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SAMAJ SEVA NIDHI Versus ASSISTANT COMMISSIONER OF INCOME-TAX (INV.)

2015 (11) TMI 390 - ANDHRA PRADESH HIGH COURT

Disallowance of benefit of accumulation by the assessee of an amount u/s 11(2) - ITAT allowed calim - Held that:- The required information was furnished through Form No. 10 along with the return and subsequently on March 10, 1997, the assessee submitted another letter to the Assessing Officer intimating the specific purpose for which the said amount was sought to be utilised by indicating that they want to utilise the amount for the objects mentioned in clause 3(a) of the trust deed. In the inst .....

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itted fact that the said information was furnished before the completion of the assessment.

In view of the ratio laid down by the Supreme Court in Nagpur Hotel Owners' Association (2000 (12) TMI 99 - SUPREME Court) and the acceptance of the date of information by the assessee as March 10, 1997, viz., before the date of completion of assessment by the Tribunal, we do not think that the objection raised by the learned Counsel for the Revenue has any substance. The explanation in the let .....

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ot;), against the order in I. T. A. No. 133/V/1997 passed by the Income-tax Appellate Tribunal, Visakhapatnam, on March 5, 2003. 2. In this appeal filed by the assessee, the substantial question of law that arises for our consideration is as follows : "Whether, on the facts and in the circumstances of the case, the order of the Income-tax Appellate Tribunal, Visakhapatnam, was perverse in reversing the order passed by the Commissioner of Income-tax (Appeals) so far as disallowing the benefi .....

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ties, etc. It was registered under section 12A of the Act. It filed its return of income for the assessment year 1996-97 on September 25, 1996, declaring nil income. The return was processed and taken up for scrutiny and notices under sections 142(1) and 143(2) of the Act were issued. Pursuant to the said notices, the secretary of the trust appeared before the Assessing Officer and produced the books of account for verification. The assessee has accumulated an amount of ₹ 3,00,000 and encl .....

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(a) of the trust deed. He also expressed his willingness to file a revised Form No. 10 for consideration and acceptance. The Assessing Officer passed an order on March 12, 1997, disallowing the benefit of accumulation under section 11(2) of the Act for the amount of ₹ 3,00,000 and demanded the tax at ₹ 1,27,676. Against the said order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), Vijayawada, who, by his order dated August 29, 1997, allowed the app .....

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of the latest position of law as has been held by the apex court in the case of Nagpur Hotel Owners' Association, although there is no specific time limit in the statue for passing on notification/ information to the Assessing Officer regarding the purpose of accu mulation, yet the assessee has to pass the information before the assessment is completed. Even holding such view of the matter and without taking resort to the case law, strictly by the Assessing Officer the information passed on .....

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irmity and has to be rejected. Hold ing such view of the matter, we cancel the order of the Commissioner of Income-tax (Appeals) and the appeal filed by the Revenue is hereby allowed." Against the said order of the Tribunal, the present appeal was preferred by the assessee. 4. Learned counsel for the appellant submitted that the explanatory letter was submitted to the Assessing Officer on March 10, 1997, well before the completion of assessment by the Assessing Officer and as per the ratio .....

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counsel appearing for the Revenue, on the other hand, submitted, by placing reliance on rule 17 of the Income-tax Rules read with section 139 of the Act that the assessee should have filed required information by September 30, 1996, but submitted the information only on March 10, 1997, and, hence, could not be taken into consideration. But he fairly submitted that the explanation in the letter dated March 10, 1997, is in sufficient compliance with section 11(2) of the Act. 5. Section 11(2) of t .....

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vious year of the person in receipt of the income, provided the following conditions are complied with, namely :- (a) such, person specifies, by notice in writing given to the Assessing Officer in the prescribed manner, the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed ten years ; (b) the money so accumulated or set apart is invested or depo sited in the forms or modes specified .....

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e 820 of 199 ITR) : "1. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that there is nothing illegal on the part of the assessee in giving notice to the Income-tax Officer in Form No. 10 listing all its objects for the purpose of accumulation of income as provided in section 11(2) of the Income-tax Act, 1961, which requires specification of the purposes ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is j .....

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Act by relying on the notice given by the assessee under section 11(2) of the Act. The Commissioner of Income-tax, by invoking the powers vested in him under section 263 of the Act called for and examined the assessment records of the assessee. After notice to the assessee and response, he set aside the order of assessment and ordered for de novo enquiry. The assessee preferred an appeal to the Tribunal. The Tribunal held that since a plurality of charitable purposes is not ruled out under the .....

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quirement of specification of the purpose for accumulation in that sub-section redundant. It was held that the purposes to be specified cannot, under any circumstances, tread beyond the objects clause of the trust and the Legislature could not have thought of the need of specification of the purpose if it did not have in mind the particularity of the purpose or purposes falling within the ambit of the objects clause of the trust deed. Accordingly, it answered question No. 2 in the negative and d .....

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lows (page 192) : "It is true that specification of certain purpose or purposes is needed for accumulations of the trust's income under section 11(2) of the Act. At the same time the purpose or purposes to be specified cannot be beyond the objects of the trust. Plurality of the purposes for accumulation is not precluded but it depends on the precise purpose for which the accumulation is intended. In the present case, both the appellate authorities below have recorded a concurrent findin .....

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onsidered and the aforementioned decision of the Calcutta High Court was also noticed. Following the earlier judgment in Hotel and Restaurant Association (supra) the High Court reiterated its view. 11. The Supreme Court also had an occasion to consider section 11 of the Act in Nagpur Hotel Owners' Association (supra), wherein the issue related to the time period within which the information should be furnished to the assessing authority. The Supreme Court categorically held that the intimati .....

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