K.C. Singhal, Judicial Member - (1.) THESE are the cross appeals filed by the assessee as well as the Revenue, pertaining to assessment year 2001-02. Both the appeals have been heard together and are being disposed off by the common order for the sake of convenience.
(2.) The first and main issue arising from the appeal of the assessee is whether the Assessing Officer was justified in denying the claim of the assessee for accumulation of its income Under Section 11(2) of Income-tax Act, 1961 (the Act). Briefly stated, the facts are that the assessee is a body established as a non-profit making organisation for the promotion and regulation of export of cotton textiles and incorporated as a company Under Section 25 of the Companies Act. The activities of the assessee, admittedly, are entitled to the benefit of Section 11 of the Act. It filed its income-tax return for the year under consideration on 24th October, 2001, declaring nil income after claiming exemption Under Section 11 of the Act. The return was accompanied by the audit report in Form No. 10B, audited accounts and computation of income. In the course of the assessment proceedings, it was found by the Assessing Officer that the total receipts including entrance fees amounted to Rs. 11,68,05,181/- while the expenditure towards the charitable objects amounted to Rs. 7,95,10,244/-. In view of the same, he was of the view that the assessee could not apply 75% of income towards charitable purposes. However, the assessee sought the accumulation of income Under Section 11(2) of the Act. The same was denied by the Assessing Officer on the ground that statutory Form No. 10 and copy of Resolution in this regard had not been filed by the assessee along with the return of income or during the course of the assessment proceedings. Consequently, accumulation was allowed only to the extent of Rs. 2,92,01,295/- being 25% of the total receipts and thus the total income was computed at Rs. 1,04,78,949/-.
(3.) THE matter was carried in appeal before the CIT(A), before whom it was submitted that copy of the Resolution along with the prescribed Form No. 10 had been filed along with the return of income for the assessment year 1992-93 and therein it has been clearly specified that the appellant could accumulate such income as would be available at the previous year ending on 31.3.1992 and for 9 subsequent previous years ending on 31.3.2001. According to the assessee it constitutes sufficient compliance with the relevant procedure prescribed and there was no need to file Form No. 10 for each and every assessment year.;