Commissioner Of Income-Tax, Hisar v. Market Committee, Tohana

Income-tax Appeal No.823 of 2010-1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Income-tax Appeal No.823of 2010 Date of decision: 28.1.2011 Commissioner of Income-Tax, Hisar ...Appellant Versus Market Committee, Tohana ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Yogesh Putney, Advocate for the appellant. **** ADARSH KUMAR GOEL, J (Oral). 1.This Appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (hereinafter referred to as“the Act”) against order dated 18.6.2009 passed by the Income TaxAppellate Tribunal, Delhi Bench 'F', New Delhi in ITANo.1410/Del/09, for the assessment year 2006-07, raising followingsubstantial question of law:- “Whether on the facts and circumstances of thecase, the learned ITAT was justified in holding thatthe assessee has fulfilled the mandatoryrequirements of Section 11(2) without specificallymentioned the definite propose or purposes ofaccumulation in form No.10?” 2.The assessee is a statutory body under the provisions ofof Punjab Agriculture Produce Marketing Act, 1961 (hereinafterreferred to as the “PAPM Act”). The assessing officer made additionto the declared income on account of accumulation of funds withoutcompliance of conditions under Section 11(2) of the Act. On appealthe said addition was deleted by the CIT(A) holding that theaccumulation was as per the statutory provisions. The said view hasbeen upheld by the Tribunal as follows:- “Mere because the assessee has mentioned development works in general manner, in Form No.10, it cannot be saidthat the primary condition of section 11(2) has not beenfulfilled as so observed by the Hon'ble Delhi High Courtin the case of Director of Income Tax Vs. Mitsui & Co.Environmental report at (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 thatin Form No.10, the assessee has mentioned thataccumulation of the funds has been made fordevelopment of works and this mentioning ofdevelopment of works in Form No.10 cannot be said tocasual because the assessee could not utilize the fundother than the purposes mentioned in section 28 ofPunjab Agriculture Produce Marketing Act, 1961. Thepurposes listed in section 28 of Punjab AgricultureProduce Marketing Act, 1961 are undoubtedly in thenature of development works. Therefore, the order of ld. CIT(A) in directing the A.O. to allow the exemption inrespect of the fund accumulated for development works isjustified.” We have heard learned counsel for the appellant. 3.The condition for excluding accumulated income of acharitable institution from total income is specification of thepurpose for which the income was accumulated and deposit in thespecified mode. Exemption was disallowed on the ground that theassessee failed to specify the purpose of accumulation. The CIT(A)as well as the Tribunal have clearly held that the purpose stoodspecified and was statutory purpose for utilizing the amount i.e.development as per Section 28 of PAPM Act. Section 11(2) of theAct to the extent relevant is as under:- “11(2)Where eighty five per cent of the incomereferred to in clause (a) or clause (b) of sub-section (1)read with the Explanation to that sub-section is notapplied, or is not deemed to have been applied, tocharitable or religious purposes in India during theprevious year but is accumulated or set apart, either inwhole or in part, for application to such purposes in India,such income so accumulated or set apart shall not beincluded in the total income of the previous year of theperson in receipt of the income, provided the followingconditions are complied with, namely:- “11(2)Where eighty five per cent of the incomereferred to in clause (a) or clause (b) of sub-section (1)read with the Explanation to that sub-section is notapplied, or is not deemed to have been applied, tocharitable or religious purposes in India during theprevious year but is accumulated or set apart, either inwhole or in part, for application to such purposes in India,such income so accumulated or set apart shall not beincluded in the total income of the previous year of theperson in receipt of the income, provided the followingconditions are complied with, namely:- (a)such person specifies, by notice in writinggiven to the assessing officer in the prescribed **** manner, the purpose for which the income is beingaccumulated or set apart and the period for whichthe income is to be accumulated or set apart, whichshall in no case exceed ten years; (b)xxxxxxxxx” 4.Learned counsel for the revenue has not been able toshow any error in the view taken by the CIT(A) as affirmed by theTribunal. No substantial question of law arises. 5.The appeal is dismissed. (Adarsh Kumar Goel) Judge January 28,2011Pka (Ajay Kumar Mittal) Judge