Assessee, a charitable trust registered under section 12A, claimed exemption under section 11(1)(a) for ` 27,05,219 [15% of total income] as accumulated/set-apart funds, despite incurring total expenditure of ` 4,88,80,927 against receipts of ` 1,80,34,791. AO disallowed the claim, reasoning that the assessee had no surplus to justify accumulation. Assessee argued that the excess expenditure was met from accumulated funds of earlier years and the 15% set-apart under section 11(1)(a) was unconditional. Section 11(1)(a) permits accumulation of up to 15% of income irrespective of whether current-year expenditure exceeds receipts. A charitable trust cannot be denied exemption under section 11(1)(a) merely because it utilised accumulated funds to cover excess expenditure. The provision is unambiguous and does not require a surplus in the relevant year for the 15% set-apart. Accordingly, the assessee’s claim was valid. (AY. 2016-17)