Delhi High Court

Guru Nanak Vidya Bhandar Trust vs Dy. Cit on 29 January, 2003

Equivalent citations: (2004) 90 TTJ Del 353

ORDER

R.M. Mehta, V.P.:

This appeal is directed against the order passed by the Commissioner (Appeals) raising the following grounds :

"l. That the learned Commissioner (Appeals) has erred in law and on facts in sustaining the order of the assessing officer in determining the total income of the assessed at Rs. 1,44,31,205 by rejecting the claim of the assessed for accumulation of the income in accordance with the provisions of section 11(2) read with rule 17 of the IT Rules, on wholly erroneous, illegal and untenable grounds.

2. That the learned Commissioner (Appeals) was not legally justified in holding that the object specified in Form No. 10 for accumulation of income under section 11(2) did not specify the concrete nature of the purpose for which accumulation is being made and thereby denying exemption under section 11(2) for accumulation of a sum of Rs. 2.86 crores.

3. On the facts and in the circumstances of the case, the authorities below were not legally justified in lightly brushing aside the submissions of the assessed that the accumulation under section 11(2) was for the purpose of establishment of center for promoting computer education for poor and deserving candidates, for which land at SAS Nagar, Mohali, costing Rs. 291.55 lakhs + Rs. 53.71 lakhs as interest on Installments, payable in five years, has already been purchased from the Punjab Urban Development Authority, which was also duly confirmed by the assessing officer in his remand report.

4. On the facts and in the circumstances of the case, the learned Commissioner (Appeals) was not legally justified in holding that the assessed had merely repeated the objects of the trust in Form No. 10 and since the purposes do not have some individuality, the requirements of section 11(2) have not been complied with, and as such, the assessed cannot be granted exemption for the purpose of accumulation of its income in terms of under section 11(2) of the Income Tax Act.

5. On the facts and in the circumstances of the case, since the assessed had categorically explained the authorities below in the course of assessment proceedings that the accumulation of income under section 11(2) was for establishment of computer education center, which was a specific purpose, for which land at a huge cost had also been purchased, the learned Commissioner (Appeals) was not legally justified in holding that the assessed has failed to specify the individuality of the purpose by misconstruing the judgment of the Calcutta High court in the case of Director of IT(Exemption) v. Trustees of Singhania Charitable Trust (1993) 199 ITR 819 (Cal) in rejecting the claim of the assessed for accumulation of its income under section 11(2) of the Income Tax Act on wholly erroneous, illegal and untenable grounds.

6. On the facts and in the circumstances of the case, it may be held that the assessed is eligible for exemption under section 11(2) in respect of its income of Rs. 2.85 crores or Rs. 1,44,31,206, as the case may be, under section 11(2) of the Income Tax Act, for establishment of computer education center.

7. On the facts and in the circumstances of the case, it may be held that in any case the exemption under section 11(2) cannot be denied on technical ground that the objects specified in Form No. 10 were not concrete in nature, even though, in the course of assessment proceedings the assessed had informed about the specific purpose of accumulation being the establishment of computer education center and had also furnished evidence of purchase of land at Mohali for this purpose.

8. In any case and without prejudice to the above grounds, the authorities below were not legally justified in lightly brushing aside the strenuous contention of the assessed that the purpose was duly identified and specified as further promotion of education, in the income and expenditure account for the year ending 31-3-1997, while making a provision of 2.85 crores for accumulation as for "construction/acquiring land, building for opening, running of schools, colleges, training and vockional centers, etc. as an uncontroverter evidence for the purpose of section 11(2) of the Act, and as such, the denial of exemption under section 11(2) was uncalled for, particularly in view of the fact that the law itself provided a period of 10 years to decide the modality of the type of educational institutions to be established.

9. That the learned Commissioner (Appeals) has erred in law and on facts in rejecting the claim of the assessed-trust that it was an "educational institution" within the meaning of section 10(22) as per law laid down in Aditanar Education Institution, etc. v. Addl. CIT (1997) 224 ITR 310 (SC), on wholly erroneous, illegal and untenable grounds.

10. On the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in law and on facts in holding arbitrarily that the trust was not existing solely for educational purposes, on wholly erroneous, illegal and untenable grounds and irrelevant consideration.

11. On the facts and in the circumstances of the case, it may be held that the assessed trust existed for educational purposes during the year under consideration, and as such its income would be eligible for exemption under section 10(22) of the Income Tax Act.

