THE BALAK EDUCATION SOCIETY,MUMBAI V. ITO EXEM, WARD-2(4), MUMBAI

ITA 893/MUM/2026

AI Insights

The case involves The Balak Education Society, a public charitable trust, which appealed against the order of the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi. The primary issues in the appeal were the taxability of unutilized funds accumulated in earlier assessment years and the disallowance of depreciation on certain assets. The tribunal found procedural improprieties in the CIT(A)'s directions and restored the matter for fresh adjudication, emphasizing the need for a detailed examination of financial records and proper application of the law regarding the taxability of accumulated funds.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 846614 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Mumbai
• Assessment Year: 2018-2019
• Appeal Filed On: 29-01-2026
• Other Referred Cases: Kapurchand Shrimal v. Commissioner of Income-tax
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAVIN SALUNKHE
• Assessee Lawyers: A.L. SHARMA
• Keywords: Set aside; Depreciation; Capital expenditure; Principle of natural justice; Initiation of penalty proceedings; Deemed to accrue or arise in india; Charitable institution
• Section: 144; 12A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H (SMC)” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 893/MUM/2026 Assessment Year: 2018-19 The Balak Education Society, Plot No. 171 -178, Road No. 28B, Sion East, Mumbai-400022. Vs. ITO Exem. Ward 2(4), MTNL Building, Cumballa Hill, Pedder Road, Mumbai-400026. PAN NO. AAATT 0599 F Appellant Respondent Assessee by : Mr. A.L. Sharma Revenue by : Mr. Pravin Salunkhe, Sr. DR Date of Hearing : 17/03/2026 Date of pronouncement : 26/03/2026 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 07.11.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018-19, raising following grounds: 1. On the facts and circumstances of the case and in law the learned CIT(A) erred in dismissing the appeal, though having Printed from counselvise.com confirmed that the amount of Rs. 1033327 cannot be taxed in AY 2018-19. 2. On the facts and circumstances of the case and in law the learned CIT(A) exceeded his jurisdiction by issuing directions to the AO. 3. (A) On the facts and circumstances of the case and in law learned CIT(A) erred in confirming the disallowance of claim of depreciation of Rs. 479045 on the ground that as per provision of section 11(6) no depreciation is allowed on assets which have been applied as utilisation. (B) The learned CIT(A) erred i appellant has not claimed depreciation on assets which have been applied as utilisation. (C) The appellant therefore submits that the addition of Rs. 479045 needs to be deleted. 2. Briefly stated, facts of the case are charitable trust registered u/s 12A of the Income short ‘the Act’) and was engaged in institutions. The assessee filed return of income for the year under consideration declaring Nil income after claiming 11(2) of the Act amounting to Rs.73,10,769/ filed by the assessee was selected for sc statutory notices under the Act were issued and complied with. the assessment order passed , the Assessing Officer (AO) identified two primary points of contention and made addition : (i) Deemed Income u/s 11(3)(c): ₹29,00,000/- was accumulated in AY 2013 and Infrastructure.\" Out of this, unutilized beyond the statutory five The Balak Education Society hat the amount of Rs. 1033327 cannot be taxed in AY 2. On the facts and circumstances of the case and in law the learned CIT(A) exceeded his jurisdiction by issuing directions to the (A) On the facts and circumstances of the case and in law learned CIT(A) erred in confirming the disallowance of claim of depreciation of Rs. 479045 on the ground that as per provision of section 11(6) no depreciation is allowed on assets which have been applied as utilisation. (B) The learned CIT(A) erred in not appreciating the fact that the appellant has not claimed depreciation on assets which have been applied as utilisation. (C) The appellant therefore submits that the addition of Rs. 479045 needs to be deleted. Briefly stated, facts of the case are that the assessee is public charitable trust registered u/s 12A of the Income-tax Act, 1961 (in short ‘the Act’) and was engaged in running institutions. The assessee filed return of income for the year under consideration declaring Nil income after claiming accumulation 11(2) of the Act amounting to Rs.73,10,769/-. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the Act were issued and complied with. the assessment order passed , the Assessing Officer (AO) identified two primary points of contention and made addition : Deemed Income u/s 11(3)(c): The AO noted that a was accumulated in AY 2013-14 for \"Building and Infrastructure.