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Facts
The assessee, a charitable trust, claimed an adjustment for Rs. 12,40,644/- accumulated in A.Y. 2017-18. The CPC disallowed this claim, stating it was incurred in the 6th year, beyond the permissible 5-year period for utilization as per Section 11(2) of the Income-tax Act.
Held
The Tribunal held that the assessee utilized the accumulated funds within the prescribed period, considering the Finance Act, 2022 amendment. The disallowance by CPC was deemed uncalled for, and based on precedent, the CIT(A)'s order was set aside.
Key Issues
Whether the utilization of accumulated funds by the assessee was within the permissible period under Section 11(2) of the Income-tax Act, considering amendments and precedents.
Sections Cited
143(1), 250, 11(2), 11(3), 12A
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
आदेश / ORDER
The captioned appeal at the instance of assessee pertaining to A.Y. 2023-24 is directed against the order dated 18.02.2025 of Addl/JCIT(A)-1 Ludhiana passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Intimation Order dated 02.12.2024 passed u/s.143(1) of the Act.
The only grievance of the asssessee is that ld.CIT(A) erred in confirming the adjustment made by CPC u/s.143(1)(a) of the act by not allowing the application of income of Rs.12,40,644/- incurred in the 6th year from the year of accumulation in A.Y. 2017-18.
At the outset, Ld. Counsel for the assessee referring to the decision of this Tribunal in the case of Yashwantrao Chavan Maharashtra Open University Vs. CIT in order dated 23.06.2025 submitted that prior to the amendment Shivgad Adyatma Charitable Trust, Murgud brought in by the Finance Act, 2022 omitting the words “or in the year immediately following the expiry thereto” the position of law was that the assessee was required to utilize the accumulated funds before the end of 6th year and therefore the disallowance made by CPC is uncalled for because the amount was accumulated from A.Y. 2017-18 onwards and it has been applied till A.Y.2023-24 which is the 6th year and therefore should have been allowed by CPC.
On the other hand, ld. DR failed to controvert the contention made b Ld. Counsel for the assessee by placing any binding precedent in its favour.
I have heard the rival contentions and perused the record placed before me. I note that the assessee is a trust engaged in religious activities and registered u/s.12A of the Act vide order dated 16.03.2022. Assessee has successfully filed Form 10 for accumulation of income of Rs.12,40,644/- during A.Y. 2017-18 u/s.11(2) of the Act. During A.Y. 2018-19 to A.Y. 2019-20 no funds are accumulated and thereafter from A.Y. 2021-22 to A.Y. 2022-23 it has further accumulated a sum of Rs.3.60 lakh, Rs.10.00 lakh and Rs.2.50 lakh. During the year under consideration, asssessee has applied Rs.26,40,644/- and claimed the same in the return of income filed for A.Y. 2023-24 on 30.10.2023. However, CPC has not allowed the benefit of application of income for A.Y. 2017-18 on the ground that it could have been applied only within five years from the end of A.Y. 2017-18. I however notice that this issue has already stands adjudicated b this Tribunal on multiple occasions and recently this Tribunal in the case of Yashwantrao Chavan Maharashtra Open University Vs. CIT (supra) has held as under:
“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. Counsel for the assessee that the 5 year period ends on 31.03.2022 and therefore the unutilized amount could have been brought to tax in assessment year 2022-23 and not in assessment year 2023-24. In the light of the above discussion, we set aside the order of the Ld. Addl / JCIT(A) on this issue and direct the Assessing Officer/CPC to delete the adjustment. The grounds raised by the assessee are accordingly allowed.”
Similar issue has been dealt by this Tribunal in the case of Shri Ishwarlal Gulabchand Vardhamantap Ayambil Trust in and another order dated 22.07.2025 placing reliance on the decision of Coordinate Bench in the case of Yashwantrao Chavan Maharashtra Open University (supra) has held in favour of the assessee by observing as under :
“11. After going through the facts of the instant case in the light of decision cited (supra), I find that the above decision is squarely applicable and at the relevant time when the funds were accumulated and set apart the prescribed time for utilisation of the amount was within a period of five years or in the year immediately following the prescribed period of five years and therefore for the case under consideration where the amount was accumulated during F.Y. 2016- 17 assessee had time to apply the accumulated funds for charitable purposes upto 31.03.2024, i.e. A.Y. 2024-25. Therefore, ld.CIT(E) erred in confirming the action of CPC making the addition for the year under appeal for A.Y. 2023-24. Finding of ld.CIT(E) is set aside and the impugned addition is hereby deleted. Grounds of appeal raised by the assessee are allowed.”
Now going through the above finding of this Tribunal and following the Rule of Consistency, I find that since the assesssee could have applied the funds within five + one year Shivgad Adyatma Charitable Trust, Murgud therefore the amount accumulated in A.Y. 2017-18 would have been applied for the purpose of charitable activities upto A.Y. 2023-24. Therefore, ld.CIT(A) ought to have allowed the claim of the assessee. I therefore set aside the finding of ld.CIT(A) and delete the disallowance of Rs.12,40,644/- and allow the grounds of appeal raised by the assessee.
In the result, appeal of the assessee is allowed.
Order pronounced on this 03rd day of September, 2025.