9911796707
TMI Blog2025 (2) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... 03/2015 passed u/s. 143(3) of the Act in determining the assessed income at Rs. 54,27,305/- as against the returned income of Rs. NIL. 2. The Ld. CIT(A) has erred in law and in facts in passing the order without observing the principles of natural justice. 3. The Ld. CIT(A) has erred in confirming the action of the Ld. Assessing Officer [Ld. Assessing Officer] in making addition and disallowance of unspent accumulation made u/s. 11(2) of the Income Tax Act in the Financial Year 2006-07 Rs. 23,62,687/- and Financial Year 2007-08 Rs. 30,64,418/- a total of Rs. 54,27,105/- which was since reversed and spent in the financial year 2011-12 being alleged deemed Income under section 11(3) of the Income Tax Act. 4. The Ld. CIT(A) has erred in confirming the action of the Ld. Assessing Officer in invoking the provision of section 11(3) of the Act in A.Y.2012-13, without considering the relevant provision of law." 3. The Appellant is a not-for-profit company incorporated under Section 25 of the Companies Act and holding valid registration under Section 12A of the Act. For the Assessment Year 2012-2013, the Appellant filed return of income on declaring a deficit of INR.17,76,768/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated or set apart as aforesaid should be invested or deposited in the specified forms/modes. Section 11(3) of the Act deals with the consequence of default of the aforesaid specified conditions subject to which the receipt was accumulated or set-apart and reads as under: "11(3) Any income referred to in sub-section (2) which- (a) is applied to purposes other than charitable or religious purposes as aforesaid or ceases to be accumulated or set apart for application thereto, or (b) ceases to remain invested or deposited in any of the forms or modes specified in sub-section (5), or (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) is credited or paid to any trust or institution registered under section 12AA [or section 12AB] or to any fund or institution or trust 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) of clause (23C) of section 10, [shall be deemed to be the income of such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration in the present appeal, only the default listed in Clause (a) and Clause (c) as well as their corresponding consequences contained in Clause (i) and Clause (iii), respectively, are relevant. 9. The provisions contained in Clause (a) read with Clause (i) of Section 11(3) of the Act provide that in case the income accumulated in terms of Section 11(2) of the Act is applied for a purpose other than chartable purpose for which such income was accumulated or ceased to be accumulated, the same shall be deemed to be income of the previous year in which such income has been so applied or ceases to be accumulated. The contention of the Appellant is that the case of the Appellant falls under this category. According to the Appellant the income accumulated/set-apart was utilised for mains objects [but not for the purpose for which the income was accumulated/set-apart] during the preceding previous years, and therefore, the same could have been brought to tax in those years only and not as deemed income for the relevant previous year. 10. On the other hand, the provisions contained in Clause (c) read with Clause (iii) of Section 11(3) of Act provide that in case the income is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumulated income of the scientific research association which was granted exemption over a period of years would become taxable. On the happening of any of the contingencies provided for, the accumulated income which earlier enjoyed exemption" shall be deemed to be the income of the scientific research association of the previous year in which the contingency happened. It does not matter that the accumulated income in respect of the earlier years which had hitherto enjoyed exemption from tax, does not relate to the previous year in which the contingency took place. This, in short, is the substance of section 10(21) read with section 11(2) and (3) of the Act. 3. The petitioner is a scientific research society approved by the competent authority under section 35(1)(ii) for research activity in the field of coronary diseases and other connected fields. In this writ petition we are concerned with the validity of the notices issued by the assessing officer under section 148 of the Act seeking to reopen the assessments for the assessment years 1998-99, 1999-00 and 2000-01. ............ 4. It would appear that the petitioner filed its objections to the notices, but these objections we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt conditions for the applicability of section 147 are (a) income chargeable to tax must have escaped assessment and (6) assessing officer must have reason to believe so. When section 11(3) treats the accumulated income of the past year of the petitioner as income of the assessment year 2001-02, there can be no question of any income escaping assessment in the past assessment years i.e. the assessment years 1998-99 to 2000-01. It follows that the assessing officer cannot entertain any reason to believe that income chargeable to tax for those years had escaped assessment. For these reasons we quash the notice issued under section 148 of the Act for all three years Le, assessment years 1998-99 to 2000-01 and allow the writ petition with no order as to costs." (emphasis supplied) 4 It was contended by the Learned Departmental Representative that Assessing Officer has invoked provisions contained in Section 11(3)(c) read with Section 11(3)(iii) of the Act. However, we are of the view that in the facts of the present case the provisions contained in Section 11(3)(a) read with Section 11(3)(i) of the Act would get attracted since the accumulated amounts were 'utilised' for the mains o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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