Bombay Society of The Franciscan Clarist Sisters of The Most Blessed Sacrament Vs ITO (ITAT Mumbai)
ITAT Mumbai Allows 6th Year Utilization – Finance Act 2022 Amendment to Section 11(3) Held Prospective Charitable Trust Gets Relief: Old Accumulations Still Eligible for 5+1 Years
Assessee filed its return declaring income of Rs.21.65 lakh after claiming exemption u/s 11. It had accumulated Rs.32.50 lakh in F.Y. 2016-17 u/s 11(2), which was required to be utilized within the prescribed period. Out of this, Rs.24.34 lakh was spent in F.Y. 2022-23 (relevant to A.Y. 2023-24), while Rs.8.15 lakh remained unspent & was duly offered to tax u/s 11(3). CPC, while processing return u/s 143(1), disallowed utilization of Rs.24.34 lakh on the ground that the 5-year period had expired as per the amendment introduced by Finance Act, 2022, & added the same to total income.
CIT(A) confirmed CPC’s action, holding that in view of the amended law effective from 01.04.2022, accumulation had to be utilized within 5 years & no sixth year grace was available. Assessee contended that the amendment was prospective & did not apply to accumulations made in earlier years, relying on SC ruling in Vatika Township & ITAT decisions including Dadar Digamber Jain Mumukshu Mandal Vs CIT(E) [2025] 176 taxmann.com 661 (Mumbai-Trib).
