COMMISSIONER OF INCOME TAX-I, COIMBATORE versus MIS. G.R. GOVINDARAJULU & SONS

Citation: [2015] 9 S.C.R. 289 · Decided: 03-09-2015 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2015] 9 S.C.R. 289 
COMMISSIONER OF INCOME TAX-I, COIMBATORE 
A 
v. 
MIS. G.R. GOVINDARAJULU & SONS 
(Civil Appeal No.4916 of2006) 
SEPTEMBER 03, 2015 
[A.K. SIKRI AND R. F. NARIMAN, JJ.] 
B 
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. 
289 
H 
290 
SUPREME COURT REPORTS 
[2015) 9 S.C.R. 
A 
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. 
C 
Jaideep Gupta, Zahaib Hussain, Sadhana Sandhu,Anil 
D 
Katiyar, B.V. Balaram Das for the Appellant. 
V. Prabhakar, Revathy Raghavan, Jyoti Prashar for the 
Respondents. 
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. 
291 
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 
Explanation.-Forthe purposes of clauses (a) and (b),-
( 1) in computing the [fifteen] per cent of the income which 
may be accumulated or set apart, any such voluntary 
contributions as are referred to in section 12 shall be 
D 
E 
deemed to be part of the income; 
F 
(2) if, in the previous year, the income applied to charitable 
or religious purposes in India falls short of [eighty-five] per 
cent of the income derived during that year from proper

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