- (1.) THIS is an assessee's appeal for the assessment year 1991-92 arising out of the order of Dy. CIT (Appeals), B-Range, Mumbai, dated 11-8-1995. Two points arise for my consideration. The first is that the claim for accumulation of the assessee-trust under section 11(2) was denied on the ground that in the form requesting for permission for accumulation it did not specify the purpose for which the amount is being accumulated. The only purpose specified in that form was "relief of poverty" which is one of the objects of the trust. The Assessing Officer felt that it is very vague and not specific as also the resolution passed by the assessee trust seeking accumulation and which was sent along with Form No. 10. Let me dispose of this point first.
(2.) In the assessment year 1991-92, the assessee received a corpus donation of 70,000. The letters disclosing the donations specifically towards the corpus of the assessee trust had been furnished by the assessee to the Assessing Officer and they were kept on record. The assessee trust filed its return of income on 30-10-1991 showing a surplus of Rs. 4,660. It further claimed deduction under section 11(2) of the I.T. Act to the extent of Rs. 40,000 and has filed Form No. 10 along with the return of income on 30-10-1991. The only reason given for accumulation is relief of poverty and it was felt very vague by the Assessing Officer. He held it to be not specific; so also the resolution filed along with the request for accumulation does not mention the amount of accumulation or the purpose for which the accumulation was made. The Assessing Officer held that notice in Form No. 10 was intended to obtain authority and permission from the Assessing Officer for accumulating any amount and using it for specific objects in the subsequent years. Hence, in his opinion, the accumulation should be specific in purpose and also in amount. Since the purpose of accumulation in Form No. 10 is vague and not specific as also the resolution accompanying Form No. 10 does not contain any specific purpose of accumulation, the Assessing Officer held that the assessee is not entitled for the benefit of accumulation. Therefore, he has taken the gross income as per the income & expenditure statement at Rs. 71,496 wherefrom he deducted a total expenses of Rs. 26,833 which he allowed as expenses spent on objects of trust and other expenses and determined the income of the assessee at Rs. 44,663 as per his assessment older dated 22-1-1992. Aggrieved, the assessee appealed to the DC(A). It was argued before him that relief of poverty being one of the objects of the trust, it could not be held to be vague and the assessee should have been granted the privilege of accumulation prayed for in Form No. 10. The DC(Appeals) did not agree with this argument. He held that the purpose put forward is a very generic term and could not be held to be for specific purpose as contemplated under section 11(2) of the I.T. Act. He called in aid the decision of the Calcutta High Court in Director of Income-tax (Exemption) v. Trustees of Singhania Charitable Trust [1993] 199 ITR 819 wherein it is held as per the head-note as follows : "The very fact that the statute requires the purpose of accumulation to be specified implies such a purpose to be a concrete one, an itemised purpose or a purpose instrumental or ancillary to the implementation of its object or objects. The provision of sub-section (2) is a concession provision to enable a charitable trust to meet the contingency where the fulfilment of any project within its object or objects needs heavy outlay calling for accumulation to amass sufficient money to implement it. Hence, a charitable trust cannot list all its objects as purposes for accumulation of income under section 11(2)". Relying upon the ratio of this Calcutta High Court decision, the DC(A) dismissed the assessee's appeal. Now, the assessee trust is in second appeal before this Tribunal.
(3.) IT is contended that the assessee-trust claimed deduction under section 11(2) for accumulation of Rs. 40,000 for which necessary Form No. 10 along with a copy of resolution, in which specific purpose has been mentioned, were filed along with the return of income. The assessee contends that the following are the conditions to be fulfilled for permission of accumulation under section 11(2) : (1) Notice in writing is filed in Form No. 10 before due date of filing of return as per rule 17 of I.T. Rules. (2) Purpose of accumulation is mentioned in the notice. (3) Period of accumulation should not exceed 10 years. (4) Money sought to be kept in accumulation is invested in one of the modes specified in section 11(5).;