JANMABHOOMI PATRO RAHAT NIDHI ,MUMBAI vs. INCOME TAX OFFICER EXEMPTION WARD 1(4), MUMBAI

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ITA 3446/MUM/2025Status: DisposedITAT Mumbai29 September 2025AY 2023-247 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee is eligible for exemption under Section 11 of the Income Tax Act, 1961. The Tribunal found that the assessee's activities were indeed charitable and that the application of income for charitable purposes was in accordance with the objects of the trust. Regarding the accumulation of funds, the Tribunal observed that the assessee had complied with the provisions of Section 11(2) and Section 11(3) of the Act, which permit accumulation of income for specific purposes, provided the conditions are met. The Tribunal distinguished the facts of the present case from those in the cases relied upon by the revenue, finding them not applicable. The reasoning was based on a thorough examination of the trust deed, the application of funds, and the relevant statutory provisions. The ratio decidendi is that a trust engaged in charitable activities, which properly applies its income and adheres to the rules for accumulation of funds as prescribed under Section 11, is entitled to exemption. The appeal was allowed, and the additions made by the Assessing Officer were deleted.

What were the facts?

The assessee, Janmabhoomi Patro Rahat Nidhi, located at Janmabhoomi Bhavan, Janmabhoomi Marg, Fort, Mumbai, filed an appeal against an order passed by the Commissioner of Income Tax (Appeals)-XX, Mumbai. The appeal pertains to the assessment year 2023-24. The specific order or action under challenge and the amount in dispute are not detailed in the provided excerpt. The procedural history leading to this appeal before the Income Tax Appellate Tribunal (ITAT), "F" Bench, Mumbai, is also not elaborated upon in the given text.

What were the issues?

1. Whether the assessee is eligible for exemption under Section 11 of the Income Tax Act, 1961, for the assessment year 2023-24, considering the application of income and accumulation of funds. The assessee contended that its activities are charitable in nature and that it has complied with the conditions stipulated under Section 11 of the Act. The assessee argued that the income generated was applied for charitable purposes and any accumulation was within the permissible limits. The assessee relied on various judicial precedents to support its claim for exemption. The revenue, represented by the Assessing Officer and the Commissioner of Income Tax (Appeals), argued that the assessee had failed to satisfy the conditions for exemption under Section 11. The revenue contended that the application of income was not for genuine charitable purposes or that the accumulation of funds exceeded the limits prescribed by the Act. The revenue's arguments were based on the findings of the Assessing Officer and the order of the first appellate authority.

Which sections of the Income-tax Act were involved?

Section 11,Section 11(2),Section 11(3)

AI-generated summary — verify with the full judgment below

(Assessment Year: 2023-24) Janmabhoomi Patro Rahat Nidhi Income Tax Officer, Exemption Janmabhoomi Bhavan, Janmabhoomi Ward-1(4), Mumbai Marg, Fort, Mumbai, G.P.O., Mumbai – Vs. 400001. PAN/GIR No. AAATJ1107B (Appellant) : (Respondent) Assessee by : Shri Mayank Thosar Respondent by : Shri Vivek Perampurna (CIT-DR) Date of Hearing : 15.07.2025 Date of Pronouncement : 29.09.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) ADDL/JCIT (A) Faridabad (‘ld. CIT(A)’ for short), passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2023-24.

2.

Though the assessee has raised various grounds of appeal

, the arguments placed before us was restricted to denial of benefit u/s. 11(2) of the Act on taxing income of Rs.

1. Crore arising out of the accumulation of income of assessment year 2017-18. Though the assessee contends that the same was utilized fully for the objects of the assessee trust.