\" Out of this, ₹10,33,324/ unutilized beyond the statutory five-year period. The AO The Balak Education Society 2 ITA No. 893/MUM/2026 hat the amount of Rs. 1033327 cannot be taxed in AY 2. On the facts and circumstances of the case and in law the learned CIT(A) exceeded his jurisdiction by issuing directions to the (A) On the facts and circumstances of the case and in law the learned CIT(A) erred in confirming the disallowance of claim of depreciation of Rs. 479045 on the ground that as per provision of section 11(6) no depreciation is allowed on assets which have been n not appreciating the fact that the appellant has not claimed depreciation on assets which have been (C) The appellant therefore submits that the addition of Rs. 479045 that the assessee is public tax Act, 1961 (in running educational institutions. The assessee filed return of income for the year under accumulation u/s . The return of income rutiny assessment and statutory notices under the Act were issued and complied with. In the assessment order passed , the Assessing Officer (AO) identified two primary points of contention and made addition : The AO noted that an amount of 14 for \"Building 10,33,324/- remained year period. The AO Printed from counselvise.com treated this residue as deemed income for the current AY 2018-19. (ii) Depreciation Disallowance: ₹479,045/-, invoking the proviso to Section 11(6), asserting that the cost of the underlying assets had already been claimed as \"application of income\" in prior years. 3. On further appeal before the Ld detailed submission. principle but introduced a direction for verification. Regarding the unutilized funds, the Ld. CIT(A) directed the AO to re No. 10 and, if the accumulat 18, to tax the amount in AY 2019 concern. Regarding depreciation, the Ld. CIT(A) dismissed the ground for want of evidentiary substantiation. of ld CIT(A) is reproduced “5.11 have carefully considered the facts of the case and written submission of the appellant as against the observations/findings of the Ld. AO in the order. On the issue of accumulated amount not spent within the time allowed it is seen that Vide this office notice dated 27.11.2020, the assessee was asked for form 10 and details of income set apart for last 5 years. The assessee vide its reply dated 04.12.2020 submitted the information so called. On perusal of the re information available on record, it was found that during the FY 2012-13 relevant to AY 2013 Rs.29,00,000/ utilized before the end of purpose specified therein, by filing the requisite form 10 before the The Balak Education Society treated this residue as deemed income for the current AY tion Disallowance: The AO disallowed depreciation of , invoking the proviso to Section 11(6), asserting that the cost of the underlying assets had already been claimed as \"application of income\" in prior years. On further appeal before the Ld. CIT(A) the assessee filed detailed submission. The Ld. CIT(A) upheld the AO's findings in principle but introduced a direction for verification. Regarding the unutilized funds, the Ld. CIT(A) directed the AO to re No. 10 and, if the accumulation period indeed extended to FY 2017 18, to tax the amount in AY 2019-20 instead of the year under concern. Regarding depreciation, the Ld. CIT(A) dismissed the ground for want of evidentiary substantiation. The relevant finding of ld CIT(A) is reproduced as under: “5.11 have carefully considered the facts of the case and written submission of the appellant as against the observations/findings of the Ld. AO in the order. On the issue of accumulated amount not spent within the time allowed it is seen that the Ld. AO has held that:- Vide this office notice dated 27.11.2020, the assessee was asked for form 10 and details of income set apart for last 5 years. The assessee vide its reply dated 04.12.2020 submitted the information so called. On perusal of the reply of the assessee and based on the information available on record, it was found that during the FY 13 relevant to AY 2013-14, the assessee trust had set apart Rs.29,00,000/- for 'Building and Infrastructure' which was to utilized before the end of FY 2016-17 i.e., by 31.03.2017 for the purpose specified therein, by filing the requisite form 10 before the The Balak Education Society 3 ITA No. 893/MUM/2026 treated this residue as deemed income for the current AY The AO disallowed depreciation of , invoking the proviso to Section 11(6), asserting that the cost of the underlying assets had already been claimed as \"application of income\" in prior years. the assessee filed he Ld. CIT(A) upheld the AO's findings in principle but introduced a direction for verification. Regarding the unutilized funds, the Ld. CIT(A) directed the AO to re-verify Form ion period indeed extended to FY 2017- 20 instead of the year under concern. Regarding depreciation, the Ld. CIT(A) dismissed the The relevant finding “5.11 have carefully considered the facts of the case and written submission of the appellant as against the observations/findings of On the issue of accumulated amount not spent within