Section 11(3) After Finance Act, 2022: Utilization of Accumulated Income - Deemed Income, Vesting and the Doctrine Against Impossibility

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....ly prospectively for accumulations arising on/after 1 April 2022. The amendment effectively reduced the permissible period for utilization of accumulated income from six years (five years plus an additional year) to five years. The decisions examine statutory language, legislative intent (as reflected in the Finance Bill memorandum), precedents on retrospective operation of taxing statutes (notably the Supreme Court's decision in Vatika Township), and facts showing whether accumulated funds were utilized within the erstwhile six-year window. Key Legal Issues * Whether the omission of the phrase "or in the year immediately following the expiry thereof" in Section 11(3)(c) by Finance Act, 2022 is retrospective or prospective in operati....

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....as extensively cited: the Court reiterates the presumption that "a legislation is presumed not to be intended to have a retrospective operation" and that a retrospective operation will not be read into an enactment unless clearly indicated. The Tribunal benches emphasized that an amendment which removes a benefit or imposes a burden should ordinarily operate prospectively. Legislative Intent and Memorandum to the Finance Bill Both decisions examine the Memorandum explaining the Finance Bill, 2022, which records that the amendment was intended to align accumulation provisions between two exemption regimes and states that the amendments will "take effect from 1st April, 2023 and will accordingly apply in relation to the assessment year 2023....

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....he presumption against retrospectivity where the amendment imposes a burden. The Ahmedabad order explicitly reproduces prior Ahmedabad/co-ordinate bench decisions and the Mumbai decision to derive consistency. Key Holdings and Reasoning Mumbai ITAT  Ratio: The amendment effected by Finance Act, 2022 is prospective and applies to accumulations pertaining to previous years starting from 1 April 2022 (AY 2023-24 and onwards). Accumulations from FY 2016-17 and FY 2017-18 remain governed by the law extant when the accumulation was made; the additional one-year grace therefore remains available. The Tribunal set aside additions of Rs. 35,66,540 (utilised in FY 2022-23) and Rs. 40,00,000 (utilised in FY 2023-24 but not relevant to AY 2023-....

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....ear grace. * Obiter observations: Both orders refer to other Tribunal decisions and commentary about alignment between regimes; observations about the scope of future assessments where utilization occurs after the sixth year (i.e., AY 2024-25 and beyond) are ancillary rather than binding on other factual permutations. Implications and Practical Consequences * Immediate relief to trusts/institutions that had accumulated income before 1 April 2022 and utilized it within the six-year window: such amounts should not be taxed in AY 2023-24. * Assessment timing: Where utilization occurs in the sixth year, any taxability (if applicable) attaches to the AY corresponding to the sixth-year previous year (i.e., in most cases AY 2023-24); but Tr....