Accumulated charitable income under section 11(3) deemed income, with recomputation required after verifying prior inclusion in application of income.

Unutilized income accumulated for charitable purposes under section 11(2) loses that protected character if not applied within the prescribed period, and section 11(3) requires it to be treated as income of the relevant previous year. The assessee accepted this position but contended that the same amount had already been considered while computing application of income for the year, so further taxation would duplicate the adjustment. The assessment therefore required verification of that factual claim before final recomputation could be made, and the income had to be recalculated in accordance with law after such verification.

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Issues: Whether the unutilized amount accumulated under section 11(2) of the Income-tax Act, 1961 was liable to be treated as deemed income under section 11(3), and whether the assessment required recomputation after verifying the assessee's claim that the amount had already been considered while computing application of income for the year.

Analysis: Income accumulated or set apart for charitable purposes under section 11(2) ceases to enjoy that treatment if it is not utilized within the prescribed period, in which event section 11(3) mandates that it be treated as income of the relevant previous year. The assessee accepted this legal position but claimed that the same amount had already been factored into the year's computation by reducing the application of income, and that the computation therefore needed correction to avoid duplication. The record required verification of that factual claim before final computation could be made.

Conclusion: The unutilized accumulated amount was liable to be treated as deemed income under section 11(3), but the Assessing Officer was directed to recompute the income in accordance with law after verifying the assessee's claim regarding its earlier inclusion in the computation.

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