the time Vide this office notice dated 27.11.2020, the assessee was asked for form 10 and details of income set apart for last 5 years. The assessee vide its reply dated 04.12.2020 submitted the information ply of the assessee and based on the information available on record, it was found that during the FY 14, the assessee trust had set apart for 'Building and Infrastructure' which was to 17 i.e., by 31.03.2017 for the purpose specified therein, by filing the requisite form 10 before the Printed from counselvise.com Department. Necessary resolution regarding the accumulation of Rs.29,00,000/ form 10 filed duri noticed that out of the amount set apart during FY 2012 Rs.18,66,676/ 10,33,324 remained unspent/unutilized by the assessee. Thus, due to non-utilization with down u/s.11(2) of the IT Act, this amount should get included and separately taxed u/s 11(3)(c) during the AY 2018 In the appeal the appellant has submitted that the entire accumulation amount was spent in this regard the appellant has submitted that the accumulation figure of each year is added to the building fund account and the utilization amount is reduced from the building fund. We are submitting herewith the relevant extr 31/03/2013 i.e. financial year 2012 evidencing the addition of Rs. 2900000/ is the accumulation figure for financial year 2012 submitting herewith the r 31/03/2015 financial year 2014 and balance sheet as at 31/03/2016 financial year 2015 (Assessment year 2016 the building fund account it will utilized as at 31/03/2015 is Rs. 3916108/ 216108/- was accumulated amount of financial year 2012 Similarly on going through the balance sheet of year ended 31/03/2016 in the building fund account it will total utilization amount is Rs. 5507028/ was the balance accumulated amount of the financial year 2012 However this approach of the appellant is not verifiable. It is not verifiable during the year how much exp accumulated fund of which year and how much expenditure was done out of current year receipts. The figures mentioned by the appellant are not supported with Form No. 10. The submission of the appellant in this regard is hypothetica Importantly, the appellant has only submitted Form No. 10 for the FY 2017-18. Form No. 10 for the FY 2014 with the evidence of having been filed with the Department, have not been filed by the appellant. Further the appellant has done by the Ld. AO. The finding of the Ld. AO is based on the Form No. 10 of the various years however the appellant has deliberately not filed the Form No. 10 of each year. The Balak Education Society Department. Necessary resolution regarding the accumulation of Rs.29,00,000/- was passed by the trustees. Further, on perusal of form 10 filed during the subsequent assessment years, it was noticed that out of the amount set apart during FY 2012 Rs.18,66,676/- was utilized by the assessee and an amount of Rs. 10,33,324 remained unspent/unutilized by the assessee. Thus, due utilization within the stipulated time period of 5 years laid down u/s.11(2) of the IT Act, this amount should get included and separately taxed u/s 11(3)(c) during the AY 2018-19. In the appeal the appellant has submitted that the entire accumulation amount was spent in FY 2014-15 and FY 2015 this regard the appellant has submitted that the accumulation figure of each year is added to the building fund account and the utilization amount is reduced from the building fund. We are submitting herewith the relevant extract of the balance sheet as at 31/03/2013 i.e. financial year 2012-13 {Assessment year 2013 evidencing the addition of Rs. 2900000/- to the building fund which is the accumulation figure for financial year 2012-13. We are also submitting herewith the relevant extract of balance sheet as at 31/03/2015 financial year 2014-15 {Assessment year 2015 and balance sheet as at 31/03/2016 financial year 2015 (Assessment year 2016-17). On going through the balance sheet in the building fund account it will be seen that the total amount utilized as at 31/03/2015 is Rs. 3916108/- out of which Rs. was accumulated amount of financial year 2012 Similarly on going through the balance sheet of year ended 31/03/2016 in the building fund account it will be seen that the total utilization amount is Rs. 5507028/- out which Rs. 2683892/ was the balance accumulated amount of the financial year 2012 However this approach of the appellant is not verifiable. It is not verifiable during the year how much expenditure was done out of accumulated fund of which year and how much expenditure was done out of current year receipts. The figures mentioned by the appellant are not supported with Form No. 10. The submission of the appellant in this regard is hypothetical. Importantly, the appellant has only submitted Form No. 10 for the 18. Form No. 10 for the FY 2014-15 and FY 2015 with the evidence of having been filed with the Department, have not been filed by the appellant. Further the appellant has