12. On the facts and in the circumstances of the case, neither the computation of total income of the assessed at Rs. 1,44,31,205 nor the computation of tax is in accordance with law.

13. That each ground of appeal raised is independent of and without prejudice to the other grounds of appeal."

2. The brief facts of the case are that the appellant is a society registered under the Societies Registration Act, 1860, and it is also registered under section 12A(a) of the Income Tax Act, 1961. The objects for which the society has been established are as under :

"(a) To spread Sikh religious education by means of lectures, Ragi Jathas, pamphlets, tracts, leaflets, newspapers, libraries, slides, films, and, by giving stipends and medals and adopting such other means as may be found expedient;

(b) To promote literacy and research and to work for the welfare of mankind without distinction of caste, creed or religion and also for the poor especially those belonging to scheduled castes and backward classes by opening running, helping and/or assisting schools, colleges, training centres, vocational, technical and industrial institutions or centres, orphanges, dharamsala, or gurudwaras, hospitals, laboratories. nursing homes, libraries, cultural, social and research centres and institutions and to carry out any other similar object of public utility;

(c) To create citizens imbued with respect and love of manual labour by starting industrial classes and encouraging cottage industries;

(d) To propagate the idea of service to humanity by establishment and maintaining homes, dispensaries, langars and schools for the blind, deaf and dumb, etc.;

(e) To uplift the so-called depressed classes by spreading religious and elementary education amongst them."

3. As noted by the assessing officer, the main activities of the society during the three preceding assessment years centered round the running of certain educational institutions at Delhi and Moradabad, which included education in vocal music as also the provision of free boarding and lodging. An educational institution was also set up at Mohali and the activities also included the provision of aid to other educational institutions.

4. The assessed had claimed exemption under section 11 though according to the assessing officer its activities were mainly educational, but exemption under section 10(22) could not be allowed since certain objects of the society were other than those pertaining to education.

5. During the course of the assessment the assessing officer noted that the assessed had filed Form No. 10 seeking accumulation of a sum of Rs. 2.85 crores under section 11(2) of the Income Tax Act, 1961. The reasons given for accumulation of funds under section 11(2) were as under :

"For enabling the trust to promote literacy and research and to work for the welfare of mankind without distinction of caste, creed or religion, and also for the poor specially those belonging to SC and backward classes, by opening, running, helping and/or assisting donation to schools, colleges, training centres, vocational, technical and industrial institutions, centers, orphanages, dharamsalas, or gurudwaras, hospitals, laboratories, nursing homes, libraries, cultural, social and research centers, and institutions, and awarding scholardships and carry out any other similar object of public ultility and repairs of existing building, and for making/acquiring land, buildings for the trust."

6. By means of an order sheet entry dated 15-11-1999, the assessed was asked to show-cause as to why accumulation not be disallowed, since no specific object had been indicated in Form No. 10. Attention was invited to the judgment of the Hon'ble Calcutta High Court in the case of Director of IT (Exemption) v. Trustees of Singhania Charitable Trust (supra). In response to the show-cause the assessed replied that its facts were quite different to those prevailing in the case cited and the emphasis was on the fact that whereas in the case of Singhania Charitable Trust (supra), all the objects of the trust had been enumerated in Form No. 10, whereas in the assessed's case it was not so.

7. The aforesaid submissions, however, did not find favor with the assessing officer, who took the view that the purposes for which accumulation had been sought by the assessed did not give any idea as to why the funds were being accumulated, and further according to the assessing officer the assessed had elaborated "almost all the objects" enumerated in the Memorandum of Association. The assessed further submitted in its written communication to the assessing officer that it had been working towards the establishment of a center for promoting computer education and with this object in mind the trustees during the year under consideration had decided to purchase land from the Punjab Urban Development Authority (hereinafter referred to as "PUDA') at Mohali According to the assessed this was a big project for which crores of rupees were required.

