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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SMT.ANNAPURNA GUPTA & SHRI T.R. SENTHIL KUMAR
PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER
The present appeal has been filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals)-2, Rajkot (in short referred to as CIT(A)), dated 3.4.2019 pertaining to Assessment Year 2014-15 under section 250(6) Income Tax Act, 1961 ("the Act" for short).
The ground of appeal raised by the assessee reads as under: “1) That the learned AO as well as CIT(A) has erred in facts as well as in law that there cannot be a double addition in the taxable income of Rs. 300. Since Rs. 630000 which is already deducted by the assessee in its return itself from the total utilization and therefore there is no need for further addition of the said amount.
2 2) The learned AO as well as CIT(A) has erred in not computing the taxable income Rs. 300. 3) Learned AO as well as CIT(A) has erred in adjusting the refund of Rs. 98032 as claimed in original return. 4) The appellant may please by allowed to add further grounds of the appeal and /or allowed to amend, alter, delete, change and /or raise further grounds during the pendency of these proceedings.”
The sole issue raised by the assessee in its appeals is that the Revenue authorities have erred in making adjustment to the returned income by adding an amount of Rs.6,30,000/- to the returned income, in the intimation made under section 143(1) of the Act, by invoking provisions of Section 11(2) of the Act.
At the outset itself, ld.counsel for the assessee submitted that addition in the present case has been made on account of non utilization of income for charitable purposes in the stipulated period of five years ,which income was accumulated and set apart for the said purpose in the A.Y 2007-08, as per the provisions of section 11(2) of the Act. The ld.counsel for the assessee pointed out that in the Asst.Year 2007-08, the assessee had set apart an amount of Rs.6,30,000/- for utilization in the next five years for charitable purpose, and the same having been not so utilized, was added back to the income of the impugned year, in an intimation made under section 143(1) of the Act. He pointed out that the matter was carried in appeal before the ld.CIT(A) who upheld the same.
Ld.counsel for the assessee contended that the addition made tantamounted to double addition in the hands of the assessee since while computing its income for the impugned year this unutilized income had been considered by the assessee by reducing the quantum of income utilized for charitable purposes during the year
3 with the said amount. He drew our attention to the computation of income showing reduction of this amount of Rs.6.30 lakhs from the utilization made during the year, placed before us at page no.6 as under:
The ld.DR on the other hand contended that act of the assessee of reducing this amount from its utilization was not in accordance with law and the same should have been added to his income, and thereafter taxable income if any be computed as per the provisions of law.
The ld.counsel for the assessee fairly conceded that as per law, the impugned amount of Rs.6,30,000/- which had been accumulated in the preceding year, but not utilized for charitable purpose in the stipulated period of five years., was to be treated as 4 deemed income of the assessee. He referred to the provisions of section 11(3) of the Act in this regard.
We have heard the rival contentions. The issue before us pertains to treatment of unutilized amount of income earned from charitable activities in preceding year which was accumulated and set apart for utilization for charitable purposes in five years as per section 11(2) of the Act.
The facts of the case being that in A.Y 2007-08, the assessee had accumulated /set apart an amount of Rs.6,30,000/- to be utilized for stated purpose in five years. The same undisputedly has remained unutilized in the five year period thereafter.
The treatment of such unutilized amount of accumulated income is governed by section 11(3) of the Act ,which requires such unutilized amount to be treated as deemed income of the assessee in the year when the period of five years so granted for utilization expires or in the succeeding year. The relevant provisions of section 11(3) © of the Act is reproduced hereunder:
“11. (3) Any income referred to in sub-section (2) which— (a) ……… (b) ……… (c) is not utilised 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]*, (d) ………. [shall be deemed to be the income of such person of the previous year in which it is so applied or ceases to be so accumulated or set apart or ceases to remain so invested or deposited or [credited or paid or], as the case may be, of the previous year immediately following the expiry of the period aforesaid].”
5 11. The Ld.Counsel for the assessee fairly concedes to the position of law in this regard. His only contention is that since the assessee has already considered this amount by reducing the quantum of application of income for charitable purposes of the assessee during the year, the computation be reworked in accordance with law taking note of this fact. Computation of income for the year reflecting this fact was also produced before us.
In view of the above therefore we direct the AO to recompute the income of the assessee in accordance with law, taking note of and after verifying the fact claimed by the assessee of having considered this unutilized amount of charitable income while computing its income for the year.
In the result, the appeal of the assessee is disposed off in above terms.
Order pronounced in the Court on 19th October, 2022 at Ahmedabad.