CPC has taxed our AY 2017-18 accumulation in AY 2023-24 saying the Finance Act 2022 took away the sixth year. We spent the money in FY 2022-23. Is the amendment good against an old accumulation?
No, on this Tribunal's view. Where the accumulation was made in AY 2017-18 under a law that allowed utilisation within five years and also in the immediately following year, the Finance Act 2022 amendment to s.11(3) — though applicable from AY 2023-24 — cannot be read so as to take away the vested right accrued at the time of accumulation. The addition of Rs.29,04,39,083 made in the s.143(1) intimation was deleted and the Revenue's appeal dismissed.
Decided by the ITAT (Beena Pillai JM and Jagadish AM) on 2026-04-20, reported as I.T.A. No. 6844/Mum/2025 (ITAT Mumbai 'G' Bench). It bears on section 11, section 11(2), section 11(3), section 12A, section 143(1) of the Income Tax Act 1961, in Charitable Trusts & Exemption and Capital Gains Exemptions matters.
This is the most expensive open question in the accumulation area right now, and CPC is raising it by intimation without any assessment. The Revenue's argument is not that the amendment is retrospective but that it operates prospectively on the year of taxability — AY 2023-24 — and so governs every accumulation whose period expires in that year. The Tribunal's answers are vested right and impossibility: the Finance Act 2022 received assent on 30 March 2022, leaving effectively no time to spend accumulations of AY 2017-18 within the truncated period. There is a second line worth pleading and not decided here — that an issue of this kind is debatable and outside the scope of a s.143(1) adjustment; the assessee argued it, the Tribunal did not rule on it. The competing point, recorded in a companion Mumbai order, is that the Revenue calls the amendment clarificatory and curative; that argument has so far failed.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee is a charitable trust registered with the Charity Commissioner, Mumbai and under s.12A, running the 300-bed Holy Spirit Hospital at Andheri (East), Mumbai, providing free and concessional treatment to economically weaker sections and operating community health centres and a nursing institute. For AY 2023-24 it filed its return within time declaring income of Rs.35,94,350 after claiming s.11 exemption, furnished the audit report in Form 10B and exercised the options for accumulation by filing Form 9A under s.11(1) and Form 10 under s.11(2). It had validly accumulated Rs.29,04,39,083 under s.11(2) in AY 2017-18, having filed Form 10 within the prescribed time, and applied that sum in FY 2022-23 relevant to AY 2023-24 — the sixth year. CPC processed the return under s.143(1) and determined income of Rs.29,40,33,430 by adding the accumulation under s.11(3) as unutilised within the prescribed period. The CIT(A), by order dated 25 August 2025, deleted the addition, holding that the assessee could utilise the AY 2017-18 accumulation in the sixth year and that the Finance Act 2022 amendment to s.11(3) did not apply to past accumulations. The Revenue appealed on five grounds, the substance of which was that the amendment expressly applies from AY 2023-24, that the CPC action imposed no retrospective burden, and that the doctrine of impossibility of performance could not override the statutory mandate.
The Revenue's appeal was dismissed. The accumulation having been made in AY 2017-18 when the law permitted utilisation within five years and also in the immediately succeeding year, the Finance Act 2022 amendment — though applicable from AY 2023-24 — cannot be interpreted so as to take away a vested right already accrued at the time of accumulation (paragraph 7). The assessee was entitled to apply the accumulated income in AY 2023-24 (paragraph 7.2), and no infirmity was found in the CIT(A)'s deletion of the s.11(3) addition.
It was undisputed that the accumulation was validly made in AY 2017-18 with Form 10 filed in time and that the money was in fact applied in FY 2022-23 (paragraph 6). The Finance Act 2022 received Presidential assent on 30 March 2022, leaving practically no effective opportunity to utilise an AY 2017-18 accumulation within the truncated period; accepting the Revenue's contention would require the assessee to perform an act that had become impossible because of the timing of the amendment, and the law is settled that no person can be compelled to perform an impossible act, as held in Life Insurance Corporation of India v CIT and Krishnaswamy S. Pd. v Union of India (paragraph 7.1). Coordinate benches in ACIT v State Examination Board and Phulchand Gulabchand Charitable Trust v ITO had held that utilisation of accumulated income in the year immediately following the expiry of the prescribed period is permissible, and the Tribunal respectfully followed them (paragraph 7.2).
The amendment brought in by the Finance Act, 2022, though applicable from A.Y. 2023-24, cannot be interpreted in a manner so as to take away a vested right already accrued to the assessee at the time of accumulation.
