TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1299
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....ty, RRL, Trivandram, Ahmedabad Management Association and also got registered u/s.12AA of the Act from 16-12-1997. For the Asst. Year 2008-09 the assessee filed its Return of Income on 22-01-2009 declaring total income of Rs. 6,25,729/-. The return was processed u/s.143[1] of the Act accepting the declared income. Subsequently, on verification of the record it is noticed that the assessee trust had accumulated/set apart an amount of Rs. 7,02,66,000/- under section 11(2) of the Act which was accumulated from Financial Years 1998-99 to 2006-07 for the purpose as mentioned below: FY of accumulation Amount accumulated Purpose of accumulation 1998-99 72,50,000 Investigation activity fund 1999-00 1,16,00,000 2000-01 1,65,00,000 2001-02 1,38,00,000 2002-03 1,60,00,000 2003-04 44,00,000 2006-07 7,16,000 Total 7,02,66,000 2.1. Out of the total accumulation/set apart no such amount was applied during the F.Y. 2007-08 and earlier years (as detailed in Schedul-l of the Return of Income). Further, the accumulated amount of Rs. 2,98,00,000/- pertaining to F.Y. 2001-02 and 2002-03 was also not applied for the objects of the purpose, though the period of five years ....
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....11(3) of the Act, unspent amount Rs. 2,98,00,000/- was being deemed income for the A.Y.2008-09 and demanded tax thereon. 4. Aggrieved against the additions, the assessee filed an appeal before CIT[A] who upheld the reopening of assessment as valid in law and also confirmed the addition made by the AO by observing as follows: "... 2.1. I have considered the facts of the case. The appellant has challenged the reassessment proceedings carried out in this case on the ground that the notices u/s.148 has been issued on account of change of opinion at the level of AO. In this case, notice u/s.148 was issued on 7.3.2013, which was duly served upon the appellant. The copy of the reasons recorded was provided to the appellant wide AO's letter dated 13.06.2013. Subsequently, on the appellant's objection on the issue of notice u/s.148, the AO vide letter dated 13.06.2013 disposing of the objections raised by the appellant against the issuance of notice u/s.148 of the Act. Thus, every procedure has been complied by the AO before completing the assessment and as such, there was no default or irregularity not only in initiating the proceedings u/s.147 but in completing the reassessment pro....
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....at the time of hearing if the need arise." 6. Ld. Counsel Mr. Manish Shah appearing for the assessee filed a written submission stating that on perusal of Pre-Amended Provision contained in Section 11(3) is applicable before 01.04.2023, it can be seen that charge was not created for non-utilisation of the amount within the period specified in Section 11(2) or further period provided in Section 11(3)(c) of the Act. On closer scrutiny of the provision as it stands in the statute book till 31.03.2023, it can be seen that charge is created to tax the accumulation which was mis-utilised/misapplied [Section 11(3)(a)] or accumulation which ceases to remain invested in form or modes specified in sub-section (5) [Section 11(3)(b)] or accumulation which was credited or paid to any trust or institution (12AA or 10(23C) referred institutions) [Section 11(3)(d)]. Thus, it can be seen that no similar charge was created for accumulation which was not utilised in the period specified in Section 11(2) or further period provided u/s.11(3)(c) of the Act. In other words, no charging provision was created to tax the accumulation which was found to be in violation as per provision contained in Section....
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....assessment notice issued u/s 148 for AY 2008-09 is bad in law and liable to be quashed. 6.2. Further the AO has added un-utilised accumulation of A.Y. 2002-03 and 2003-04 in Asst Year 2008-09 which is legally not sustainable on any interpretation. It is therefore submitted that even if worst case against the assessee is taken and it is held that unutilised accumulation is taxable in the sixth year then also in the Assessment Year 2008-09, the unutilised accumulation of AY 2002-03 only can be added as deemed income u/s 11(3) and whereas the unutilised accumulation of AY 2003-04 cannot be added as deemed income u/s 11(3) of the Act in the Asst. Year 2008-09 and therefore requested to allow the appeal and delete the additions made by the Ld AO. 7. Per contra, Shri. Ankit Jain, Ld. Sr. DR submitted that the amendment made to Section 11(3) of the Act was applicable from Asst. Years 2023-24 and accordingly the additions made by the lower authorities are correct in law and strongly supported the orders passed by the lower authorities and requested to dismiss the appeal filed by the assessee. 8. We have considered the rival submissions and perused the materials available on record and p....
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....subclause (vi) or sub-clause (via) of clause (23C) of section 10, [shall be deemed to be the income of such person of the previous year in which it is so applied or ceases to be so accumulated or set apart or ceases to remain so invested or deposited or credited or paid or, as the case may be, of the previous year immediately following the expiry of the period aforesaid]. Words "or in the year immediately following the expiry thereof" shall be omitted by the Act No. 6 of 2022, w.e.f. 1-4-2023. 9.1. As per the sub-clause (c) of Section 11(3), the accumulated amount shall be deemed to be the income of the assessee, if it was not utilised within the period of five years as mentioned in Section 11(2)(a) of the Act, or "in the year immediately following the expiry thereof". Thus, the assessee had time limit of five years and one additional year to utilise the accumulated funds. Since the funds were accumulated in this case in the F.Y. 2007-08, the extended time period for utilisation of fund was till the end of the F.Y. 2008-09. In the present case, the assessee had utilised funds to the extent of Rs. 2,60,00,000/- in the additional one-year period and accordingly claimed the dedu....