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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY
Aforesaid appeal has been filed by the assessee challenging the order dated 5th July 2016, passed by the learned Commissioner (Appeals)–1, Mumbai, for the assessment year 2012–13.
2. The only issue arising in the aforesaid appeal relates to addition of ` 10,85,684, on account of unutilisation of accumulated fund under section 11(2) of the Income Tax Act, 1961 (for short “the Act”).
Brief facts are, the assessee a charitable trust registered under section 12A of the Act. For the assessment year under dispute, the 2 Federation of Indian Pilots assessee filed its return of income on 28th September 2012, declaring nil income after claiming exemption under section 11 of the Act. During the assessment proceedings, the Assessing Officer called upon the assessee to furnish a statement of accumulation of fund made under section 11(2) of the Act for the last ten years and the details of utilisation of accumulation of funds towards the object of the trust. In response to the query raised by the Assessing Officer, the assessee furnished the details of accumulated funds for the last ten years. On a perusal of the said statement, the Assessing Officer noticed that an amount of ` 10,85,684 accumulated under section 11(2) of the Act in assessment year 2006–07 has not been utilised for the stated object within a period of five years. Accordingly, he called upon the assessee to show cause why the said amount should not be brought to tax as per section 11(3) of the Act. In response, it was submitted by the assessee that it has utilised all its accumulated fund towards purchase of school building in financial year 2014–15. The Assessing Officer, however, did not find merit in the submissions of the assessee. He observed, as per section 11(2) of the Act the unutilised accumulated fund has to be utilised towards the object of the trust within five years from the year of accumulation. Since, the assessee has failed to utilise the accumulated fund within the stipulated period, the Assessing Officer added back the amount of ` 10,85,684 to the income of the 3 Federation of Indian Pilots assessee. Though, the assessee challenged the aforesaid addition before the first appellate authority, however, it did not succeed.
The learned Authorised Representative submitted, due to inadvertent calculation error in Form no.10, the assessee has mistakenly shown accumulated fund without taking into consideration the utilisation of accumulated fund towards purchase of fixed assets and other objects of the trust. He submitted, considering the aforesaid factor the Tribunal while deciding identical issue in assessee’s own case for assessment year 2011–12, has restored it to the Assessing Officer for fresh adjudication. In this context he drew our attention to the observations of the Tribunal in ITA no.5042/Mum./2015, dated 3rd December 2016. Thus, he submitted, the issue may be restored to the Assessing Officer for de novo adjudication.
The learned Departmental Representative, though, relied upon the observations of the learned Commissioner (Appeals), however, he submitted that the issue may be restored to the Assessing Officer for de novo adjudication in terms with the directions of the Tribunal in assessment year 2011–12.
I have considered rival submissions and perused materials on record. Undisputedly, in the statement of accumulated funds shown by the assessee from assessment year 2004–05 to assessment year
4 Federation of Indian Pilots 2012–13, the assessee has shown an amount of ` 10.85,684, for A.Y. 2006–07. It is also not disputed that as per the provision of section 11(2) of the Act the assessee has to utilise the accumulated fund within a period of five years. However, it is the contention of the learned Authorised Representative before me that there is a mistake in the statement of accumulation fund as the assessee has not taken into consideration utilisation of fund in fixed assets and towards other objects of the trust. Notably, the learned Commissioner (Appeals) has decided the issue against the assessee following his decision in assessment year 2011–12. As brought to my notice by the learned Authorised Representative, in assessment year 2011–12 the Tribunal while deciding assessee’s appeal on identical issue, as referred to above, has restored it to the Assessing Officer for de novo adjudication with the following observations:– “4. We have heard rival contentions and perused material available on record. The basic facts are not in dispute. It is evident from records that the assessee could not apply the accumulated income for charitable purpose within a period of five years and there is no dispute on that. The Ld. AR has pointed out to some discrepancies / inadvertent calculations error in Form No. 10 and placed reliance on cited CBDT circular to contend that first of all the correct figures should be arrived at by providing an opportunity to assessee to rectify the same. It is also noticed from financial statements that the assessee has purchased certain fixed assets during earlier years and as per settled principles, the same amounts to application of funds for charitable purpose. On the contrary, we also find that AO erred in taking figures of Rs.40,33,668/- which are figures only for AY 2005-2006 as against cumulative figures of Rs.72,99,057/- from AY 2003-03 to 2005-06, as is evident from above table in paragraph no.
Therefore, on the overall facts and circumstances of the cases, we
5 Federation of Indian Pilots deem it fit to restore the matter back to the file of AO for de-novo assessment by correctly appreciating the facts and figures of the case. The assessee shall also be at liberty to substantiate its claim regarding correct figures of Form 10. Needless to say, statutory provisions as contained in Section 11 shall apply to the assessee.”
Facts being identical, respectfully following the aforesaid decision of the Tribunal, I restore the issue to the Assessing Officer for de novo adjudication keeping in view the directions of the Tribunal in assessment year 2011–12. Grounds raised are allowed for statistical purposes.
In the result, assessee’s appeal is allowed for statistical purposes. Order pronounced in the open Court on 25.09.2018