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Handle my notice → Ask a CA on WhatsAppNo, on this Tribunal's view. Where the accumulation was made in AY 2017-18 under a law that allowed utilisation within five years and also in the immediately following year, the Finance Act 2022 amendment to s.11(3) — though applicable from AY 2023-24 — cannot be read so as to take away the vested right accrued at the time of accumulation. The addition of Rs.29,04,39,083 made in the s.143(1) intimation was deleted and the Revenue's appeal dismissed. This was decided by the ITAT (Beena Pillai JM and Jagadish AM) and bears on section 11, section 11(2), section 11(3), section 12A, section 143(1) of the Income Tax Act 1961. It is reported as I.T.A. No. 6844/Mum/2025 (ITAT Mumbai 'G' Bench). This is the most expensive open question in the accumulation area right now, and CPC is raising it by intimation without any assessment. The Revenue's argument is not that the amendment is retrospective but that it operates prospectively on the year of taxability — AY 2023-24 — and so governs every accumulation whose period expires in that year. The Tribunal's answers are vested right and impossibility: the Finance Act 2022 received assent on 30 March 2022, leaving effectively no time to spend accumulations of AY 2017-18 within the truncated period. There is a second line worth pleading and not decided here — that an issue of this kind is debatable and outside the scope of a s.143(1) adjustment; the assessee argued it, the Tribunal did not rule on it. The competing point, recorded in a companion Mumbai order, is that the Revenue calls the amendment clarificatory and curative; that argument has so far failed. If it applies to you, the first step is this: Identify the year of accumulation, not the year of spending; the whole argument depends on showing the accumulation was made under the pre-amendment law and that Form 10 was filed within time then.
The assessee is a charitable trust registered with the Charity Commissioner, Mumbai and under s.12A, running the 300-bed Holy Spirit Hospital at Andheri (East), Mumbai, providing free and concessional treatment to economically weaker sections and operating community health centres and a nursing institute. For AY 2023-24 it filed its return within time declaring income of Rs.35,94,350 after claiming s.11 exemption, furnished the audit report in Form 10B and exercised the options for accumulation by filing Form 9A under s.11(1) and Form 10 under s.11(2). It had validly accumulated Rs.29,04,39,083 under s.11(2) in AY 2017-18, having filed Form 10 within the prescribed time, and applied that sum in FY 2022-23 relevant to AY 2023-24 — the sixth year. CPC processed the return under s.143(1) and determined income of Rs.29,40,33,430 by adding the accumulation under s.11(3) as unutilised within the prescribed period. The CIT(A), by order dated 25 August 2025, deleted the addition, holding that the assessee could utilise the AY 2017-18 accumulation in the sixth year and that the Finance Act 2022 amendment to s.11(3) did not apply to past accumulations. The Revenue appealed on five grounds, the substance of which was that the amendment expressly applies from AY 2023-24, that the CPC action imposed no retrospective burden, and that the doctrine of impossibility of performance could not override the statutory mandate. The matter was decided on 2026-04-20 by the ITAT (Beena Pillai JM and Jagadish AM). On those facts the ITAT held as follows. The Revenue's appeal was dismissed. The accumulation having been made in AY 2017-18 when the law permitted utilisation within five years and also in the immediately succeeding year, the Finance Act 2022 amendment — though applicable from AY 2023-24 — cannot be interpreted so as to take away a vested right already accrued at the time of accumulation (paragraph 7). The assessee was entitled to apply the accumulated income in AY 2023-24 (paragraph 7.2), and no infirmity was found in the CIT(A)'s deletion of the s.11(3) addition.
It was undisputed that the accumulation was validly made in AY 2017-18 with Form 10 filed in time and that the money was in fact applied in FY 2022-23 (paragraph 6). The Finance Act 2022 received Presidential assent on 30 March 2022, leaving practically no effective opportunity to utilise an AY 2017-18 accumulation within the truncated period; accepting the Revenue's contention would require the assessee to perform an act that had become impossible because of the timing of the amendment, and the law is settled that no person can be compelled to perform an impossible act, as held in Life Insurance Corporation of India v CIT and Krishnaswamy S. Pd. v Union of India (paragraph 7.1). Coordinate benches in ACIT v State Examination Board and Phulchand Gulabchand Charitable Trust v ITO had held that utilisation of accumulated income in the year immediately following the expiry of the prescribed period is permissible, and the Tribunal respectfully followed them (paragraph 7.2). In the words reproduced by the source cited on this page: "The amendment brought in by the Finance Act, 2022, though applicable from A.Y. 2023-24, cannot be interpreted in a manner so as to take away a vested right already accrued to the assessee at the time of accumulation." The decision followed or applied ACIT v. State Examination Board, ITA No. 3271/Ahd/2016 — followed; Phulchand Gulabchand Charitable Trust v. ITO, ITA No. 794/Bang/2019 — followed; Life Insurance Corporation of India v. CIT, 219 ITR 410 (SC) — applied; Krishnaswamy S. Pd. v. Union of India, 281 ITR 305 (SC) — applied.
