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2019 (2) TMI 1438 - HC - Income TaxExemption u/s 11 - entitled for accumulation and carry forward the surplus amount when the assessee had not filed Form 10 within the due date prescribed - Information relevant to the claim of accumulation - whether the prescription to file Form 10 for the purposes of accumulation under Section 11 (2) of the Act is mandatory for the purpose of grant of exemption in terms of Section 11 of the Act, or only directory? - HELD THAT - The Supreme Court, in the case of Commissioner of Income Tax v. Nagpur Hotel Owners Association 2000 (12) TMI 99 - SUPREME COURT , considered the identical question and concluded that a claim under Section 11 of the Act would have to be considered by the assessing authority on the basis of the information supplied by the assessee at the time of assessment and if the relevant information to support such a claim was not available with the assessing authority, the same was liable to be rejected. In the instant case, we find that the Assessing Authority, the CIT (A) and the Tribunal have taken note of the resolution passed by the Board of Trustees dated 22.09.2003, proposing the accumulation of a sum of ₹ 4.10 crores for the purpose of construction of a building. As a fact, the prescribed Form 10 for accumulation has also been filed before the CIT (A). Requirement of filing Form 10 at the time of assessment is only directory and if it would suffice if the same were filed at the stage of appeal, so long as all relevant information in support of the claim for accumulation is furnished by the assessee along with the claim for consideration by the assessing authority. This conclusion is supported by a line of decisions, including that of the jurisdictional High Court in the case of CIT v. Jayant Patel, 1998 (9) TMI 6 - MADRAS HIGH COURT . Thus information relevant to the claim of accumulation was furnished to the assessing officer at the time of assessment and there is thus substantial compliance of the provisions of Section 11 (2) of the Act. - Decided in favour of assessee.
Issues:
Challenge to order of Income Tax Appellate Tribunal regarding Assessment Year 2003-2004, Requirement of filing Form 10 for accumulation under Section 11 (2) of the Income Tax Act, 1961. Analysis: 1. The appellant, Commissioner of Income Tax, Chennai, challenged the Income Tax Appellate Tribunal's order regarding Assessment Year 2003-2004. The respondent, a Charitable Trust, claimed exemption under Section 11 of the Act, with a resolution to accumulate funds for building construction. The assessing authority rejected the claim due to the absence of Form 10 with the return of income. 2. The Commissioner of Income Tax (Appeals) allowed the appeal, considering the requirement to file Form 10 as directory, not mandatory. The Tribunal, citing various decisions and Circular No.273, concluded that filing Form 10 at any stage sufficed, as long as the relevant information was provided. The Tribunal found the resolution for accumulation available with the assessing officer and approved the benefit of accumulation. 3. The substantial question of law raised was whether the Tribunal was correct in allowing accumulation without filing Form 10 within the prescribed due date. The provisions of Section 11 (2) mandate filing an application for accumulation. The Board Resolution for accumulation was available with the assessing officer, fulfilling the requirement for exemption under Section 11. 4. Referring to the Supreme Court decision in a similar case, it was established that the assessing authority should consider the claim based on information supplied by the assessee. In this case, the Board Resolution and Form 10 were available for consideration by the authorities, supporting the claim for accumulation. 5. The court held that the requirement of filing Form 10 at the time of assessment was directory, not mandatory. Citing precedents, including decisions from High Courts, it was concluded that substantial compliance with providing relevant information supported the claim for accumulation. The court dismissed the appeal in favor of the assessee, emphasizing substantial compliance with Section 11 (2) provisions.
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