TMI Blog1974 (6) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... te to the manager of the Reserve Bank of India on July 23, 1965, making a request to the effect that the assessee wants to invest a sum of Rs. 2,00,000 in Government securities in terms of section 11 of the Income-tax Act, 1961 (hereinafter referred to at "the Act"). Thereafter, on July 24, 1965, the wrote a letter to the manager, Punjab National, Bank, requesting them to purchase Central or State securities whichever be available but maturing in 1970, 1971 or 1972, at best market rates in the account of the assessee. A draft of Rs. 2,00,000 dated July 23, 1965, drawn by the Jammu and Kashmir Bank Ltd. on the United Commercial Bank Ltd., Delhi, was also attached and duly endorsed thereon for the purchase of the above securities. A request was also made in that letter that the information about the purchase of the securities must be furnished to the assessee before or on July 29, 1965, failing which the securities will not be accepted. The Punjab National Bank, Parliament Street branch, wrote a letter to the assessee on September 28, 1965, in which they said that due to abnormal postal service created by the grave political conditions obtaining in the country, it had not been advisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel for the respondent raised two contentions before the Tribunal and urged that the interpretation sought to be given by the learned departmental representative is farfetched because the purpose of section 11 (2)(b) of the Act is not what the departmental representative has contended. It was further contended that there was no restriction on the accumulation up to 25% or Rs. 10,000, whichever is higher, and the only question to be seen is whether the balance of 75% has been invested in the Govt. securities within the meaning of section 11(2)(b) of the Act or not and the shortfall in investment being only less than 1% the assessee would be deemed to have satisfied the conditions laid down in the section. The learned Judicial Member of the Tribunal accepted the contention raised by the assessee in view of the circumstances, viz., that the assessee had already sent a sum of Rs. 21,00,000 but the bankers chose to invest only a sum of Rs. 1,87,778 and remitted the balance to the assessee and the assessee cannot be blamed for this and further that the subsequent conduct of the assessee also shows that in the subsequent year as against the statutory investment of Rs. 20,608, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s within four months of the close of the accounting period. The main question which, therefore, arises is whether, in spite of the shortfall in the circumstances and on an interpretation of the relevant provisions of the Act, could the assessee be entitled to an exemption as contemplated by section 11(2) of the Act. It is necessary, thefore, first of all to refer here to the relevant provisions in this connection. The relevant provision is section 11 of the Act. This section is under Chapter III which deals with incomes not included in total income. Section 11 deals with charitable trusts and we are concerned here primarily with the two provisions, viz., section 11(1)(a) and section 11(2) which run as under : "(1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income-- (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India ; and, where any such income is accumulated for application to such purposes in India, to the extent to which the income so accumu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed by section 11(1)(a). In my opinion, where a statute, particularly a taxing statute, confers a concession by one particular provision in the statute and then further liberalizes and enlarges that concession by another provision in that statute, then the concession granted by the earlier provision cannot be deemed to be taken away. Section 11(2) of course lays down the conditions, the compliance of which is necessary to avail of the exemption but they are merely for the purpose of availing of the further exemption and not for depriving or taking away the exemption granted under section 11(1)(a). To explain the view which I have expressed above, I may give different illustrations. Supposing a trust spends the entire income for charitable purpose, then such income will not be taxable. Supposing the trust does not spend any income for charitable purpose, then even in such circumstances the 25% of the unspent income or Rs. 10,000, whichever is higher, will not be included in the taxable income. For the purpose of further illustration supposing the trust spends 75% on charitable purpose, the remaining 25% will be exempted under section 11(1)(a). In such a case, the entire income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r also the provisions referred to above cannot be interpreted in such a manner as to effect a deprivation of such a relief. It has also been rightly urged that supposing the interpretation be that 100% of accumulated income and not 75% should be invested, then this can be done at any time before the assessment is made because in the statute itself there is no prescribed time limit within which it should be made. It has also been urged. that the relevant rule in this connection which lays down a time limit of four months would be ultra vires of the Act. The words used in section 11(2)(a) of the Act are that the notice has to be given in writing in the prescribed manner. The words "prescribed manner" used therein cannot confer the authority to lay down a period of limitation also. This view of mine finds support also in the case of M. Ct. Muthiah Chettiar Family Trust v. 4th Income-tax Officer, City Circle VI, Madras. The words "prescribed manner" (though occurring in another statute) were also interpreted as not to mean to confer a power to lay down a period of limitation. See the case of Sales Tax Officer v. K. I. Abraham. It was strenuously argued on behalf of the department ..... X X X X Extracts X X X X X X X X Extracts X X X X
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