not highlighted any error in the working done by the Ld. AO. The finding of the Ld. AO is based on the Form No. 10 of the various years however the appellant has deliberately not filed the Form No. 10 of each year. The Balak Education Society 4 ITA No. 893/MUM/2026 Department. Necessary resolution regarding the accumulation of was passed by the trustees. Further, on perusal of ng the subsequent assessment years, it was noticed that out of the amount set apart during FY 2012-13, was utilized by the assessee and an amount of Rs. 10,33,324 remained unspent/unutilized by the assessee. Thus, due in the stipulated time period of 5 years laid down u/s.11(2) of the IT Act, this amount should get included and In the appeal the appellant has submitted that the entire 15 and FY 2015-16. In this regard the appellant has submitted that the accumulation figure of each year is added to the building fund account and the utilization amount is reduced from the building fund. We are act of the balance sheet as at 13 {Assessment year 2013-14) to the building fund which 13. We are also elevant extract of balance sheet as at 15 {Assessment year 2015-16) and balance sheet as at 31/03/2016 financial year 2015-16 17). On going through the balance sheet in be seen that the total amount out of which Rs. was accumulated amount of financial year 2012-13. Similarly on going through the balance sheet of year ended be seen that the out which Rs. 2683892/- was the balance accumulated amount of the financial year 2012-13. However this approach of the appellant is not verifiable. It is not enditure was done out of accumulated fund of which year and how much expenditure was done out of current year receipts. The figures mentioned by the appellant are not supported with Form No. 10. The submission of Importantly, the appellant has only submitted Form No. 10 for the 15 and FY 2015-16 along with the evidence of having been filed with the Department, have not highlighted any error in the working done by the Ld. AO. The finding of the Ld. AO is based on the Form No. 10 of the various years however the appellant has deliberately Printed from counselvise.com In view of the above discussion, the fin hereby upheld. Further the appellant has contended that the addition could have been made in the AY 2019 that the taxation is to be done in the next year following the last previous year du utilised. In this regard the Ld. AO has noted from the various years' Form 10 that during the FY 2012 trust had set apart Rs.29,00,000/ which was to utilized before the end of FY 2016 31.03.2017 for the purpose specified therein. Thus as per Form No. 10 the fund was accumulated for the period till FY 2016 31.03.2017, and thus the taxation done in the FY 2017 2018-19 meets the interpretation claimed by the appellant. Further the appellant has claimed that 5 years for accumulation of financial year 2012 year 2018-19) but the unutilized amount can be taxed in fina year 2018-19 i.e. Assessment year 2019 appellant has not placed on record the Form No. 10 of the various years. The Ld. AO is directed to verify the Form No. 10 after providing due opportunity to the appellant and if the accum was done till end of financial year 2017 amount in the AY 2019 It is held by the Hon'ble Supreme Court in the case of Kapurchand Shrimal v. Commissioner of Income (SC)/[1981] 131 ITR 451 (SC)/[1981] 24 CTR 345 (SC) as under: 13... It is, however, difficult to agree with the submission made on behalf of the assessee that the duty of the Tribunal ends with making a declaration that the assessments are illegal and it ha duty to issue any further direction. It is well known that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeals and to issue, if necessary, appropriate directions to the authority again decision the appeal is preferred to dispose of the whole or any part of the matter afresh unless forbidden from doing so by the statute. The Tribunal, orders and in not issuing further direction Thus the ground no. 1 (and its sub dismissed in above terms. The Balak Education Society In view of the above discussion, the finding made by the Id. AO is hereby upheld. Further the appellant has contended that the addition could have been made in the AY 2019-20 and not in the AY 2018- that the taxation is to be done in the next year following the last previous year during which the accumulated sum should have been In this regard the Ld. AO has noted from the various years' Form 10 that during the FY 2012-13 relevant to AY 2013-14, the assessee trust had set apart Rs.29,00,000/- for 'Building and Infrastructur which was to utilized before the end of FY 2016 31.03.2017 for the purpose specified therein. Thus as per Form No. 10 the fund was accumulated for the period till FY 2016 31.03.2017, and thus the taxation done in the FY 2017 19 meets the interpretation claimed by the appellant. Further the appellant has claimed that 5 years for accumulation of financial year 