Gujarat Safety Council Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that application of accumulated income towards acquisition of the fixed assets allowable under section 11 of the Income Tax Act. Accordingly, matter remanded for fresh consideration.
Facts- The assessee is a trust. In the course of assessment, the AO had raised query regarding accumulation of Rs.5,92,352/- for future application made u/s. 11(2) of the Act made in A.Y. 2008-09, which was not applied within 5 years. The assessee had explained that the surplus amounts were utilized as capital expenditure and the total amount spent on capital expenditure during the A.Y. 2008-09 to 2012-13 was Rs.7,96,543/-.
AO, however, did not accept the explanation of the assessee and the accumulation of income of Rs.5,92,352/-in A.Y. 2008-09, which was held as not applied within the stipulated period of 5 years, was treated as income of the current year.
CIT(A) confirmed the same. Being aggrieved, the present appeal is filed.
Conclusion- Held that the assessee was eligible to claim application of income towards acquisition of fixed assets. Though, the provision of section 11(6) of the Act was introduced in the statute w.e.f. 01.04.2015, the same was clarificatory in nature and applicable for the current year as well. CIT(A) too had brushed aside the submission of the assessee without verifying the correctness of the submission of the assessee. Thus, we deem it proper to set aside the matter to the file of the AO to verify the claim of the assessee for application of accumulated income towards acquisition of the fixed assets. The AO may decide the matter after allowing a proper opportunity of being heard to the assessee and after calling for the necessary evidences to verify the claim of the assessee. The assessee is also directed to produce the necessary evidences in respect of its claim before the AO.
