Estate Of Raja Ramasamy Mudaliar Choultry Trustee v. The Asst. Director Of Income-Tax (Exemptions)-Ii Chennai-600 034

In the High Court of Judicature at MadrasDated : 15.12.2009 Coram :- The Honourable Mr.Justice K.RAVIRAJA PANDIANandThe Honourable Mr.Justice M.M.SUNDRESH Tax Case (Appeal) No.1007 of 2008 Estate of Raja RamasamyMudaliar Choultry TrusteeC/o.The Official Trustee of Tamil NaduHigh Court CampusChennai-600 034. ...Appellant Vs. The Asst. Director of Income-tax(Exemptions)-IIChennai-600 034. ... Respondent Appeal filed under Section 260-A of the Income Tax Act againstthe order of the Income Tax Appellate Tribunal, Madras 'A' Bench,dated 15.09.2006 passed in I.T.A.No.1797/Mds/2003. Against the orderdt.21.7.03 on the file of Assistant Director of Income Tax(Exemptions)II, Chennai against the order dated.21.7.03 on the fileof Assistant Director of Income Tax (Exemptions II) Chennai inITA.No.11/03-04 for Assessment Year 2002-03. For Appellant : Mr.R.Venkata Narayanan for Mr.Subbaraya AiyarFor Respondent : Mr.Patty B.Jegannathan JUDGMENT (Judgment of the Court was delivered by K.RAVIRAJA PANDIAN,J.) The revenue has come up on appeal against the order of theIncome Tax Appellate Tribunal, Madras 'A' Bench, dated 15.09.2006passed in I.T.A.No.1797/Mds/2003 in respect of the assessment year2002-2003 by formulating the following substantial questions of law: "(i). Whether the Tribunal was right in law in holding thatthe conditions stipulated for availing the benefit ofaccumulation of income under Section 11(2) are notsatisfied? https://hcservices.ecourts.gov.in/hcservices/ (ii). Whether the Tribunal is justified in law inholding that for the purpose of accumulation of the incomeas provided under Section 11(2) of the Income Tax Act, itrequires specification of the purposes? And (iii). Whether the Tribunal was right in law inholding that the reasons stated in Form 10 are vague andnot specific?". 2. The facts of the case are as follows: The appellant trust filed its return of income declaring "Nil"income after claiming exemption under Section 11 of the Income-taxAct. The appellant claimed accumulation of the income under Section11(2) of the Income Tax Act. The appellant filed Form 10 givingreasons for accumulating the income. The assessing officer whiledeciding the application of income in Form No.10 found that thepurpose of accumulation mentioned therein are vague and not specificand hence declined the benefit of accumulation under Section 11(2) ofthe Act by following the decision of the Calcutta High Court in thecase of DIT(E) Vs Trustees of Singhania Charitable Trust (1999 ITR819) charitable in nature. Further the trust is under the control ofOfficial Trustee of Tamil Nadu and it has to get the permission fromthe High Court for spending the amount. The Commissioner of Income-tax (Appeals) rejected the arguments and confirmed the order of theAssessing Officer. Aggrieved by the said order, the appellant filedappeal to the Income-tax Appellate Tribunal and the Tribunal relyingon its order in the case of Estate of Maligai Merchant inI.T.A.No.1524/04 dated 7.6.2005 dismissed the appeal. Aggrieved bythe same, the present appeal is filed. 3. The learned counsel appearing for the appellant as well asthe counsel for the respondent submits that the issue involved inthis appeal is covered by the decision of this Court in the case ofEstate of Kadapakam Charities Vs. The Asst.Director of Income Tax(Exemptions) II, Chennai – 34 (T.C.(A) No.281 of 2004) dated15.12.2008,wherein it was observed as follows: 3. The learned counsel appearing for the appellant as well asthe counsel for the respondent submits that the issue involved inthis appeal is covered by the decision of this Court in the case ofEstate of Kadapakam Charities Vs. The Asst.Director of Income Tax(Exemptions) II, Chennai – 34 (T.C.(A) No.281 of 2004) dated15.12.2008,wherein it was observed as follows: ".... 8.The decision of the Calcutta High Court willnot strictly apply to this case, since in that case in Form10, all the objects of the trust had been enumerated andtherefore, rejection of Form 10 was not justified. In thiscase, the purpose has been specified viz., repair andrenovation of the building, and the difficulties inimmediately starting the renovation have also been broughtto the notice of the authorities. But at the same time, wealso see that Form 10 has not been duly filled up. Even inthe matter decided by the Calcutta High Court, the assesseewas allowed to adduce fresh evidence to show the specificpurpose for which the trust requires accumulation of the income. In this case too, especially in view of the factthat it is AG & OT who is administering the trust, we feelthat the same indulgence could be shown. We are notanswering the questions of law raised, however, we remandthe matter to the Assessing Officer and the assessee shallspecify the purpose in addition to renovation and repair ofthe building and also the amount and the period for whichaccumulation is required, and the Assessing Officer shallconsider the same in accordance with law...." 4. Having regard to the submission made by the counsel on eitherside, the order of the Tribunal is hereby set aside and the matter isremitted back to the assessing officer in terms of the directiongiven in the order dated 15.12.2008 made in T.C.(A) No.281 of 2004and the tax case is disposed of accordingly. rg Sd/-Asst.Registrar/True Copy/Sub.Asst.Registrar Copy to:1.The Assistant Registrar, Income-tax Appellate Tribunal, Madras A Bench, Chennai2.The Commissioner of Income Tax (Appeals)-XIChennai-34. 3.The Asst.Director of Income-tax (Exemptions)-IIChennai-34. + 1 cc to Mr.Patty B.Jaganathan,Advocate,SR.68975 KA(CO)EM/06.1.10