed deduction of set apart amount holding that if option is exercised at the time of filing return, it would be in conformity with the provisions in s. 11 - However, they have gone wrong in treating the entire income as exempted from F -income tax The deduction of the set apart amount is -permissible only to the extent of 25% of total income The set apart amount by the assessee, being more than 25%, the entire set apart amount could not have been allowed to -be deducted -Appeal allowed Direction to the Assessing G Officer to recompute the taxable income. Additional Commissioner of Income Tax vs. A.L.N. Rao 1995 (4) Suppl. SCR 348: 1995 (6) SCC 62.5- referred to. 290 Case Law Reference 1995 (4) Suppl. SCR 348 referred to. Para 3 CIVIL APPELLATE JURISDICTION: Civil Appeal No. B 4916of2006 From the Judgment and Order dated 07.09.2004 of the High Court of Judicature at Madras, in Tax (Appeal) No. 561 of2004. Jaideep Gupta, Zahaib Hussain, Sadhana Sandhu,Anil Katiyar, B.V. Balaram Das for the Appellant. V. Prabhakar, Revathy Raghavan, Jyoti Prashar for the Respondents. D The Judgment of the Court was delivered by A.K. SIKRI, J . 1. The respondent-assessee is a Public Charitable Trust. It filed its return for the Assessment Year 1994-95 declaring 'nil' taxable income. In the summary of total E income filed by the assessee it had mentioned gross income forthe year in the sum of Rs. 99,41,221/-"which represented interest receipts, rental income, bus collections, miscellaneous receipts and surplus in GRS hotel. It was further stated that out F of this income the assessee had applied and spent a sum of Rs. 47,27,533/-forthe objects of the Trust. In the return it was also stated that it was setting apart a sum of Rs. 32 Lacs to be spent for charitable purposes in the following year. On that basis the assessee claimed that it was entitled to have the G deduction of the entire amount and for the purpose of taxation the income was 'nil' under Section 11 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). 2. Before we proceed further and discuss as to how the H Assessing Office:r made the assessment,' it wouid be COMMISSIONER OF INCOME TAX-I,. COIMBATORE v. G.R. GOVINDARAJULU & SONS [A.K. SIKRI, J .] necessary to take note of the provisions of Section 11 of the A Act which are relevant for our purpose. "11. (1) Subject to the provisions of sections 60 to 63, the following income shall hot be included in the total income of the previous year of the person in receipt of the B income-- [ (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, c wher~ 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 [fifteen] per cent of the income from such property; xxxxx xxxxx xxxxx ( 2006 [ 2015 4916 2006 का