HIMALAYAN BUDDHIST CULTURAL ASSOCIATION,DELHI vs. ITO, NEW DELHI

Coming to the assessee’s sole substantive ground challenging both the learned lower authorities’ action disallowing its section 11 exemption claim, the tribunal’s attention is invited at the outset to the learned lower authorities’ discussion reading as under: “5.1 The main contention of the appellant is that the addition of Rs. 18,44,782/- made by the CPC is not justified because the amount accumulated in AY 2017-18 was applied in AY 2023-24, which according to the appellant is within the permissible time limit as per section 11(3)(c) of the Act before its amendment by Finance Act, 2022. 5.2 Section 11(2) of the Act allows a charitable or religious trust to accumulate income for a maximum period of 5 years for application towards specified purposes, subject to certain conditions. Section 11(3) (c) of the Act (before amendment by Finance Act, 2022) provided that if such accumulated income "is not utilized for the purpose for which it is so accumulated or set apart during the period referred to in clause (a) of that sub-section or in the year immediately following the expiry thereof," then it shall be deemed to be the income of the trust for the previous year immediately following the expiry of the said period. 5.3 Finance Act, 2022 amended section 11(3)(c) with effect from 01.04.2023 (i.e., from AY 2023-24) by omitting the words "or in the year immediately following the expiry thereof." After this amendment, accumulated income has to be utilized within the specified period of 5 years only, and the additional grace period of one year (immediately following the expiry of 5 years) is no longer available. 5.4 In the present case, the appellant accumulated Rs. 18,44,782/- in AY 2017-18. Therefore, as per section 11(2), this amount had to be utilized within 5 years, i.e., up to AY 2022-23. After the amendment to section 11(3)(c), which is effective from AY 2023-24, the additional period of one year following the expiry of 5 years is no longer available for utilization of accumulated income. 5.5 The appellant's argument that the amendment should not be applied retrospectively is not tenable. The amendment is applicable from AY 2023-24 and is prospective in nature. The appellant's case falls within AY 2023-24, and hence the amended provision is correctly applicable. The law as it stands on the first day of the assessment year is applicable for determining the tax liability for that assessment year. This is a well-established principle, upheld by the Supreme 2 | P a g e Court in numerous judgments, including CIT v. Vatika Township Pvt. Ltd. [2014] 367 ITR 466 (SC). 5.6 The appellant's reliance on the decision of Hon'ble ITAT Bangalore in the case of M/s Phulchand Gulabchand Charitable Trust vs. Income Tax Officer Ward-2 is not relevant as the facts and applicable law in that case were different. Similarly, the judgments of the Supreme Court in the cases of Commissioner of Income Tax vs. Vinay Cement Ltd. and Sedco Forex International Drill Inc. vs. CIT relate to different provisions of law and different factual circumstances. 5.7 The appellant has argued that CPC could not have made the addition under section 143(1) as it is beyond the scope of processing. However, as per section 143(1)(a)(ii) of the Act, adjustments can be made in respect of "an incorrect claim, if such incorrect claim is apparent from any information in the return." In the present case, the claim of exemption for income accumulated beyond the permissible time limit under section 11(3)(c) is an incorrect claim which is apparent from the information in the return itself, particularly when read with Form 10B where the appellant has disclosed that the amount accumulated in AY 2017-18 was utilized in AY 2023-24, which is beyond the permissible time limit as per the amended section 11(3)(c). Therefore, the CPC was well within its jurisdiction to make the adjustment under section 143(1). 5.8 In view of the above, I hold that the CPC correctly disallowed the exemption claimed on Rs. 18,44,782/- which was not utilized within the permissible time limit as per section 11(3)(c) of the Act. The ground of appeal

That being the case, tribunal finds no merit in the Revenue’s foregoing vehement contentions for the precise reason that once the impugned assessment year 2023-24 is the starting year of the amended provision, all the previous accumulation could not be held to have been hit by the same going by CIT (Central)-I, New Delhi vs Vatika Township Pvt Ltd, (2014) 49 taxmann.com 249 (SC).

It is further made clear that there is no stipulation in the amended statutory proviso that all previous accumulations would be hit by the same; and, therefore, I hereby hold stricter interpretation in light of Commissioner Vs. Dilip Kumar & Co. (2018) 9 SCC 1 (FB)(SC) to reverse both the learned lower authorities’ respective action. Ordered accordingly.