The tribunal determined that accumulated funds of a charitable trust utilized within the sixth year are not subject to taxation as deemed income, reaffirming the prospective application of amendments to section 11(3).

ORDER

PER R. K. PANDA, VP :

This appeal filed by the assessee is directed against the order dated 11.02.2025 of the Ld. Addl / JCIT(A)-2, Gurugram, relating to assessment year 2023-24.

2. Facts of the case, in brief, are that the assessee Yashwantrao Chavan Maharashtra Open University (YCMOU) is established by Yashwantrao Chavan Maharashtra Open University Act, 1989. The sole object of the assessee is education, more particularly described as „to advance and disseminate learning and knowledge by a diversity of means‟. It is primarily financed by the Government of Maharashtra in terms of allotment of lands in different cities of Maharashtra, construction of buildings providing the infrastructure, financing the recurring cost of such institution. It has been granted registration u/s 12AA of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) by the CIT(Exemption), Pune vide letter dated 25.07.2016 and the registration was renewed under the new law. It filed its return of income for the impugned assessment year 2023-24 declaring total income as Nil after claiming exemption u/s 11 of the Act. During the financial year 2016-17 the trust had accumulated an amount of Rs.90,70,20,511/- which was required to be utilized within 5 years and if not utilized then unutilized amount, if any, was taxable in 6^th year. The CPC in the Intimation u/s 143(1) of the Act added an amount of Rs.90,70,20,511/- u/s 11(3) of the Act as deemed income.

3. Before the Ld. Addl / JCIT(A) it was submitted that the above accumulation amount was already fully utilized by the trust in financial year 2022-23. It was submitted that as per section 11(3) of the Act as stood at that time (at the time of accumulation i.e. as on 31.03.2017), accumulated amount of Rs.90,70,20,511/- was required to be utilized by 31.03.2022. In case the same is not utilized, then the amount was taxable in the year 2023-24 only if such amount is unutilized by 31.03.2023. Since the assessee has already utilized an amount of Rs.90,70,20,511/- before the end of 31.03.2023, therefore, the CPC is not justified in making the addition. It was further submitted that the amendment to section 11(3) restricting the non-utilization to 5 years is applicable from assessment year 2023-24 and to be applied prospectively. The assessee also submitted that the adjustment made by the CPC is outside its purview as there was neither any arithmetical error nor any incorrect claim which is apparent in the return of income filed u/s 139(1) of the Act.

4. However, the Ld. Addl / JCIT(A) was not satisfied with the arguments advanced by the assessee and dismissed the appeal by observing as under:

“3.3 Thus, as per these provisions income accumulated during A.Y. 2017-18 was required to be utilized upto A.Y. 2022-23 (till 31.03.2022). Since the appellant was not able to utilise it within stipulated time, according to provisions of Section 11 (3) of Income Tax Act, the amount of Rs.90,70,20,511/- is taxable as deemed income during the instant assessment year.

Further, since the accumulated amount had to be utilized upto AY 2022-23, the ground of appeal taken by appellant that amendment to S. 11(3) is applicable prospectively and applicable only for the funds accumulated from AY 23-24 onwards and not for the funds which are already accumulated prior to AY 23-24 becomes infructuous and is dismissed.

In view of the above, I find no error in the AO's decision to disallow the appell