9911796707
TMI Blog1983 (5) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be allowed to accumulate its surplus of Rs. 51,200 u/s 11 (2) of the Act. The ITO found that in Form No.10 which was filed along with the original return, the assessee had stated that it was proposed to accumulate a sum of Rs. 60,000 for a period of 10 years to be spent for the objects of the trust. In the revised return the trustees had made another resolution in suppression of the earlier resolution and had stated that it was proposed to accumulate its surplus to the extent of Rs. 60,000 and that the said purples was proposed to be utilised for the construction of the building for the trust. The ITO was of the view that the trust had not specified the objects in Form No. 10 by stating the purpose for which the surplus was proposed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Form No. 10 at a latter date as the provision of r. 17 were held to be ultra vires by the decision of the Madras High Court in Second ITO vs. M.C.T. Trust Ors. Reported at 1976 CTR (Mad) 69 : (1976) 102 ITR 136 (Mad). The authorities below were, therefore, not justified in declining accumulation u/s 11 (2) of the Act. The ld. departmental representative vehemently argued that the decisions of the authorities below were correct and that the request for accumulation for surplus was rightly rejected. 4. We have considered the rival submissions. In order to appreciate the controversy we must first look at the provisions of ss. 11(1)(a), 11(2) and 11(3) of the Act as are relevant for our purpose. Section 11(1) (a) : Income derived f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount with the Post Office Saving Bank including deposits made under the Post Office (Time Deposits) Rules, 1970 or a Scheduled bank or a cooperative society engaged in carrying on the business of banking (including a Co-operative land, mortgage bank or a Cooperative land development bank): Provided that the money so accumulated or set apart may also be deposited, to continue to remain deposited during any previous year commencing before the 1st day of April, 1981, with any other banking company, being a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies, or (iii) deposited in any account with a financial corporation which is engaged in providing long-term finance for industrial development in India and whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed subject to certain conditions. The conditions are of two-fold. Firstly, that the trust has to specify by a notice in writing to the ITO in a prescribed manner the purposes for which the income is to be accumulated or set apart and the purposes for which such income is proposed to be accumulated. However, such period for which the said income could be accumulated should not exceed 10 years. The second condition is that money so accumulated is invested in the manner laid down in cl. (B) of s. 11(2) of the Act. Now in case the accumulated income is not utilised for the purpose for which it is sought to be accumulated or it ceases to be invested in approved securities as laid down in cl. (B) of s. 11(2), then s. 11(3) came into operation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as income in the year in which there is breach of conditions laid down is ss. 11(2) or 11(2)(b). Now in the instant case there is no dispute that the provisions of s. 11(2)(b) are satisfied. The grievance of the revenue is that whatever is stated in the first application viz. "For the objects of the trust" is too general a purpose which could be accepted. We do not find any infirmity in the statement which was made in the original form. The assessee proposed to accumulate surplus for the objects of the trust. If, however, the surplus which was accumulated was utilised otherwise than the objects of the trust, the ITO could have invoked the provisions of s. 11(3) in the year in which he found that the utilisation of the surplus was not in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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