2012-13 ends in financial year 2017-18 (Assessment 19) but the unutilized amount can be taxed in fina 19 i.e. Assessment year 2019-20. In this regard, the appellant has not placed on record the Form No. 10 of the various years. The Ld. AO is directed to verify the Form No. 10 after providing due opportunity to the appellant and if the accum was done till end of financial year 2017-18, in that case, tax the amount in the AY 2019-20 in giving effect to this order. It is held by the Hon'ble Supreme Court in the case of Kapurchand Shrimal v. Commissioner of Income-tax [1981] 7 Taxman 6 C)/[1981] 131 ITR 451 (SC)/[1981] 24 CTR 345 (SC) as under: 13... It is, however, difficult to agree with the submission made on behalf of the assessee that the duty of the Tribunal ends with making a declaration that the assessments are illegal and it ha duty to issue any further direction. It is well known that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeals and to issue, if necessary, appropriate directions to the authority again decision the appeal is preferred to dispose of the whole or any part of the matter afresh unless forbidden from doing so by the statute. The Tribunal, therefore, erred in merely cancelling the assessment orders and in not issuing further directions as stated above.\" Thus the ground no. 1 (and its sub-grounds) of appeal is hereby dismissed in above terms. The Balak Education Society 5 ITA No. 893/MUM/2026 ding made by the Id. AO is Further the appellant has contended that the addition could have -19 by arguing that the taxation is to be done in the next year following the last ring which the accumulated sum should have been In this regard the Ld. AO has noted from the various years' Form 10 14, the assessee for 'Building and Infrastructure' which was to utilized before the end of FY 2016-17 i.e., by 31.03.2017 for the purpose specified therein. Thus as per Form No. 10 the fund was accumulated for the period till FY 2016-17 i.e., by 31.03.2017, and thus the taxation done in the FY 2017-18 / AY 19 meets the interpretation claimed by the appellant. Further the appellant has claimed that 5 years for accumulation of 18 (Assessment 19) but the unutilized amount can be taxed in financial 20. In this regard, the appellant has not placed on record the Form No. 10 of the various years. The Ld. AO is directed to verify the Form No. 10 after providing due opportunity to the appellant and if the accumulation 18, in that case, tax the 20 in giving effect to this order. It is held by the Hon'ble Supreme Court in the case of Kapurchand tax [1981] 7 Taxman 6 C)/[1981] 131 ITR 451 (SC)/[1981] 24 CTR 345 (SC) as under:- 13... It is, however, difficult to agree with the submission made on behalf of the assessee that the duty of the Tribunal ends with making a declaration that the assessments are illegal and it has no duty to issue any further direction. It is well known that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeals and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh unless forbidden from doing so by the statute. therefore, erred in merely cancelling the assessment s as stated above.\" grounds) of appeal is hereby Printed from counselvise.com The second issue pertains to deduction of claim of depreciation on the assets which have already been claimed as application. The Ld. AO inter-alia observed that \"As the claim of depreciation of Rs.4,79,045/ amendments to the provisions of section 11(6) of the IT Act w.e.f. the AY 2015 16. Hence, depreciation amount of Rs.4,79,045/ not to be allowed assets on which depreciation is being claimed would have already applied as utilization in the earlier years, though not claimed in the current year under consideration. The assessee, vide his earlier replies, did not substantiate his claim on the issue of allowability of depreciation.\". In the appeal the appellant has not made any submission as to what was replied before the Id. AO on the issue and also not explained why no submission was made before issue, if no submission was made. The appellant has stated that no part of accumulated amount was shown under the head fixed assets and as such there is no question of any depreciation being claimed thereon. Appellant has submitted the co as at 31/03/2015 and 31/03/2016 from which it will be seen that the addition/utilization have been disclosed under the head building fund. As such the appellant submit that since no part of accumulation amount is claimed as application expenditure the addition needs to be deleted and that depreciation of Rs.4,79,045/ The balancesheets filed by the appellant are not having annexure and are not having the income and expenditure account. The depreciation schedule, WDV details of assets, has also not been submitted. The appellant has claimed that no depreciation has been claimed on building. This statement is not verifiable from the documents placed on record. At the same time, this claim of the appellant