8. These submissions also did not find favor with the assessing officer as according to him the assessed had not substantiated its claim by furnishing any project report of the computer education center. Further, no estimate of the amount required for setting up such a center had been furnished and the assessing officer also made a reference to the past assessments observing that the assessed had been accumulating funds under section 11(2) and which ran into crores of rupees, but no steps were taken for utilizing the same. In the final analysis, the assessing officer on the ground that the assessed had not spent anything out of the funds accumulated so far and further the request for accumulation being currently made not being specific, he proceeded to reject the same. The assessment came to be made at an income of Rs. 1,44,31,025 as follows :

"Income as per Income & Expenditure A/c

3,18,04,718

75 per cent income to be applied

2,38,53,538

Less : Expenditure as of I&H A/c

33,31,012

Less addition to fixed assets

60,91,321

Taxable income :

1,44,31,205"

9. Being aggrieved, the assessed filed an appeal to the Commissioner (Appeals). At this stage detailed arguments were advanced, both on facts and in law; the main thrust of the arguments was that the assessed was a charitable and religious trust founded as far back as 1921 and registered under the Societies Registration Act, 1860, as also under section 12A(a) of the Income Tax Act, 1961 (hereinafter referred to as "Act"). The main activities of the trust were stated to be charitable and educational and emphasis was laid on the fact that for the last 6 years the trust had been accumulating income for the purpose of establishing of computer center for the poor and deserving candidates, who could not afford computer training because of the high cost involved. Attention was also invited to the fact that vis-a-vis the preceding assessment years the facts in the year under appeal were quite identical. It was stressed that the request for accumulation made in the previous 8 years had been allowed by the predecessor of the current assessing officer and assessments also came to be framed and that also under section 143(3) of the Act.

10. It was further stated that in the year under consideration as also in the previous years substantial funds had been accumulated to fulfill the legitimate and lawful needs to facilitate the attainment of the objects of the trust and no funds accumulated had been utilized for a purpose other than the one mentioned in Form No. 10. It was also highlighted before the Commissioner (Appeals) that during the course of the assessment proceedings the assessed had placed on record relevant documentary evidence, which would show that the funds accumulated had been utilized for the purposes of establishing a computer center and which included the purchase of land at Mohali from PUDA. A reference was made to the fact that an Installment amounting to Rs. 59,12,500 was paid during the year under consideration and till date a further amount of Rs. 2.81 crores had been paid once again to PUDA.

11. Coming to the judgment of the Hon'ble Calcutta High Court in the case of Singhania Charitable Trust (supra), the submission was that the assessing officer had without appreciating the facts of the case had proceeded to apply the same and that also on assumptions and presumptions. It was emphasized that vis-a-vis the provisions of section 11(2), two conditions were required to be satisfied and the first being a notice in Form No. 10 to be given to the assessing officer indicating therein the purpose for which the income was being accumulated and the period for such accumulation and which in no case was to exceed 10 years, and secondly, the money so accumulated or set apart was to be invested or deposited in the forms or modes specified in sub-section (5) of section 11. It was stated that the assessed had given the requisite notice complete in all respects and further in the income and expenditure account, a provision of Rs. 2.85 crores had been made indicating the purpose thereof. In referring to the objects stated in Form No. 10 it was emphasized before the Commissioner (Appeals) that the funds accumulated were to be utilized for the purpose of establishing a center of learning and welfare where beside a computer center, the building would also be used for vocational training, library, cultural center and research center. Further, some part of the funds were also to be utilized for assisting the other organizations, which were running schools, colleges, orphanages, dharamshalas and hospitals.

12. It was further stated on behalf of the assessed that the trust fulfillled the conditions for availing benefit of section 11(2) as it had not only filed Form No. 11 specifying the purpose for accumulation, but the moneys so accumulated had been placed in specified deposits. According to the assessed it was nowhere provided that there was an obligation on the assessed to file project reports or to submit the details of the projects to be undertaken during the period of accumulation of income as was the stand of the assessing officer.

13. Going back once again to the judgment of the Hon'ble Calcutta High Court in the case of Singhania Charitable Trust (supra), it was sought to be highlighted that even though it had been held in that case that the resolution was vague having listed all the objects of the trust for accumulation, the matter had only been remanded back to the Tribunal to allow the assessed to adduce fresh evidence whether in the form of a resolution or otherwise and which would show the specific purpose for which the accumulation of the income existed.

