Whether advance given for incurring expenditure will be treated as application under section 11(2)

Snehlata Agrawal (Chartered Accountant) (32 Points)

11 May 2021  

My organization is a registered trust u/s 12AA of Income Tax. On 31st March 21 , we have given some advance to our vendor for booking media in newspaper and in other modes for FY 21-22. This is covered under the objective of the Trust. Now my query is whether we can claim those advances as utilization  from the accumulation set aside u/s 11(2) of the Income Tax Act. The purpose of  accumulation was satisfied with this advance release. So no issues with the condition laid down to fulfill the purpose of accumulation.

If we don't consider those advance as utilization, then our accumulation set aside in FY 2015-16  was unspent and we are liable to pay tax thereon.