9911796707
TMI Blog2018 (6) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) is justified in holding that the appellant has utilized accumulated income within the period of five years. 3. On the facts and circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the AO. 4. It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of the Assessing officer." 3. The solitary issue raised by the revenue in this appeal is that learned CIT(A) erred in deleting the addition made by the AO for Rs. 45,00,000/- under provision of section 11(3)(c) of the Act. 4. The briefly stated facts are that the assessee in the present case is a trust and engaged in the activity of education. The assessee in the A.Y. 2003-04 accumulated a sum of Rs. 45,00,000/- u/s 11(2) of the Act by way of filing Form 10 for 5 years which is ending on FY 2007-08 corresponding to AY 2008-09. This accumulated sum was to be utilized for the purchase of fixed asset and/or for adjustment in fee structure before 31-03-2008. However, the assessee utilized the same in the F.Y. i.e. 2008-09 corresponding to AY 2009-10 after the expiry date i.e. 31.3.2008 (F.Y. 2007-08). Thus, the Assessee during the year transferred a sum of Rs. 45,00,000/- fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 11(3) of the Act. The Ld. CIT(A) after considering the submission of the assessee deleted the addition made by the AO by observing as under: I have carefully considered the facts of the case, assessment order and submission filed by the appellant. The undisputed facts of present appeal is that Appellant has shown total income in Profit & Loss Account at Rs. 5,75,81,017/- which includes Rs. 45,00,000/- being amount accumulated in A.Y. 2003-04 and transfer from capital fund in current year. Thus, net total income for the current year is Rs. 5,30,81,017/-. The Appellant has submitted computation of total income wherein it is stated that exemption under Section 11 being 15% of income is at Rs. 78,02,738/-. Further, total expenses in Profit & Loss Account is of Rs. 3,12,78,279/- out of which Rs. 43,35,054/- is claimed against accumulation made for earlier years. The Appellant has also claimed accumulation under Section 11(2) for Rs. 1,85,00,000/-. Thus, Appellant claimed total expenses either claimed under Section 11 or 11(2) is of Rs. 5,32,45,963/- (78,02,738 + 3,12,78,279 + 1,85,00,000 - 43,35,054) and such amount is claimed against net total income of Rs. 5,30,81,017/- and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely:-] [(a) such person furnishes a statement in the prescribed form and in the prescribed 5 manner 6 to the Assessing Officer, stating the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed five years; (b) the money so accumulated 6 or set apart is invested or deposited in the forms or modes specified in sub-section (5); (c) the statement referred to in clause (a) is furnished on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previous year. Provided that in computing the period of five years referred to in clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded.] 7[Explanation - Any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub-section (1), read with the Explanation to that subsectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 31st March, 2008, whereas Appellant is of the view that accumulation is required to be used upto 31/03/2009. The provisions of Section 11(3)(c) as discussed herein above clearly states that accumulated income can be deemed income only if it is not used within period of five years or the year immediately following the expiry and in present case Appellant has already utilized accumulated income in the year immediately following the expiry being A.Y. 2009-10 and such utilization is as per provisions of the Law, hence, AO was not justified in treating income of Rs. 45,00,000/- as deemed income u/s 11(3) of the Act. This ground of appeal is allowed." Being aggrieved by the order of Ld. CIT(A) Revenue is in second appeal before us. Both Ld. DR and AR before us relied on the order of authorities below as favorable to them. 6. We have heard rival contentions and perused the materials available on record. In the instance case, the assessee has accumulated a sum of Rs. 45,00,000/- in the A.Y. 2003-04, which was to be utilized within the period of 5 years i.e. 31-03-2008 for the specified purposes. But the assessee failed to utilize the same within the period of 5 years therefore, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income and expenditure account as deemed income of the assessee. Similarly, we also note that indeed assessee was to utilize the fund within the period of 5 years, which ended on 31-03-2008 but the assessee failed to do so and utilized the same for specified purpose in the immediate succeeding financial year. In this regard, we note that the provisions of Section 11(3)(c) of the Act clearly permits to utilize the funds either within the specified period or in the next year immediately following the expiry of the period as discussed above. The relevant extract of the section reads as under : "72[(3) Any income referred to in sub-section (2) which- (a) XXXXXXXXXXXXXXX 73[(b) XXXXXXXXXXXXXXXXXXXXXXXXXXX (c) is not utilised74 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" It is undisputed fact that the fund was utilized by the assessee for the specified purpose in the previous year immediately following the expiry of the year upto which the fund was accumulated. Therefore, there remains no doubt that the assessee was entitled for claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X
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