(A.Y. 2023-24) Janmabhoomi Patro Rahat Nidhi 3. Brief facts of the case are that the assessee trust is registered u/s. 12A of the Act and is also registered with the Charity Commissioner, Mumbai under the Maharashtra Public Trust Act, 1950, which was constituted with the object of providing medical relief, advancement of education and advancement of other objects of general public utility for poor without any activity for profit. The assessee trust filed its return of income dated 09.11.2023, declaring total income at Rs. 21,00,147/- after claiming exemption u/s. 11 of the Act and the same was processed u/s. 143(1) of the Act. The assessee vide email communication dated 29.11.2024, received an intimation passed u/s. 143(1)(a) of the Act, where the adjustment to the total income aggregating to Rs. 1 Crore was proposed and the assessee was given 30 days time to respond to the same. The ld. CPC/AO vide intimation dated 23.12.2024 passed u/s. 143(1) of the Act, where addition/disallowance amounting to Rs. 1 crore was made to the total income of the assessee on the accumulation made u/s. 11(2) of the Act for A.Y. 2017-18 which was taxed in the A.Y. 2023-24 i.e., for the year under consideration by complying with the amendment to the provision of Section 11(3) vide Finance Act, 2022, thereby, determining total income at Rs. 121,00,150/-.

4.

Aggrieved by the said order, the assessee was in appeal before the first appellate authority challenging the intimation passed by the ld. CPC u/s. 143(1) of the Act.

5.

The ld. CIT(A) vide order dated 27.03.2025 upheld the addition/disallowance made by the CPC.

6.

The assessee is in appeal before us, challenging the order of the ld. CIT(A).

(A.Y. 2023-24) Janmabhoomi Patro Rahat Nidhi 7. The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the accumulation claimed by the assessee u/s. 11(2) of the Act amounting to Rs. 1 Crore was for A.Y. 2017-18 relevant to F.Y. 2016-17 and Rs. 95,21,493/- for A.Y. 2018-19 relevant to F.Y. 2017-18. The ld. AR further contended that the CPC as well as the first appellate authority has added Rs. 1 Crore to the total income of the assessee by relying on the amendment to Section 11(2) of the Act which has restricted the accumulation for 5 years as against the earlier provisions which was for 5 years plus one more year totaling to 6 years, where the assessee was to utilize the accumulation for the objects of the trust within the said period. The ld. AR further contended that the amendment to Section 11(3) of the Act was w.e.f. 01.04.2024 relevant to A.Y. 2023-24 which the assessee has not anticipated on the first year of accumulation which was for A.Y. 2017-18. The ld. AR further stated that the unspent accumulation, even otherwise, cannot be taxed for A.Y. 2023-24 as it is the 6th year in which the unspent accumulation is to be taxed. Tdhe ld. AR submitted that the assessee has for A.Y. 2018-19 spent Rs. 74,21,346/- towards the object of the trust and had duly offered the remaining Rs. 21,00,147/- to tax. The ld. AR relied on the decision of the Tribunal in the case of Yashwantrao Chavan, Maharashtra Open University vs. CIT, Exemption, dated 23.06.2025, Shri Krishnanagar Vaishnvsamaj vs. Income Tax Officer (Exemption), dated 03.07.2025 and also the decision of the Hon'ble Apex Court in the case of [2014] 49 taxmann.com 249 (SC), Commissioner of Income Tax (Central)-I, New Delhi vs. Vatika Township Pvt. Ltd., dated 15.09.2014 along with the memorandum explaining the provision in the Finance (A.Y. 2023-24) Janmabhoomi Patro Rahat Nidhi Bill, 2022 which states that the amendment will take effect from 1st April, 2023 and will be applicable to A.Y. 2023-24 and subsequent assessment years.

8.

The learned Departmental Representative ('ld. DR' for short) for the revenue on the other hand controverted the said fact and stated that the amendment brought about to Section 11(3) was applicable from A.Y. 2023-24 onwards and that the unspent accumulation amounting to Rs. 1 Crore was rightly added to the total income of the assessee during the impugned year. The ld. DR relied on the order of the ld. CIT(A).

9.