is irrelevant. The appellant is required to show and prove that the claimed depreciation is only on those assets which were not claimed as application when those assets were purchased. The appellant is required to list all those assets with dates of and show with various documents that the purchase was not claimed as application. The appellant has miserably failed in that and has made a general submission. It is noteworthy that apparently no submission was made before the Ld. AO in this reg ground number 2 (and its sub grounds) is hereby dismissed. The ground no. 3 of the appeal is general in nature. The ground is pre-mature as this is against mere initiation of penalty proceedings. The Balak Education Society The second issue pertains to deduction of claim of depreciation on the assets which have already been claimed as application. The Ld. a observed that \"As the claim of depreciation of Rs.4,79,045/- cannot be allowed in accordance with the amendments to the provisions of section 11(6) of the IT Act w.e.f. the AY 2015 16. Hence, depreciation amount of Rs.4,79,045/ not to be allowed as application of income as the cost of the original assets on which depreciation is being claimed would have already applied as utilization in the earlier years, though not claimed in the current year under consideration. The assessee, vide his earlier eplies, did not substantiate his claim on the issue of allowability of depreciation.\". In the appeal the appellant has not made any submission as to what was replied before the Id. AO on the issue and also not explained why no submission was made before the Id. AO on the issue, if no submission was made. The appellant has stated that no part of accumulated amount was shown under the head fixed assets and as such there is no question of any depreciation being claimed thereon. Appellant has submitted the copy of balance sheet as at 31/03/2015 and 31/03/2016 from which it will be seen that the addition/utilization have been disclosed under the head building fund. As such the appellant submit that since no part of accumulation amount is claimed as application against capital expenditure the addition needs to be deleted and that depreciation of Rs.4,79,045/- should be allowed in full. The balancesheets filed by the appellant are not having annexure and are not having the income and expenditure account. The ciation schedule, WDV details of assets, has also not been submitted. The appellant has claimed that no depreciation has been claimed on building. This statement is not verifiable from the documents placed on record. At the same time, this claim of the ellant is irrelevant. The appellant is required to show and prove that the claimed depreciation is only on those assets which were not claimed as application when those assets were purchased. The appellant is required to list all those assets with dates of and show with various documents that the purchase was not claimed as application. The appellant has miserably failed in that and has made a general submission. It is noteworthy that apparently no submission was made before the Ld. AO in this regard as discussed above. Thus the ground number 2 (and its sub grounds) is hereby dismissed. The ground no. 3 of the appeal is general in nature. The ground is mature as this is against mere initiation of penalty proceedings. The Balak Education Society 6 ITA No. 893/MUM/2026 The second issue pertains to deduction of claim of depreciation on the assets which have already been claimed as application. The Ld. a observed that \"As the claim of depreciation of cannot be allowed in accordance with the amendments to the provisions of section 11(6) of the IT Act w.e.f. the AY 2015 16. Hence, depreciation amount of Rs.4,79,045/- also is as application of income as the cost of the original assets on which depreciation is being claimed would have already applied as utilization in the earlier years, though not claimed in the current year under consideration. The assessee, vide his earlier eplies, did not substantiate his claim on the issue of allowability of In the appeal the appellant has not made any submission as to what was replied before the Id. AO on the issue and also not the Id. AO on the issue, if no submission was made. The appellant has stated that no part of accumulated amount was shown under the head fixed assets and as such there is no question of any depreciation being py of balance sheet as at 31/03/2015 and 31/03/2016 from which it will be seen that the addition/utilization have been disclosed under the head building fund. As such the appellant submit that since no part of against capital expenditure the addition needs to be deleted and that depreciation The balancesheets filed by the appellant are not having annexure and are not having the income and expenditure account. The ciation schedule, WDV details of assets, has also not been submitted. The appellant has claimed that no depreciation has been