1979 (5) TMI 63 - AT - Income Tax

Summary

Issues:
1. Assessment of income for the year 1974-75 in the status of an Association of Persons.
2. Exemption of unspent balance from tax due to charitable purposes.
3. Timeliness of filing Form No. 10 for accumulation of income by a charitable trust.
4. Requirements for deposit in a bank for exemption under section 11(2) (b) (ii).

Analysis:
1. The appeal pertains to the assessment of income for the year 1974-75 in the status of an Association of Persons. The assessee, a social service society, had an unspent balance of Rs. 93,908, which the Income Tax Officer (ITO) considered taxable due to belated filing of Form No. 10 and uncertainty regarding the accumulation being deposited in banks. The Assistant Commissioner (AAC) opined that the deposits in any bank account satisfied the conditions under section 11(2) (b) (ii), and the filing of Form No. 10 was not delayed as per Rule 17.

2. The timeliness of filing Form No. 10 was a crucial issue. The Revenue contended that the revised return filed on 28th Nov., 1974, with a declaration for accumulated balance, was not within time. However, the assessee argued that the return was lawful, and Rule 17, prescribing the manner of filing Form No. 10, did not specify a time limit. Citing relevant case law, the assessee maintained that any time prescription would conflict with section 11(2), and thus, the form filed on 28th Nov., 1974, was not out of time.

3. The Tribunal analyzed the conflict between Rule 17 and section 11(2) regarding the time limit for filing Form No. 10. Referring to legal precedents, the Tribunal held that if a rule contradicts the main purpose of the section, the section prevails. Consequently, the prescription of a time limit in Rule 17 was disregarded, allowing the form filed on 28th Nov., 1974, to be considered timely. This ruling was based on the principle that rules conflicting with statutory provisions must be ignored.

4. Regarding the deposit in a bank for exemption under section 11(2) (b) (ii), the Tribunal noted that the balance-sheet confirmed the amount was in a bank, meeting the requirement of deposit in a banking company. Emphasizing that the section did not specify the type of deposit, only the entity, the Tribunal concluded that the conditions were fulfilled, entitling the assessee to tax exemption. The Income Tax Officer was directed to grant exemption if other requirements were met, and the appeal by the Revenue was dismissed.