TaxTMI 
TaxTMI 
2025 (9) TMI 285
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....t for the reason that the impugned addition has to be made in the AY 2022-23 and not in AY 2023-24. 3. The appellant craves leave to add, alter, amend, or withdraw any of the above grounds of appeal at the time of hearing, and further reserves the right to raise any additional ground that may be considered necessary in the interest of justice." 3. The brief facts of the case are that the assessee filed return of income declaring total income of Rs. 2,51,699/-. While processing the return of income, the CPC made an adjustment of Rs. 1,58,301/- by treating this amount as deemed income under Section 11(3), chargeable under Section 115BBI of the Act. This was based on the reasoning that the said amount was accumulated in Financial Year (FY) 2016-17 under Section 11(2), and since it was not utilised by 31.03.2022, it was deemed to be income of FY 2022-23 (relevant to AY 2023-24). Upon receiving a notice of adjustment, the assessee submitted that the accumulated amount had in fact been utilised in FY 2022-23, which, as per the law prevailing at the time, was still a permissible period of utilisation. The assessee argued that the amendment made by the Finance Act, 2022, which ....
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..... 6. In response, the Ld. DR placed reliance on the observations made by the Assessing Officer and Ld. CIT(Appeals) in their respective orders. 7. We have heard the rival contentions and perused the material on record. We note that the present issue is directly covered in favour of the assessee in light of the Ahmedabad ITAT decision in the case of Shri Krishnagar Vaishvsamaj vs. ITO(E) in ITA No. 1096/Ahd/2025. It would be useful to reproduce the relevant extracts of the Ruling, for ready reference: "7. We have considered the rival submissions. In the present case, the assessee had accumulated fund of Rs. 4,60,000/- in the F.Y. 2016-17. As per provisions of Section 11(2) of the Act, a trust is required to apply 85% of income during any previous year to charitable or religious purposes. However, if it is not able to apply 85% of its income during the previous year, it is allowed to accumulate such income for the period of five years. In fact, the time limit of accumulation was earlier ten years which was restricted to five years w.e.f. 01.04.2016. The provision of Section 11(3) of the Act stipulates that if the income so accumulated is not utilised within the prescri....
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....ional one-year period for utilisation of funds was omitted vide Finance Act 2022 w.e.f. 01.04.2023. The contention of the assessee is that the amended provision would create an impossible and absurd situation as the assessee would be left with no time to utilise the funds accumulated in F.Y.2016-17. The original five years' time period in this case had expired on 31.02.2022. As per the unamended provisions, the assessee had additional one year to utilise the funds. The removal of additional one-year period would create an impossible or absurd situation as the assessee will be left with no time to utilise the accumulated funds. The doctrine of impossibility (lex non cogit ad inpossibilia) would be applicable in the situation when assessee would be left with no time to utilise the accumulated funds. The amendment cannot be interpreted in such a way that it makes impossible for the assessee to utilise the accumulated funds within the time period as originally provided under the provisions of the Act. It is a settled position that legal rules should not be applied rigidly or literally, when doing so would lead to an unfair or impossible outcome. Rather, the legal obligations should be ....
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....ought to tax in assessment year 2023-24 and, thus, addition made by Assessing Officer was to be deleted. 9. Further, in the case of Yashwantrao Chavan Maharashtra Open University vs. CIT(E) in ITA No. 505/Pun/2025 vide order dated 23.06.205, the Pune ITAT while dealing with similar set of facts and issue for consideration, made the following observations: "21. In light of the above discussion, we are of the considered opinion that since the assessee in the instant case has utilized the accumulated surplus funds in the year immediately following the prescribed period of 5 years i.e. before 31.03.2023 and the amendment to the provisions of section 11(3) are held to be prospective in nature, therefore, the Ld. Addl / JCIT(A) in our opinion is not justified in upholding the intimation of the CPC making adjustment of Rs. 90,70,20,511/- u/s 11(3) as deemed income of the assessee which was accumulated in the financial year 2016-17 and when the provisions at the relevant time prescribed the utilization of the amount within a period of 5 years or in the year immediately following the prescribed period of 5 years. Even otherwise also we find merit in the argument of the Ld. Couns....