THE ITO(EXEMPTIONS), WARD-1, AHMEDABAD vs. INDIAN MEDICAL ASSOCIATION NATIONAL SOCIAL SECURITY SCHEME, AHMEDABAD

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ITA 1156/AHD/2016Status: DisposedITAT Ahmedabad23 February 2018AY 2012-134 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal agreed with the CIT(A) that the unutilized accumulated income would be treated as income of the trust in the subsequent Assessment Year (AY 2013-14), not in the year the five-year accumulation period ended (AY 2012-13). The AO had wrongly counted the window of five years.

What were the facts?

The Revenue appealed against the CIT(A)'s order which deleted the disallowance of Rs. 61,50,000/- claimed by the assessee for accumulation of profit under Section 11(2) of the Income Tax Act. The AO had treated this accumulated income as income of AY 2012-13.

What were the issues?

Whether unutilized accumulated income under Section 11(2) is taxable in the year the accumulation period ends or the subsequent year.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “ D ” BENCH, AHMEDABAD

Before: SHRI S.S. GODARA & SHRI PRADIP KUMAR KEDIA

For Respondent: Shri Bhadresh, AR

आदेश / O R D E R PER PRADIP KUMAR KEDIA - AM: The captioned appeal has been filed at the instance of the Revenue against the appellate order of the Commissioner of Income Tax(Appeals)-9, Ahmedabad [CIT(A) in short] dated 18/02/2016 arising in the assessment order passed under s.143(3) of the Income Tax

ITA No.1156/Ahd/2016 ITO vs. Indian Medical Association National Society Security Scheme Asst.Year – 2012-13 - 2 - Act, 1961 (hereinafter referred to as "the Act") dated 24/03/2015 relevant to Assessment Year (AY) 2012-13.

2.

The revenue has agitated the reversal of disallowance of assessee’s claim for accumulation of profit under s.11(2) of the Act amounting to Rs.61,50,000/- by the CIT(A).

3.

We have examined the issue in the light of the orders of the authorities below. The controversy is in narrow compass where the accumulation if not utilized can be treated as income of the trust in the subsequent AY 2013-14 and not in the AY 2012-13. It is inter alia alleged that The AO has wrongly counted window of five years available under s.11(2) r.w.s. 11(3)(c) of the Act.

4.

We find that the CIT(A) has taken note of the relevant facts and held that period of five years contemplated under s.11(2)(a) will fall in the subsequent AY 2012-13 for the purposes of unutilized income of Rs.61.50 lakhs set apart and claimed as application during AY 2007-08. The relevant operative para of the order of the CIT(A) read as under:-

“4.2. I have carefully considered the rival contention as well as the observation of the AO. It is observed that AO has made an addition of Rs.61,50,000/- being amount accumulated u/s.11(2) of the Act for AY 2007-08 on the ground that accumulated income has not been utilized for the purpose for which it was accumulated at the end of fifth year.

ITA No.1156/Ahd/2016 ITO vs. Indian Medical Association National Society Security Scheme Asst.Year – 2012-13 - 3 - The AO has observed that trust has not utilized Rs.61.50 lacs set apart and claimed as application during AY 2007-08. In its written submission appellant has submitted that appellant has been set up to provide security to the life members of India Medical Association National Social Security Scheme. The appellant has given a Note detailing the various aspects of the scheme. It was submitted by the appellant that application was made by it during AY 2007-08 u/s.11(2) for accumulation of income. Five years were completed on 31-3-2012. Appellant has relied upon section 11(3)(c) of the Act. It states as follows: “11(3)(c) is not utilized for the purpose for which it is so accumulated for set apart during the period referred to in clause (a) of that sub section or in the year immediately following the expiry thereof”. According to the appellant if the accumulated income is not applied within the period for which it is accumulated, then the same is treated as income after expiry of five years. According to the appellant the accumulation if not utilized would be treated as income of the trust for AY 2013-14 and not for AY 2012-13, as period of five years of accumulation would be ending on 31-3-2012. I agree with the contentions of the appellant. As per section 11(3)(c) if the accumulated income is not utilized by the trust, then it would be considered as income of the year immediately following the expiry of period of five years of accumulation. The year under consideration is AY 2012-13. Therefore, I am of the considered opinion that AO has made an addition of Rs.61,50,000/- in the fifth year of accumulation i.e. AY 2012-13, the year under consideration. Accordingly, AO is directed to delete the addition of Rs.61,50,000/-. This ground of appeal is allowed.”

5.

We find the conclusion of the CIT(A) is in consonance with the provisions of Act and does not call for any interference.

ITA No.1156/Ahd/2016 ITO vs. Indian Medical Association National Society Security Scheme Asst.Year – 2012-13 - 4 - In the result, appeal of the Revenue is dismissed. 6. This Order pronounced in Open Court on 23 / 02/2018

Sd/- Sd/- (एस.एस.गोदारा) (�द�प कुमार के�डया) �या�यक सद�य लेखा सद�य ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 23/ 02/2018 ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-9, Ahmedabad �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation .. 21.2.18 (dictation-pad 5- pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member …21/2/18 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S…….23.2.18 7. Date on which the file goes to the Bench Clerk…………………23.2.18 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………

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