9911796707
TMI Blog2007 (1) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(a) of the Act and taxing the income at Rs. 20,97,720 instead of nil disclosed by rejecting the appellant's claim of accumulation of income under s. 11(2) of the Act made through. II. On the facts and in the peculiar circumstances of the present case specially keeping in view the written submission, the learned CIT(A) was not at all justified in rejecting the claim of the appellant of accumulation of the surplus under s. 11(2) as stated in Form No. 10 filed along with the return and/or as tiled in the course of assessment proceedings, only for the reason that inadvertently the appellant instead of stating that the income is being accumulated for a period five years which stood stated ten years, and so the order of the CIT(A) be set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 12A One of the objects of the society is to manage and organise education for physical, mental, social and moral development and overall development of students. During the assessment year under consideration, the assessee society has received following funds: Interest Rs. 2,88,987 Donation Rs. 29,82,756 Tuition fee Rs. 24,300 ------------- Rs. 32,96,043 ------------- After application of funds to charita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also filed well within time. The AO observed that the society has set apart Rs. 21,00,000 for 10 years in place of five years provided in the Act. The assessee was again required to submit explanation in the light of provision of the Act. In this regard, the assessee submitted that due to technical mistake, ten years' period for application of accumulated fund was passed in meeting held on 24th June, 2003 instead of five years as allowed by the IT Act. The assessee also assured the AO that Rs. 21,00,000 will be applied for construction of school building before expiry of five years i.e. 31st March, 2008. The assessee also furnished a copy of resolution of meeting held on 17th Jan., 2006 wherein it was resolved that the accumulated fund wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of s. 11 of the Act. 5. We have heard rival submissions and have also carefully gone through the materials available on record. Sec. 11(2) of the IT Act, 1961 provides that in the case of accumulation of funds, the assessee has to specify in the prescribed Form No. 10, the period for which accumulation shall be made. It is relevant to state that the period for accumulation of income before 1st April, 2001 was ten years and the period of ten years has been revised by five years after 1st April, 2001. Shri Kanchan Kaushal, learned counsel for the assessee submitted that by oversight, the assessee society resolved that accumulation of income shall not exceed ten years instead of five years. In our view, the lower authorities hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. It is seen that the claim of the assessee has been disallowed on the ground that in the Form No. 10, period was mentioned ten years instead of period of five years as per mandatory provisions. In our view, this is a technical mistake which has been rectified by another resolution dt. 17th Jan., 2006 resolving that the assessee society will utilise the accumulated funds within a period of five years which lapses on 31st March, 2008. The contention of the Department is that the assessee failed to submit any other notice in Form No. 10 before the expiry of time allowed under s. 139(1) of the Act. It is also submitted by the learned Departmental Representative that there was no explanation on the side of the assessee that any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time limit by which the money accumulated or set apart should be invested or deposited in the prescribed modes. The Tribunal further held that the time limits laid down in the rules are directory in nature. Respectfully following the decision of the Tribunal, Ahmedabad Bench, we hold that the Departmental authorities were not justified in rejecting the claim of the assessee. In our view, the assessee has complied with the provisions of s. 11(2) by filing Form No. 10 before completion of assessment by the AO. Furthermore, the period of ten years was mentioned in Form No. 10 inadvertently which was rectified by a resolution passed on 17th Jan., 2006 before completion of assessment. 7. In view of the above, we set aside order of the CIT(A) an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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