It was decided by the ITAT on 2026-04-20 and is reported as I.T.A. No. 6844/Mum/2025 (ITAT Mumbai 'G' Bench). Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 11, section 11(2), section 11(3), section 12A, section 143(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Revenue's appeal was dismissed. The accumulation having been made in AY 2017-18 when the law permitted utilisation within five years and also in the immediately succeeding year, the Finance Act 2022 amendment — though applicable from AY 2023-24 — cannot be interpreted so as to take away a vested right already accrued at the time of accumulation (paragraph 7). The assessee was entitled to apply the accumulated income in AY 2023-24 (paragraph 7.2), and no infirmity was found in the CIT(A)'s deletion of the s.11(3) addition. It arises in Charitable Trusts & Exemption and Capital Gains Exemptions matters, on section 11, section 11(2), section 11(3), section 12A, section 143(1) of the Income Tax Act 1961, and was decided by Beena Pillai JM and Jagadish AM. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Show the accumulation was in fact applied in the sixth year, and produce the ledger of application for that year. Plead vested right and impossibility of performance together, citing Life Insurance Corporation of India v CIT 219 ITR 410 and Krishnaswamy S. Pd. v Union of India 281 ITR 305, and anchor them to the 30 March 2022 assent date. Take the s.143(1) point in the alternative — that the issue is debatable and involves interpreting an amended provision, and so is outside the permissible adjustments — and press it, because it was left undecided here. Raise double taxation expressly if any part of the accumulation has already been offered or applied in a later year; the assessee sought that relief without prejudice.
Validity check could not be completed. Validity check could not be completed; no later treatment was searched for and no appeal position was checked. The point is contested between benches rather than settled: a second Mumbai bench reached the same result in ITO(E)-1(1) v Basilica of Our Lady of the Mount, ITA No. 2927/Mum/2025, pronounced 14 August 2025, dismissing the Revenue's appeal against deletion of a s.11(3) addition of Rs.3 crores on an AY 2017-18 accumulation applied in AY 2023-24, following ITAT Pune in Yashwantrao Chavan Maharashtra Open University v CIT (Exemption), ITA No. 505/PUN/2025 dated 23 June 2025 and ITAT Mumbai in Shri Dadar Digamber Jain Mumukshu Mandal, ITA No. 2446/Mum/2025 dated 15 July 2025, and applying CIT v Vatika Township. The Revenue's contrary case, that the amendment is clarificatory and curative and so retrospective, was argued in Basilica and rejected. No High Court decision on the point was located. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order runs to paragraph 7.2 followed by an unnumbered concluding passage and the disposal, and was transcribed in full from the plain /doc/ URL; the sentence quoted from paragraph 7 was re-checked through /docfragment/ and came back word for word. Three defects in the report: the opening paragraph describes the CIT(A) order dated 25 August 2025 as being 'for A.Y. 2015-16' whereas the cause title, the grounds and the whole of the reasoning are for AY 2023-24; the paragraph numbering repeats, with 4.1.1, 4.2 and 4.3 each appearing twice, so the submissions of both sides are interleaved under duplicate numbers; and the accumulated amount is given as Rs.29,04,39,083 while the income determined under s.143(1) is Rs.29,40,33,430, the difference being unexplained in the text. This entry states what the Finance Act 2022 did to s.11(3) as the Tribunal and the Revenue's own grounds describe it — withdrawal of the benefit of utilisation in the sixth year with effect from AY 2023-24; the amending provision was not read from the Finance Act text. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Revenue's appeal was dismissed. The accumulation having been made in AY 2017-18 when the law permitted utilisation within five years and also in the immediately succeeding year, the Finance Act 2022 amendment — though applicable from AY 2023-24 — cannot be interpreted so as to take away a vested right already accrued at the time of accumulation (paragraph 7). The assessee was entitled to apply the accumulated income in AY 2023-24 (paragraph 7.2), and no infirmity was found in the CIT(A)'s deletion of the s.11(3) addition.
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