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Issues involved: Interpretation of sec. 10(26AAB) of the Act, deduction of amount accumulated u/s 11(2) of the Act.
Interpretation of sec. 10(26AAB) of the Act: The Tribunal initially held that sec. 10(26AAB) applied retrospectively to the assessees. However, the High Court later ruled that it had prospective operation from 01.04.2009. The assessees sought recall of the orders to address grounds raised on merits. The appeals were then heard. Deduction of amount accumulated u/s 11(2) of the Act: The assessees filed Form No.10 for accumulation of income under sec. 11(2) during assessment proceedings, but the Assessing Officer rejected it for not being filed with the return of income. The AR argued that Form No.10 could be filed even at the appellate stage as sec. 11(2) compliance is procedural. The CIT(A) did not decide in favor of the assessees. The Assessing Officer did not consider Form No.10 due to: (a) lack of specific purpose for accumulation, (b) not filing within the time prescribed, and (c) not investing in specified forms. The AO relied on legal precedents to support his decision, which the CIT(A) upheld. The Tribunal found that the purpose of accumulation should be precise and specific, allowing for a plurality of purposes. The time limit for filing Form No.10 was clarified by judicial decisions to be before assessment completion. The issue of accumulation of funds u/s 11(5) also needs fresh examination. The Tribunal set aside the CIT(A) orders on the accumulation issue, directing the Assessing Officer to reexamine it and make a decision in accordance with the law. The appeals were treated as partly allowed for statistical purposes. Separate Judgment: None.
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