14. On the observation of the assessing officer that the assessed had not spent anything out of the accumulations made so far, the stand on behalf of the assessed was that this was factually incorrect since the assessed even during the year under consideration had paid a sum of Rs. 59 lakhs and odd to PUDA and even in the subsequent four assessment years huge amounts had been paid, i.e., Rs. 75.21 lakhs in assessment year 1998-99, Rs. 82.35 lakhs in assessment year 1999-2000; Rs. 64.47 lakhs in assessment year 2000-01 and Rs. 59.10 lakhs in assessment year 2001-02. The further submission was to the effect that plans for construction were under consideration and the land, which was being acquired was over 1,500 sq. yds. on which a multi-discipline building was being planned. Reliance was placed at this stage on the unreported decision of the Delhi Bench of the Tribunal in the case of Sir Sri Ram Foundation v. D.D.I. in ITA No. 6034 (Del) of 1994, dated 30-3-1995, and this was for the proposition that in identical circumstances and after due consideration of the judgment in the case of Singhania Charitable Trust (supra), the Tribunal had been pleased to allow the accumulation under section 11(2). It was emphasized vis-a-vis the judgment of the Tribunal that a view had been taken that if a trust chose to accumulate the funds for more than one purpose, then it would not be considered to have contravened the provisions of section 11(2). It was emphasized that the relevant provisions of law did not require specifications of the plans laid down for the utilization of the money right at the time of accumulation. It was further submitted that the purposes for which accumulation had been sought in Form No. 10 were not vague and were quite specific, and in concluding it was urged that the request for accumulation be granted.

15. As per para 3.5 of the order of the Commissioner (Appeals), the assessed filed written submissions during the course of the hearing and a copy of these was forwarded to the assessing officer, whose comments are reproduced in the said para 3.5 as under :

"During the year assessed-trust utilised the accumulation in purchasing land at Mohali for the intention of starting an educational institution and paid an Installment of Rs. 59,12,500 to PUDA. The accumulated income has been utilised for the purpose mentioned in the notice and in Form No. 10. In subsequent years 1998-99 and 1999-2000 also the trust paid Installments of Rs. 1,57,57,837 to PUDA and has been accepted as charitable and educational trust and accumulation has been allowed."

16. The further observations of the Commissioner (Appeals) are quite interesting when he says that the assessing officer has not at all addressed himself to the issues raised on behalf of the assessed, more so, the reliance on the judgment of the Hon'ble Calcutta High Court in the case of Singhania Charitable Trust (supra). According to the Commissioner (Appeals) there was no evidence on record that the accumulation had been utilized for the intention of starting an educational institution and the statement of the assessing officer in response to the written submissions filed on behalf of the assessed was quite contrary to what had been stated by the assessed in Form No. 10 or for that matter the relevant resolution passed in the general body meeting of the trust held on 12-4-1997.

17. The subsequent views expressed by the Commissioner (Appeals) in rejecting the assessed's claim are quite detailed as these span pp. 8 to 19 of the order of the Commissioner (Appeals). A perusal thereof shows that there is a reiteration of the objects of the trust, the purposes for which the accumulation was sought and there is a reproduction of relevant observations made in certain decisions, both of the Hon'ble High Courts and the different Benches of the Tribunals. According to the Commissioner (Appeals) a mere glance at the objects revealed that the trust had multifarious objects including educational and religious and it was, therefore, apparent that the trust did not exist solely for educational purposes. Further, according to the Commissioner (Appeals), the purposes set out in Form No. 10 were not specific and concrete, but were vague. In relying on the decision of the Tribunal in the case of Cotton Textile Export Promotion Council v. Income Tax Officer (1983) 4 ITD 642 (Bom), the Commissioner (Appeals) opined that it was open to the assessed to seek the accumulation only if it had in his mind some clear project, or proposal which required the use of more than one year's income and in such a case it was to clearly specify in Form No. 10 what such proposal was and how it required the accumulation of income for more than a year. Further, unless and until the purposes/proposals were not clearly indicated in the request for accumulation, then it was not possible for the assessing officer to go through the same and satisfy himself that the accumulation sought for was not a mere excuse for dealing with the money in any other manner.

18. The next judgment on which the Commissioner (Appeals) relied was the case of Manohar Lal Mani Lal Foundation Trust v. Asstt. Director of Inspection (1997) 61 ITD 404 (Mumbai) and which, according to him, had proceeded on similar facts as were available in the case of the present assessed, and the ultimate view which was expressed was that the request for accumulation made under section 11(2) was liable to be rejected. According to the Commissioner (Appeals), the facts of the assessed's case were on all fours with the facts prevailing in the case of Singhania Charitable Trust (supra) and quoting extensively from the said judgment he moved on to a judgment of the Hon'ble Madras High Court CIT v. M. Ct. Muthiah Chettiar Family Trust & Ors. (2000) 162 CTR (Mad) 63 and which in fact had followed the judgment of the Hon'ble Calcutta High Court in the case of Singhania Charitable Trust (supra).

