1988 (5) TMI 71 - AT - Income Tax

Summary

Issues:
1. Allowance of accumulation u/s 11(2) for a Trust
2. Extension of time for filing return and its impact on accumulation plea

Detailed Analysis:

Issue 1: Allowance of accumulation u/s 11(2) for a Trust
The case involved a Trust that had been granted benefits under section 11 in previous assessment years. The Trust filed a return for the relevant year, declaring a deficit. The Income-tax Officer included a significant amount in the Trust's income and refused to accept the plea for accumulation under section 11(2). The CIT (Appeals) directed the Income-tax Officer to exclude the amount from the income and accepted the plea for accumulation based on the Trust's compliance with the legal requirements of section 11(2). The Revenue challenged this decision, arguing that the accumulation should not have been allowed. However, the Tribunal found the Revenue's grievance unjustified, emphasizing the Trust's compliance with the law and the fulfillment of requirements for accumulation under section 11(2).

Issue 2: Extension of time for filing return and its impact on accumulation plea
The Income-tax Officer contended that the Trust's application for extension of time to file the return was not supported by evidence of approval, leading to the conclusion that the Form No. 10 for accumulation was filed late. However, the Tribunal disagreed, citing legal precedents that emphasized the importance of the Department informing the assessee of the refusal to extend time. The Tribunal highlighted that the Trust had applied for an extension, and since the return was filed within the extended period, the Form No. 10 for accumulation should be considered timely. The Tribunal also referred to judgments from the Supreme Court and the Punjab and Haryana High Court, supporting the Trust's position regarding the extension of time and the filing of Form No. 10 within the prescribed period. Ultimately, the Tribunal dismissed the Revenue's appeal, upholding the decision to allow accumulation under section 11(2) for the Trust.

In conclusion, the Tribunal ruled in favor of the Trust, allowing accumulation under section 11(2) based on the Trust's compliance with legal requirements and the timely filing of Form No. 10 within the extended period. The Tribunal emphasized the importance of the Department communicating clearly regarding the extension of time for filing returns and upheld the decision of the CIT (Appeals) to grant the accumulation plea.