The Assessing Officer assessed deemed income on the ground that the same could not be subject to provisions of Section 11(1)(a). on appeal the  CIT(A) held that exemption under Section 11(1) was not available for deemed income under Section 11(3).On appeal The Tribunal held that ;  

Firstly, in view of Circular No. 29 [F. No. 20/22/69 IT (A-1) dated 23^rd August, 1969, unapplied amount is deemed income under Section 11(3), hence, benefit of Section 11(1)(a) would be lost.

Secondly, as per the said Circular, the assessee should not be eligible to claim double deduction in respect of the same income. 

Thirdly, in the case of Trustees, the B.N. Gamadia Parsi Hunnarshala [2002] 77 TTJ 274 (Mum) (Trib)  held that exemption under Section 11 is available only on income and not on deemed income.

Fourthly, clause 10 of Part 1 of Form No. 3A does not allow that assessee to claim exemption under Section 11(b).

It was, therefore, held that assessee trust is not eligible to claim exemption under Section 11(1)(a) and Section 11(2) in respect of deemed income under Section 11(2). The Assessing Officer was directed to recompute  exemption  available to the assessee.  (AY. 2015-16  2016-17)  (AY. (AY 2016-17,2017-18)