19. Coming to the submission made on behalf of the assessed that on identical facts the accumulation had been allowed in the preceding assessment years, the Commissioner (Appeals) observed that the point at issue had not been specifically dealt with by the assessing officer in such preceding years and in the matter of assessment each year was independent and the decision arrived at in one previous year could not be regarded as binding in another assessment year. Reliance was placed on Dwarkadas Kesardeo Morarka v. CIT (1962) 44 ITR 529 (SC) and M.M. Ipoh & Ors. v. CIT (1968) 67 ITR 106 (SC). According to the Commissioner (Appeals) there could be no estoppel in law and the fact that the assessing officer took a particular view of a statutory provision in an earlier year would not bar him from taking a different view of the same statutory provision in a subsequent assessment year. Reliance was placed on C.G. Krishnaswami Maidu v. CIT & Anr. (1975) 100 ITR 33 (Mad).

20. On the submissions of the assessed that the funds accumulated in the preceding years had been utilized for purchasing land at Mohali and the accumulation sought was for establishing a computer center, the Commissioner (Appeals) observed that not an iota of evidence had been filed regarding the alleged establishment of a computer center. Reliance on the judgment of Hon'ble Supreme Court in Dharmaposhanam Co. v. CIT (1978) 114 ITR 463 (SC) was also turned down by the Commissioner (Appeals) as according to him the same was not applicable and this was also his observation with reference to the unreported decision of the Delhi Bench of the Tribunal in the case of Sir Sri Ram Foundation v. DDI (supra). In concluding, the Commissioner (Appeals) confirmed the view taken by the assessing officer, observing as under :

"By no stretch of imagination this purpose can be termed as specific, as held in the aforesaid judgments of the High Court in the Singhania case (supra) later followed in the case of CIT v. M. Ct Muthaiah Chettiar Family Trust (supra). Doubtless, it is not necessary that the assessed has to mention only one specific object. There can be setting apart and accumulation of income for more objects than one but whatever the objects or purposes might be, the assessed must specify in the notice the concrete nature of the purposes for which the accumulation is being made. Plurality of the purposes for accumulation may not be precluded but it must depend on the exact and precise purposes for which the accumulation is intended for the statutory period of ten years. The generality of the objects of the trust cannot take the place of the specificity of the need for accumulation. As observed by the Hon'ble Calcutta High Court, it is sub-section (2), which provides for the long-term accumulation of the income. Obviously, such long-term accumulation should be for a definite and concrete purpose or purposes. What the assessed has sought to be permitted to do here is to accumulate not for any determinate purpose or purposes but for the objects as enshrined in the trust deed in a blanket manner. Accumulation in such a global manner is definitely not in the contemplation of section 11(2) when it is construed in the setting. The purposes to be specified cannot, under any circumstances, tread beyond the objects clause of the trust. When sub-section (2) of section 11 requires specification of the purpose, it does so having in mind a statement of some specific purpose or purposes out of the multiple purposes for which the trust stands. Were it is not so, there would have been no mandate for such specification. For a charitable trust, in no circumstances, can apply its income, whether current or accumulated, for any purposes other than the objects for which it stands. The very fact that the statute requires the purpose for accumulation to be specified implies such a purpose to be a concrete one, an itemized purpose or a purpose instrumental or ancillary to the implementation of the object or objects. The very requirement of specification of purpose predicates that the purpose must have an individuality. Therefore, specification of purpose as required by section 11(2) admits of no amount of vagueness about such purpose. The purposes must have some individuality and mere repetition of the objects of the trust would not meet the requirements of section 11(2) of the Act.

In view of the foregoing and the aforesaid judgments of the Tribunal and the High Court, no interference is called for in the order of the assessing officer".

