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Issues involved: Appeal by revenue u/s 260A of Income Tax Act against ITAT order on accumulation of funds u/s 11(2) for assessment year 2006-07.
Summary: 1. The appeal was filed by the revenue against the ITAT order regarding the accumulation of funds by the assessee u/s 11(2) of the Income Tax Act, 1961. The primary question raised was whether the assessee fulfilled the mandatory requirements of Section 11(2) without specifically mentioning the definite purpose of accumulation in Form No.10. 2. The assessee, a statutory body under the Punjab Agriculture Produce Marketing Act, 1961, had funds accumulated without complying with Section 11(2) conditions. The CIT(A) deleted the addition made by the assessing officer, stating that the accumulation was in accordance with statutory provisions. The Tribunal upheld this view, emphasizing that the mentioning of development works in Form No.10 fulfilled the primary condition of Section 11(2). 3. The condition for excluding accumulated income of a charitable institution from total income requires specification of the purpose for accumulation and deposit in a specified mode. The exemption was disallowed initially due to the alleged failure to specify the purpose of accumulation. However, both the CIT(A) and the Tribunal confirmed that the purpose was specified for utilizing the amount, which was for development as per Section 28 of the PAPM Act. 4. The relevant portion of Section 11(2) of the Act was cited, highlighting the conditions to be complied with for accumulation of income for charitable purposes. The counsel for the revenue failed to demonstrate any error in the decisions of the CIT(A) and the Tribunal, leading to the dismissal of the appeal. 5. Ultimately, the appeal by the revenue was dismissed as no substantial question of law was found to arise from the case.
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