claimed on building. This statement is not verifiable from the documents placed on record. At the same time, this claim of the ellant is irrelevant. The appellant is required to show and prove that the claimed depreciation is only on those assets which were not claimed as application when those assets were purchased. The appellant is required to list all those assets with dates of purchases and show with various documents that the purchase was not The appellant has miserably failed in that and has made a general submission. It is noteworthy that apparently no submission was ard as discussed above. Thus the ground number 2 (and its sub grounds) is hereby dismissed. The ground no. 3 of the appeal is general in nature. The ground is mature as this is against mere initiation of penalty proceedings. Printed from counselvise.com Penalty proceedings are ind is required to make his submissions before the appropriate authority during the penalty proceedings. Accordingly, the ground of appeal raised by the appellant on this issue is treated as disposed off. The ground no. 4 has not added or altered any of the above mentioned grounds of appeal. Accordingly such mention by the appellant in its ground is treated as general in nature, not needing any specific adjudication and is accordingly treated as disposed off.” 4. Before us, the Ld. Counsel for the Assessee restricted the challenge primarily to the procedural propriety of the CIT(A)’s directions and the timing of the taxability of unspent accumulations. It was contended that: (i) The statutory period of five years for funds accumulated in AY 2013-14 expires in AY 2018 becomes taxable only in the (ii) The Ld. CIT(A) exceeded his jurisdiction by \"remanding\" the matter to the AO, a power no longer available to the first appellate authority post the 2001 amendment to Section 251(1)(a). 5. We have heard rival submissions of the parties and perused the relevant materials on record. grievance regarding the nature of the Ld. CIT(A)’s directions. Following the amendment to Section 251 of the Act by the Finance Act, 2001, the power of the Ld. CIT(A) to set aside an assessment and remit it to the AO for fresh adjudication has been Expressly The Balak Education Society Penalty proceedings are independent proceedings and the appellant is required to make his submissions before the appropriate authority during the penalty proceedings. Accordingly, the ground of appeal raised by the appellant on this issue is treated as disposed The ground no. 4 of the appeal is general in nature. The appellant has not added or altered any of the above mentioned grounds of appeal. Accordingly such mention by the appellant in its ground is treated as general in nature, not needing any specific adjudication accordingly treated as disposed off.” Before us, the Ld. Counsel for the Assessee restricted the challenge primarily to the procedural propriety of the CIT(A)’s directions and the timing of the taxability of unspent accumulations. It was contended that: The statutory period of five years for funds accumulated in AY 14 expires in AY 2018-19; hence, any unutilized balance becomes taxable only in the succeeding year, i.e., AY 2019 The Ld. CIT(A) exceeded his jurisdiction by \"remanding\" the o the AO, a power no longer available to the first appellate authority post the 2001 amendment to Section We have heard rival submissions of the parties and perused the relevant materials on record. We find merit in the Assessee’s egarding the nature of the Ld. CIT(A)’s directions. Following the amendment to Section 251 of the Act by the Finance Act, 2001, the power of the Ld. CIT(A) to set aside an assessment and remit it to the AO for fresh adjudication has been Expressly The Balak Education Society 7 ITA No. 893/MUM/2026 ependent proceedings and the appellant is required to make his submissions before the appropriate authority during the penalty proceedings. Accordingly, the ground of appeal raised by the appellant on this issue is treated as disposed of the appeal is general in nature. The appellant has not added or altered any of the above mentioned grounds of appeal. Accordingly such mention by the appellant in its ground is treated as general in nature, not needing any specific adjudication Before us, the Ld. Counsel for the Assessee restricted the challenge primarily to the procedural propriety of the CIT(A)’s directions and the timing of the taxability of unspent The statutory period of five years for funds accumulated in AY 19; hence, any unutilized balance year, i.e., AY 2019-20. The Ld. CIT(A) exceeded his jurisdiction by \"remanding\" the o the AO, a power no longer available to the first appellate authority post the 2001 amendment to Section We have heard rival submissions of the parties and perused We find merit in the Assessee’s egarding the nature of the Ld. CIT(A)’s directions. Following the amendment to Section 251 of the Act by the Finance Act, 2001, the power of the Ld. CIT(A) to set aside an assessment and remit it to the AO for fresh adjudication has been Expressly Printed from counselvise.com rescinded except assessment order passed u/s 144 of the Act. The Ld. CIT(A) is duty-bound to either confirm, reduce, enhance, or annul the assessment; he cannot simply restore the matter to the file of the AO for de novo verification. 