21. The further discussion in the order of the Commissioner (Appeals) pertains to the claim for exemption under section 10(22) and although the observation of the Commissioner (Appeals) in para. 5. 1 of his order shows that the assessed right since its inception had not claimed exemption under section 10(22) and this was being done since claim for accumulation had been disallowed in the year under appeal he still proceeded to decide the same on merits categorically observing that since the trust was not existing solely for educational purposes, there was no ground to allow the said exemption. The other grounds taken up before the Commissioner (Appeals) are not being discussed since in the present appeal before the Tribunal, such grounds have not been taken up/repeated with the exception of ground No. 12 which is treated to be general and on which no arguments were advanced during the course of the present hearing. We would like to emphasize that during the hearing of the present appeal before the Tribunal the main thrust of the argument of both the sides was with reference to the request for accumulation made vis-a-vis the provisions of section 11(2) and grounds pertaining to exemption under section 10(22) were raised as an alternative.

22. Before us, the matter was argued at length by both the parties, the learned counsel for the appellant reiterating the arguments advanced before the tax authorities. The followings were emphasized :

"(i) The amount accumulated as also the manner in which it has been invested had been clearly exhibited in the audit report prepared in Form No. 10-B under section 12A(b) of the Income Tax Act, 1961;

(ii) Adequate provision had been made in the books of accounts in respect of the amount accumulated and the purpose had also been highlighted;

(iii) It emerged from the audited accounts itself that during the previous year under consideration a sum of Rs. 59 lakhs and odd had been paid to PUDA for land at Mohali;

(iv) The fact that funds had been expended for an educational institute at Mohali became quite apparent from the audited accounts as also the notes appended thereto;

(v) Vis-a-vis the form for accumulation, copy thereof being appended at p. 25 of the paper book, the fundamental thread in the objects was the acquisition of land and efforts for the purposes of running the trust;

(vi) The assessed-trust was founded in 1924 and had been enjoying exemption under section 11 since many years and all the activities conducted were in the field of education. Further, educational institutions of national repute had been set up in India;

(vii) The form for accumulation as also the objects detailed therein were identical in preceding assessment years when accumulation under section 11(2) had been allowed. A reference was made to pp. 62 to 106 of the paper book for the past history of the case. Further, the claim for accumulation had not only been accepted in the past, but also in subsequent assessment years and the assessment year under appeal viz,. 1997-98 was the solitary year of rejection;

(viii) The remand report sent by the assessing officer to the Commissioner (Appeals) had various factual findings which fully supported the assessed's case and these were being vehemently relied upon-,

(ix) Inasmuch as the facts were the same in preceding and succeeding assessment years res judicata applied and for this reliance was placed on Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC);

(x) The assessed's case was better than the two cases on which reliance was being placed viz., the Third Member decision of the Tribunal in the case of Sir Sobha Singh Public Charitable Trust v. Asstt. Director of IT (Exemption) (2001) 79 ITD 1 (Del)(TM) and Sri Ram Foundation v. DDI (supra). That as per the Memorandum of Association, copy thereof being placed at p. 28 of the paper book 5 objects had been set out, i.e., (a) to (e), whereas in the form for accumulation only item (b) had been mentioned; and

(xi) That as per the details placed at p. 48 of the paper book the amount utilized till date for the Mohali project came to Rs. 4.63 crores whereas the accumulation in assessment year 1997-98 had been requested for only in a sum of Rs. 2 crores and odd.

23. In support of the aforesaid arguments, the learned counsel over and above the decisions already cited, relied upon (1978) 114 ITR 463 (SC) at p. 465 (supra). The further argument of the learned counsel was an alternative one viz., claim for exemption under section 10(22). The submission was that even the assessing officer in his remand report, copy appended at p. 49 of the paper book, had accepted the assessed as "an educational and charitable trust". In concluding, the learned counsel referred to his written submissions addressed to the tax authorities, the assessing officer, at pp. 107 to 109 of the paper book and the Commissioner (Appeals) at pp. 50 to 61 of the paper book. It was finally urged that the request for accumulation be accepted and failing the same the assessed's case for exemption under section 10(22) be processed.

24. The learned Departmental Representative, on the other hand, vehemently supported the orders passed by the tax authorities. According to her, section 11(2) required specification of the purpose for which accumulation was being asked for and by reproducing clause (b) of the objects in Form No. 10 it did not mean that the object of accumulation had been specified. The learned Departmental Representative further stated that even in the accounts of the assessed the depiction was not specific, but general in nature. A reference was also made to the observation of the Commissioner (Appeals) in his order and this being to the effect that the site allotted by PUDA was for a general purpose and not for purposes of education. The learned Departmental Representative further emphasized that even the Commissioner (Appeals) had observed that the objects mentioned in Form No. 10 were vague and somewhat conflicting.

