TMI Blog1993 (10) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... directing the Income-tax Officer to allow exemption in respect of accumulation as claimed under section 11(2) of the Income-tax Act, 1961, read with rule 17 of the Income-tax Rules, 1962 ?" The brief facts of the case are that the assessee has been registered as a charitable institution with the Commissioner of Income-tax under section 12A(a) of the Income-tax Act, 1961. It derives income from the services rendered to Dargah Khawaja of Ajmer and then applies the same for charitable purposes. The assessee has not furnished the returns of income for the years 1974-75 and 1975-76 on the ground that it had no taxable income. The Income-tax Officer issued notices under section 148 for the years 1974-75 and 1975-76 and under section 139(2) for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held that the assessee was not entitled to accumulate the said sums under section 11(2) of the Income-tax Act. In the appeal before the Appellate Assistant Commissioner of Income-tax it was contended that the provisions of rule 17 imposing a time-limit for submission of the application were ultra vires the rule-making authority and reliance was placed on the decisions in M. Ct. Muthiah Chettiar Family Trust v. Fourth ITO [1972] 86 ITR 282 (Mad); Second ITO v. M. C. T. Trust [1976] 102 ITR 138 (Mad) and in the case of CIT v. Shri Krishen Chand Charitable Trust [1975] 98 ITR 387 (J K). The appeals of the assessee were allowed by the Appellate Assistant Commissioner and the assessee was held entitled for exemption after verification. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 1961 to 1970 so as to make a sizable fund for the sole purpose of being utilised in major projects of a charitable nature. The application for accumulation was definitely given beyond the prescribed time and the Department, therefore, negatived the assessee's claim for exemption under section 11(2)(a). It was held by the Madras High Court that (headnote) : "In the prescribed manner" in section 11(2)(a) of the Income-tax Act, 1961, do not confer power on the rule-making authority to prescribe a time-limit for making an application for exemption under the section. Therefore, paragraphs 2 and 4 in Form No. 10 issued in pursuance of rule 17 of the Income-tax Rules, 1962, are ultra vires the rule-making authority, in that the rule-making autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accounts of the trust and for that purpose the Income-tax Officer was directed to verify the assessee's claim and allow the exemption in respect of accumulations as claimed by the assessee. There is another point that the provisions of rule 17 which are framed under section 11(2) before April 1, 1971, did not prescribe any time-limit for filing Form No. 10 and without there being any amendment in the provisions of the Act, the rule was substituted with effect from April 1, 1971, prescribing the time-limit from the assessment year 1971-72. Prior to the assessment year 1971-72, the form could have been submitted up to the stage of assessment. In these circumstances, the Income-tax Appellate Tribunal was justified in upholding the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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