By TIOL News Service

CHANDIGARH, AUG 18, 2018: THE ISSUE IS - Whether charitable trust can claim exemption u/s 10(23C)(iv) only to the extent of actual income and not for accumulation of income exceeding the actual amount. YES IS THE VERDICT.

Facts of the case

++ the loss claimed to be carried forward by the assessee, amounting to Rs. 9.7 crores, has arisen on account of the claim of assessee towards accumulation of income in excess of that actually earned by it. It was noted that Revenue is correct in holding that the section allows exemption of the entire income even if the same remains unutilized or is accumulated, to the extent of 15% of the income of the assessee. The section is clear, simple and unambiguous leaving no scope for any other interpretation. Thus it is the actual accumulation made by the assessee which to be seen while determining its eligibility for claiming exemption and there is no provision for allowing deduction on account of accumulation exceeding the actual accumulation made by the assessee;

++ since as per the facts of the present case the assessee has claimed deduction of accumulation in excess of the actual amount,the same was held as not allowable to the assessee. The loss claimed to be carried forward by the assessee on account of the same is therefore also disallowed. Thus it was held that the assessee is not entitled to claim carry forward of loss to the extent of Rs.9,70,90,059/- and set aside the order of the CIT(A). In the result, the appeal of the Revenue is allowed.

(See 2018-TIOL-1308-ITAT-CHD)