25. The learned Departmental Representative further contended that in the preceding assessment years the issue was not examined in the manner in which the assessing officer had done so in the year under appeal and in fact the earlier assessment orders were quite silent. The often advanced argument that res judicata did not apply was also canvassed by the learned Departmental Representative before us. The learned Departmental Representative also referred to the observations of the assessing officer and which according to her stated that the assessed trust was carrying on other activities as well. The other arguments of the learned Departmental Representative were a reiteration of the reasons recorded by the Commissioner (Appeals) in confirming the view taken by the assessing officer.

26. In support of the revenue's case, the learned Departmental Representative placed reliance on (1993) 199 ITR 819 (Cal) (supra), i.e., the case of Singhania Charitable Trust, and also relied on the judgment of the Hon'ble Madras High Court reported in (2000) 245 ITR 400 (Mad) (supra) and which had also been taken into account by the Commissioner (Appeals). Coming to the decision relied upon by the assessed's counsel, the learned Departmental Representative contended that the Third Member decision in the case of Sir Sobha Singh Public Charitable Trust (supra) was distinguishable since specific purposes were highlighted in that case and further the decision of the Hon'ble Madras High Court in (2000) 245 ITR 400 (Mad) (supra) was not brought to the notice of the Bench. The learned Departmental Representative also sought to distinguish the decision of the Delhi Bench of the Tribunal in the case of Sir Sri Ram Foundation (supra) contending that specific purposes had been underlined in that case and, therefore, the same being distinguishable was not applicable to the facts of the assessed's case. The learned Departmental Representative also invited attention to the fact that (1978) 114 ITR 463 (SC) (supra) cited by the assessed's counsel in the present hearing was not applicable and the same, according to her, had been rightly distinguished by the Commissioner (Appeals).

27. Coming to the alternative contention pertaining to exemption under section 10(22) the learned Departmental Representative strongly relied on the order of the Commissioner (Appeals) emphasizing that the assessed was carrying on many other activities which were not at all related to the field of education and, therefore, the claim under section 10(22) was required to be rejected on this ground itself.

28. In his short reply the learned counsel for the assessed stressed that the term used in section 11(2) was "purposes" and not "purpose", i.e., the term used was in plural and not in singular. For the same submission our attention was invited to Form No. 10 and where also, according to the learned counsel, the term used was "purposes". In seeking to distinguish (2000) 245 ITR 400 (Mad) (supra) relied upon by the revenue, the argument of the learned counsel was that this decision was not applicable as it did not pertain to accumulation, but to utilization. He once again invited our attention to p. 6 of the paper book, which was the income and expenditure account pertaining to the previous year under appeal and where according to him the purposes for making the provision were quite specific and not at all general as alleged by the revenue.

29. The further submissions of the learned counsel were to the effect that not only adequate facts, but ample material had been placed on record, both before the assessing officer and the Commissioner (Appeals), and the observations of the latter to the contrary were, therefore, incorrect. It was emphasized by the learned counsel that in the remand report the assessing officer had clarified everything and once again the observations of the Commissioner (Appeals) to the contrary were improper. The learned counsel once again reiterated reliance on (2001) 79 ITD 1 (Del)(TM), which according to him squarely applied.

30. As regards exemption under section 10(22), the stand of the learned counsel was that it was an uncontroverter fact that the assessed had engaged itself only in activities which squarely came within the meaning of the term "education" and other facts referred to by the tax authorities were, therefore, to be ignored.

31. We have examined the rival contentions and have also perused the material on record, to which our attention was invited during the course of the hearing. The decisions cited at the bar by the parties have also been taken into account. At the outset, we would refer to certain facts which have been stated and reiterated by the learned counsel for the assessed and which have not been rebutted by the learned Departmental Representative. The assessed-trust was founded in 1924 and has been enjoying exemption vis-a-vis the relevant provisions of the Income Tax Act pertaining to charitable trusts. Its request for accumulation has been accepted in the preceding and succeeding assessment years and this is the solitary year in which the claim came to be rejected. Further, the objects for accumulation set out in Form No. 10 in the preceding assessment years, in the succeeding assessment years and in the year under appeal were absolutely identical.

32. The question of res judicata was argued before us by both the parties and the learned counsel for the appellant has cited (1992) 193 ITR 321 (SC) (supra) and the observations of Their Lordships at p. 329 of the report are being reproduced as follows :

"We are aware of the fact that, strictly speaking, res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact, one way or the other, and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.