5.1 On the Merits of Section \"previous year immediately following the expiry\" of the accumulation period. To determine the exact year of taxability, a granular verification of Form No. 10 and the subsequent utilization for each intervening year is i acknowledging the need for verification, erred in delegating this judicial function back to the AO. 5.2 Since the Ld. CIT(A) did not have the statutory mandate to restore the matter to the AO, and in the interest of natural and substantial law, we deem it fit to set aside the impugned order in its entirety. We restore the matter to the file of the Ld. CIT(A) with a direction to: (i) Take on record the relevant Form No. 10 and supporting financial statements for the conce (ii) Independently adjudicate whether the unutilized amount is taxable in the year under consideration (AY 2018 subsequent year (AY 2019 the accumulation period. The Balak Education Society d except assessment order passed u/s 144 of the Act. The bound to either confirm, reduce, enhance, or annul the assessment; he cannot simply restore the matter to the file of the AO for de novo verification. On the Merits of Section 11(3)(c), the dispute hinges on the \"previous year immediately following the expiry\" of the accumulation period. To determine the exact year of taxability, a granular verification of Form No. 10 and the subsequent utilization for each intervening year is imperative. The Ld. CIT(A), while acknowledging the need for verification, erred in delegating this judicial function back to the AO. Since the Ld. CIT(A) did not have the statutory mandate to restore the matter to the AO, and in the interest of natural and substantial law, we deem it fit to set aside the impugned order in its entirety. We restore the matter to the file of the Ld. CIT(A) with Take on record the relevant Form No. 10 and supporting financial statements for the concerned years. Independently adjudicate whether the unutilized amount is taxable in the year under consideration (AY 2018 subsequent year (AY 2019-20) based on the date of expiry of the accumulation period. The Balak Education Society 8 ITA No. 893/MUM/2026 d except assessment order passed u/s 144 of the Act. The bound to either confirm, reduce, enhance, or annul the assessment; he cannot simply restore the matter to the he dispute hinges on the \"previous year immediately following the expiry\" of the accumulation period. To determine the exact year of taxability, a granular verification of Form No. 10 and the subsequent utilization mperative. The Ld. CIT(A), while acknowledging the need for verification, erred in delegating this Since the Ld. CIT(A) did not have the statutory mandate to restore the matter to the AO, and in the interest of natural justice and substantial law, we deem it fit to set aside the impugned order in its entirety. We restore the matter to the file of the Ld. CIT(A) with Take on record the relevant Form No. 10 and supporting Independently adjudicate whether the unutilized amount is taxable in the year under consideration (AY 2018-19) or the 20) based on the date of expiry of Printed from counselvise.com 5.3 The Assessee is directed to produce a documents, including the depreciation schedule and proof of non application of capital cost, to resolve the remaining grievances. 5.4 Ground No. 1 is allowed for 2 and 3, having not been pressed during hearing, are dismissed as 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 26 Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 26/03/2026 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// The Balak Education Society The Assessee is directed to produce all requisite evidentiary documents, including the depreciation schedule and proof of non application of capital cost, to resolve the remaining grievances. Ground No. 1 is allowed for statistical purposes 2 and 3, having not been pressed during the course of the hearing, are dismissed as infructuous. In the result, the appeal of the assessee is allowed for statistical purposes. ounced in the open Court on 26/0 Sd/ SANDEEP SINGH KARHAIL) (OM PRAKASH KANT MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai The Balak Education Society 9 ITA No. 893/MUM/2026 ll requisite evidentiary documents, including the depreciation schedule and proof of non- application of capital cost, to resolve the remaining grievances. statistical purposes. Ground Nos. the course of the In the result, the appeal of the assessee is allowed for /03/2026. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, Registrar) ITAT, Mumbai Printed from counselvise.com "