1982 (4) TMI 99

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..... 0. On a perusal of the record of the assessee, the Commissioner was of the opinion that deducting from this amount of Rs. 3,52,950 (i) the income deemed to have been applied under section 11(1A) of the Income-tax Act, 1961 ('the Act'), and (ii) the cost of shares, there was still a surplus of Rs. 1,39,325 which should have been taxed as income 'not applied'. The Commissioner furnished the details of this computation to the assessee and called upon the assessee to show cause why this item should not be subjected to tax under section 263 of the Act. After considering the objections on behalf of the assessee, the Commissioner set aside the assessment, observing that the ITO had erroneously taxed only an amount of Rs. 1,790 instead of the amoun .....

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..... s in a capital asset within the time permitted in section 11(1A). On behalf of the revenue, our attention is invited to the provisions of section 11(2), according to which the assessee had an option of having so much of the income applied to such purposes in India during the previous year, immediately following the previous year in which the income was derived as did not exceed the said amount of 75 per cent of the income. The assessee could exercise the option within the time availing for filing the return of income for the year under consideration. Having failed to file this option, the Commissioner was fully justified in treating the income from the capital gains not applied for the purposes of the trust, as liable to tax. 4. We have c .....

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..... in the Great Eastern Shipping Co. Ltd. beyond the end of the accounting period. For this purpose all that the assessee had to do was to exercise the option under section 11(2) which should have been done before the expiry of the time allowed under section 139(1) or 139(2) of the Act for filing the return of income for the year. Since admittedly this option has not been exercised, the assessee could not have applied the income in the next previous year for exemption under section 11(1A). In the circumstances, in our opinion, the Commissioner was justified in holding that the assessee was ineligible for relief under section 11(1A) in respect of the item of Rs. 1,39,325 being the capital gains earned by the assessee from the sale of shares. We .....

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