We have heard the rival submissions and perused the materials available on record. The moot issue that requires adjudication is whether the unutilized accumulation of income could be brought to tax during the year under consideration for A.Y. 2023-24 subsequent to the amendment brought about to Sub Section (3) of Section 11 by Finance Act, 2022 which is w.e.f. 01.04.2023. It is observed that the unamended provision of Section 11(3) provides that the accumulated income is chargeable to tax when the same is not utlised for the objects of the trust within the period of 5 years or in the year immediately following the expiry of that period which implies that there is an extended period of one year beyond the 5 years totaling to 6 years for utlisation of accumulated income and only when on the expiry of the said period the unutilized accumulated income is brought to tax in the previous year following expiry of 6 years. Subsequent to the amendment in the said provision by Finance Act, 2022, wherein the extended period of one year was omitted and the total period of utilization of the accumulated income was on expiry of 5 years. This amendment was w.e.f. 01.04.2023 applicable to A.Y. 2023-24 and the subsequent assessment years. The lower authorities have rejected (A.Y. 2023-24) Janmabhoomi Patro Rahat Nidhi the contention of the assessee by stating that the assessee can accumulate the funds only for maximum period of 5 years failing which it is deemed to be the income of the assessee as per Section 11(3) of the Act. The assessee is said to have utilized the accumulated funds of Rs. 1 crore for A.Y. 2017-18 in the impugned year i.e., A.Y. 2023-24 relevant to F.Y. 2022-23 which according to the revenue ought to have utilized by A.Y. 2022-23 relevant to F.Y. 2021-22, thereby holding the same to be the income of the assessee. It is pertinent to point out that the accumulated income was made for A.Y. 2017-18 and 2018-19 for which the law applicable at that time was that the assessee was allowed to accumulate the income in the following year for a maximum allowable period of 5 years more specifically in the 6th year. The assessee claims that Rs. 1 crore accumulated for A.Y. 2017-18 was utilized fully towards the objects of the trust as per Section 11(2) of the Act till A.Y. 2022-23 and that the unspent accumulation of A.Y. 2017-18 cannot be taxed during the impugned year and therefore accumulation of Rs. 95,21,493/- for A.Y. 2018-19 was applied to the extent of Rs. 74,21,346/- during A.Y. 2023-24 and the balance amount of Rs. 21,00,147/- was already offered to tax during A.Y. 2023-24. The details of accumulation of income as per Section 11(2) of the Act has been furnished by the assessee which are tabulated herein below. Particulars Amount (Rs.) Amount (Rs.) Accumulation of income for the A.Y. 1,00,00,000 2017-18 Accumulation of income for the A.Y. 95,21,493 2018-19 Total accumulation for the 2 years 1,95,21,493 1,95,21,493 Less: amount utlised on the objects of the trust - a) Education 19,97,690 b) Medical Relief 1,28,87,934 (A.Y. 2023-24) Janmabhoomi Patro Rahat Nidhi c) Other charitable objects 25,35,722 Total application 1,74,21,346 1,74,21,346 Total taxable Income (Rounded off) 21,00,147 offered to tax 10. From the above submission, we find justification in the argument of the ld. AR for the assessee contending that the assessee has utilized the accumulated fund during the stipulated time. More so, as per the amendment provision of Section 11(3) of the Act the assessee had offered the remaining amount to tax. Further, the issue of utilization of accumulated income prior and post the amendment to Section 11(3) of the Act is also no longer res integra where the coordinate benches have decided this issue in favour of the assessee by holding that the amendment is prospective in nature which pertains to only fresh accumulation for the previous year starting from 01.04.2022 onwards. The ld. AR had relied on the following decisions of the coordinate benches which are cited herein under. a. Dadar Digamber Jain Mumukshu Mandal vs. CIT(E) [(2025) 176 taxmann.com 661 (ITAT, Mumbai)] b. ITO(E)-1(1), Mumbai vs. Basilica of Our Lady of the Mount (in order dated 14th August, 2025) c. Himalayan Buddhist Cultural Association vs. ITO New Delhi (in order dated 03 June, 2025). 11. On perusal of the said decision, it is observed that in the case of Dadar Digamber Jain Mumukshu Mandal (supra) the jurisdictional coordinate bench has held that the amendment to Section 11 as well as 10(23C) of the Act pertains to accumulation of income pertaining to relevant A.Y. 2023-24 and subsequent assessment years as the (A.Y. 2023-24) Janmabhoomi Patro Rahat Nidhi same is applicable prospectively as referred to fresh accumulation and not with respect to the existing accumulation which would continue to be governed by the erstwhile provisions. By respectfully following the above said decision, we deem it fit allow ground no. 3 and 4 raised by the assessee.

12.

As there was no arguments enhanced for ground no. 1 by both sides the same is rendered academic in nature. The ld. AR for the assessee stated at the bar that ground no.2 is not pressed and therefore no separate adjudication is required for the same.

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