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TMI Blog2021 (9) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... d to section 11(7) by Finance Act 2020 w.e.f 01-06-2020. We are presently concern with a case for AY 2009-10 and the surplus pertains to FY 2009-10 when the appellant was not registered under provision of section 10(23C). The subsequent insertion of section 11(7) and its further amendment are though not applicable but are supportive to our interpretation that earlier provisions of sections 11 and 10(23C) were two parallel regimes which operated independently in their respective realms. As a result, the addition made by the AO is deleted. - Decided in favour of assessee. - I.T.A. No.1952/DEL/2013 - - - Dated:- 23-9-2021 - Shri Amit Shukla, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Appellant : Shri Tarandeep Singh, Adv., Shri Pulkit Verma, Adv. For the Respondent : Shri K.A Manu, Sr.D.R. ORDER PER AMIT SHUKLA, A.M. The aforesaid appeal has been filed by the Appellant Assessee against order dated 21stJanuary, 2013, passed by the Ld. Commissioner of Income Tax (Appeals)-XXI, New Delhi in Appeal No.368/11-12 for the quantum of assessment passed u/s 143 (3) for the AY 2009-10. The Grounds of Appeals raised in the appeal are as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given after 3rd proviso to section 10(23C)(iv) of the IT Act remained unutilized. Since the period of five years in this case has expired on 31.03.2009 and the accumulated amount has not been applied for charitable purpose, the said amount of ₹ 4,39,07,729/- is found to be taxable as the income of the year under consideration. The representatives were confronted with this fact vide proceedings sheet noting dated 28.12.2011 the representatives only stated that the said sum has been utilized in the subsequent year. The submissions of the assessee is not found to be acceptable in view of the specific provisions of the Act, In this regard. 4. In the appeal before the First Appellate Authority. Ld. CIT (A) dismissed the appeal by observing as under :- 4.3 From the above analysis it is apparent that Sec.11 to 13 are general sections and Sec. 10(23C)(iv) is a specific section. There were various facilities available as per Sec.11 to 13 of the IT Act with appellant by virtue of registration u/s 12A, even though appellant has opted for Notification u/s 10(23C)(iv) and it has got it vide order of DGIT dated 31.10.2007, effective from A.Y.2007-08 and for getting Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be dealt with in accordance with Sec. 11(3)(c) of the Act. That as per section 11(3)(c), the accumulated income in excess of 15% is taxable in the previous year immediately following the expiry of the period five years. Accordingly, it was his submission that the Ld AO has misapplied the provisions of clause (a) given after 3rd proviso to Sec. 10(23C)(iv) of the IT Act, 1961 which states that in a case where more than 15% of its income is accumulated, the period of the accumulation of the amount exceeding 15% of its income shall in no case exceed five years. In addition to the above, he also submitted that the undisputedly the accumulated income for the financial year 2003-04 has been fully utilized in the FY 2009-10. 6. On the other hand, ld. Sr. DR has supported the orders passed by the lower authorities. In this regard, it was submitted by him that the Ld. AO and Ld. CIT(A) have for appropriate reasons rejected the claim raised by the appellant and as such the instant appeal merits to be dismissed. 7. We have considered the facts of the case and material placed on record. We find that part surplus of FY 2003-04 (which was in excess of 15%) amounting to ₹ 4,39,07,729 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulated and set apart u/s 11(1) of ₹ 4,39,07,729/- pertaining to FY 2003-04 can be utilized within 5 years thereto i.e. up to FY 2008-09 or in the year immediately following the expiry thereof i.e., FY 2009-10 and if the same is not utilized then it shall be deemed to be the income of the previous year immediately following the expiry of the period aforesaid . Therefore, the provision of section 11(3) very clearly stipulate that any amount accumulated for financial year 2003-04 can be utilized up to financial year 2009-10 and if not utilized by then, then it is taxable in AY 2010-11 (applicable for FY 2009-10). Undisputedly in the present case, the sum of ₹ 4,39,07,729/- has been utilized by the appellant in FY 2009-10 i.e., AY 2010-11. 9. On the other hand, in Section 10(23C) one of the stated conditions for claiming benefit of exemption as provided in third proviso to that section is as under :- Provided also that the fund or trust or institution [or any university or other educational institution or any hospital or other medical institution] referred to in sub-clause (iv) or sub-clause (v) [or sub-clause (vi) or sub-clause (via)]- [(a) applies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Hon ble Jurisdictional High Court in case of Venu Charitable Society reported in 393 ITR 63 (Del) has also held as under :- The Revenue s other contention was that the petitioner had applied for exemption under Section 11 as well as Section 10(23C) in the same year. Section 10(23C) does not prescribe any stipulation, which makes registration u/s 12AA a mandatory condition. The provisions of Sections 11 and 10(23C) are two parallel regimes and operate independently in their respective realms. In order to avail exemption u/s 11, 12 and 13, the entity should be registered u/s 12AA. The sections 11, 12, 12A, 12AA and 13 of the Income Tax Act constitute a complete code governing the grant, cancellation or withdrawal of registration, providing exemption to income, and also the conditions subject to which a charitable trust or institution is required to function in order to be eligible for exemption. The primary objective of providing exemption in case of charitable institution is that income derived from the property held under trust should be applied and utilized for the object or purpose for which the institution or trust has been established. In many cases it had been note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have been inserted to section 11(7) by Finance Act 2020 w.e.f 01-06-2020. The memorandum explaining provision of Finance Bill 2020 reported in 381 ITR 326 (St) relevant at 381-382 has stated as under :- Section 11 of the Act provides for grant of exemption in respect of income derived from property held under trust for charitable or religious purposes to the extent to which such income is applied or accumulated during the previous year for such purposes in accordance with the provisions contained in sections 11, 12, 12A, 12AA and 13 of the Act. Sub-section (7) of section 11 of the Act, inserted by the Finance (No.2) Act, 2014 with effect from 1st April, 2015, provides that where a trust or an institution has obtained registration under section 12AA [as it stood immediately before its proposed amendment] or under section 12A [as it stood immediately before its amendment by the finance (No.2) Act, 1996] and said registration is in force for any previous year, then exemption under section 10 [except under clauses (1) and (23C) shall not be allowed.. This sub-section was inserted on the basis that the provisions contained in sections 11, 12, 12A, 12AA and 13 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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