2024 (8) TMI 531 - AT - Income Tax

Accumulated unspent fund as provided u/s 11 - AO found that the amount accumulated in the assessment year 2013-14 as per Form 10 stands at Rs. 4 crores against which, the utilization in the year under consideration stands at Rs. 3,13,07,781/- only leaving the unspent accumulated amount of Rs. 86,92,219/- only, which should have been utilized in the year under consideration being the last year for utilization - HELD THAT - We are of the view that the amount specified in the report in Form 10 by the auditor cannot be relied upon - we note that the audited financial statements, statement of income and the copy of the return of income for the assessment year 2013-14 were not filed by assessee during the proceedings before the authorities below. It is pertinent to note that all these documents, stated above, are filed along with the return of income, meaning thereby, these documents were already available with the authorities below, but the revenue authorities did not look into it - in the interest of justice and fair play, we are inclined to set aside the issue to the file of AO for fresh adjudication in the light of the above stated discussion and as per the provisions of law. Hence, the ground of appeal raised by the assessee is allowed for statistical purposes. Addition under the provisions of sec. 13(1)(d) - Capital fund shown by the assessee was utilized in fixed assets, capital work in progress and current assets. In our considered view, such an amount represents the application of income and, therefore, the same should be excluded while calculating the amount to be invested under the provisions of sec. 11(2) r.w.s. 11(5). Nevertheless, the assessee has not represented the facts properly and, therefore, we are inclined to restore this issue to the file of the AO for denovo adjudication as per the provisions of law. Hence, ground of appeal raised by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Treatment of accumulated unspent fund under section 11 of the Act.
2. Addition made under section 13(1)(d) of the Act.

Analysis:

Issue 1: Treatment of accumulated unspent fund under section 11 of the Act
The appeal was filed by the assessee against the order passed by NFAC, New Delhi, regarding the treatment of an amount as accumulated unspent fund under section 11 of the Act. The assessee, a public charitable trust providing religious education, claimed to have utilized a specific amount for its activities, leaving an unspent accumulated amount. The AO disagreed with the assessee's contention, adding the unspent amount to the total income. The CIT(A) upheld the AO's order. The AR contended that the actual amount accumulated was different from what was declared in Form 10 and requested fresh adjudication based on additional evidence. The Tribunal found discrepancies in the amount accumulated for the assessment year and decided to set aside the issue for fresh adjudication, allowing the appeal for statistical purposes.

Issue 2: Addition made under section 13(1)(d) of the Act
The AO made an addition under section 13(1)(d) of the Act, stating that a certain amount had not been invested as required under section 11(5) of the Act. The CIT(A) upheld this addition. The AR argued that the amount under corpus fund was utilized in various assets, with a balance invested as per the Act. The Tribunal observed that the capital fund was utilized in assets, representing income application, and decided to restore the issue for fresh adjudication by the AO. The appeal was allowed for statistical purposes.

In conclusion, the Tribunal set aside both issues for fresh adjudication by the AO, based on discrepancies and inadequate representation of facts. The appeal by the assessee was allowed for statistical purposes.