- (1.) This Appeal has been preferred by the revenue under section 260A of the Income-tax Act, 1961 (hereinafter referred to as ''the Act'') against order dated 18-6-2009 passed by the Income-tax Appellate Tribunal, Delhi Bench 'F', New Delhi in ITA No. 1410/Del./09, for the assessment year 2006-07, raising following substantial question of law:-- Whether on the facts and circumstances of the case, the learned ITAT was justified in holding that the assessee has fulfilled the mandatory requirements of section 11(2) without specifically mentioned the definite propose or purposes of accumulation in form No. 10?
(2.) The assessee is a statutory body under the provisions of Punjab Agriculture Produce Marketing Act, 1961 (hereinafter referred to as the ''PAPM Act''). The Assessing Officer made addition to the declared income on account of accumulation of funds without compliance of conditions under section11(2) of the Act. On appeal the said addition was deleted by the CIT(A) holding that the accumulation was as per the statutory provisions. The said view has been upheld by the Tribunal as follows:-- Mere because the assessee has mentioned development works in general manner, in Form No. 10, it cannot be said that the primary condition of section 11(2) has not been fulfilled as so observed by the Hon'ble Delhi High Court in the case of Director of Income-tax v. Mitsui & Co. Environmenta,2008 167 Taxman 43. We, therefore, uphold the order of ld. CIT(A) on this issue, which has been decided by the ld. CIT(A) by saying that in Form No. 10, the assessee has mentioned that accumulation of the funds has been made for development of works and this mentioning of development of works in Form No. 10 cannot be said to casual because the assessee could not utilize the fund other than the purposes mentioned in section 28 of Punjab Agriculture Produce Marketing Act, 1961. The purposes listed in section 28 of Punjab Agriculture Produce Marketing Act, 1961 are undoubtedly in the nature of development works. Therefore, the order of ld. CIT(A) in directing the Assessing Officer to allow the exemption in respect of the fund accumulated for development works is justified. We have heard learned counsel for the appellant.
(3.) The condition for excluding accumulated income of a charitable institution from total income is specification of the purpose for which the income was accumulated and deposit in the specified mode. Exemption was disallowed on the ground that the assessee failed to specify the purpose of accumulation. The CIT(A) as well as the Tribunal have clearly held that the purpose stood specified and was statutory purpose for utilizing the amount i.e. development as per section 28 of PAPM Act. Section 11(2) of the Act to the extent relevant is as under:-- 11(2) Where eighty five per cent of the income referred to in clause (a) or clause (b) of sub-section (1) read with the Explanation to that sub-section is not applied, or is not deemed to have been applied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to such purposes in India, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely:-- (a) such person specifies, by notice in writing given to the Assessing Officer in the prescribed manner, the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed ten years; (b) ***;