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The Assessing Officer as well as CIT(A) both wrongly applied Section 11(1A) as there is no acquisition of another capital assets. In fact, the assessee society invoked the winding up clause of the Trust Deed. Therefore, the CIT(A) was not right in confirming the additions made under Section 11(1A) of the Act by the Assessing Officer.

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Sec. 11 of Income Tax Act, 1961— Exemption— AO made addition to the income of the appellant in respect of long term capital gain alleged to be have been derived on the sale of the land. The assessee contended that the income derived on the sale of the land and donated to the corpus funds of another trust engaged in the same nature of charitable activities is application of income in view of the provisions of Section 11 (1 )(a) of the Act. On appeal, CIT(A) confirmed the addition. ITAT noted that the immovable property was sold and the amount of the sale proceeds were donated to the corpus of the other charitable society/trust. Section 11(1)(a) clearly sets out that the assessee is entitled to claim the benefit as the sale proceeds of property cannot be included in the total income of the assessee. The assessee has donated the sale proceeds to the corpus of another charitable society/trust. Thus, ITAT held that ”The AO as well as CIT(A) both wrongly applied Section 11(1A) as there is no acquisition of another capital assets. In fact, the assessee society invoked the winding up clause of the Trust Deed“. In result, appeal of the assesse allowed.—SUVIPRA SHIKSHA SANSTHAN vs. ITO.[2020] 26 ITCD Online 050 (ITAT-DELHI)

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