On these reasoning, in the absence of any material change justifying the revenue to take a different view of the matter and, if there was no change, it was in support of the assessed we do not think the question should have been reopened and contrary to what had been decided by the Commissioner in the earlier proceedings, a different and contradictory stand should have been taken."

33. Their Lordships in taking the aforesaid view referred to a Full Bench judgment of the Madras High Court reported in 4 ITC 226 as also the judgment of the Hon'ble Supreme Court in Parashuram Pottery Works Co. Ltd. v. Income Tax Officer (1977) 106 ITR 1 (SC). A perusal of the observations from the aforesaid two judgments reproduced in the order shows that there is a great stress on bestowing finality in legal proceedings. In the present case, no material on record has been referred to by the learned Departmental Representative which would show that the facts in any way are different to those considered by the assessing officer himself in preceding and succeeding assessment years. In the same tenor, we refer to the remand report sent by the assessing officer to the Commissioner (Appeals) and a copy thereof being placed at p. 49 of the paper book. The assessing officer in the said report states as under :

"During the year, the assessed has been denied the benefits of section 11 as no specific purpose was mentioned in the Form No. 10 filed by the assessed along with the return of income, for accumulation of the funds received during the year, which was required as per provisions of section 11(2) of the Income Tax Act. From the verification of the records, it is seen that the assessed has been allowed the benefits of section 11 of the Income Tax Act, though the purposes mentioned in the Form 10, were the same as during the year under consideration. The accumulation has been allowed in all the years and there is no change in the facts and aims and objects of the Trust.

During the year, the assessed-trust utilised the accumulation in purchasing of land at Mohali for the intention of starting an educational institution and has aid on Installment of Rs. 59,12,500 to PUDA. The accumulated income has been utilised for the purpose mentioned in the notice and in Form No. 10.

In subsequent assessment years. 1998-99 and 1999-2000 also the trust has paid Installments of Rs. 1,57,57,837 to PUDA and has been accepted as an educational and charitable trust and accumulation has been allowed."

34. A reading of the aforesaid reveals the following :

(i) The assessed had been allowed the benefit of section 11 in other assessment years though the purposes mentioned in Form No. 10 were the same as during the year under consideration;

(ii) The accumulation had been allowed in other assessment years, there being no change in the facts as also the aims and objects of the trust;

(iii) The accumulated funds had been utilised during the previous year under consideration for paying an Installment of Rs. 59 lakhs and odd to PUDA for purchasing land at Mohali with the intention of starting an educational institution; and

(iv) In subsequent assessment years, i.e., 1998-99 and 1999-2000, the assessed trust had paid Installments of Rs. 1.57 crores to PUDA and it had been accepted as an educational and charitable trust, and the request for accumulation allowed.

35. The Commissioner (Appeals) has not given much importance to the aforesaid factual aspects highlighted by the learned Departmental Representative in the remand report, but has chosen to uphold the action of the assessing officer by referring to certain reported judgments and which on minute perusal are not found to be applicable. That apart, the contents of the remand report aforesaid supports the argument of the learned counsel to the effect that in the present case res judicata should be applied.

36. It has been stated by the revenue, moreso, in the order of the Commissioner (Appeals) that no evidence has been placed on record about the accumulated funds being put to the use for which such accumulation was sought. We restrict ourselves to the assessed's submission about the purchase of land at Mohali and once again go back to the remand report, which categorically mentions the particulars of the amounts invested in the year under appeal as also the subsequent two assessment years. In the Third Member decision of the Delhi Bench of the Tribunal in the case of Sir Sobha Singh Public Charitable Trust v. ADI (supra), to which one of us (the Vice President) was a party, the Tribunal was dealing with more or less on identical issue as the assessed in that case had in Form No. 10 listed certain objects and which according to the assessing officer were not specific. Following the same very decision as has been done by the assessing officer in the present case viz., Singhania Charitable Trust (supra), the assessing officer rejected the claim for accumulation and which the Commissioner (Appeals) on further appeal confirmed. The matter travelled to the Tribunal and there was a difference of opinion between the learned members constituting the Division Bench, the Accountant Member expressing an opinion in favor of the assessed and the Judicial Member taking a view to the contrary, i.e., in favor of the revenue. We reproduce the head note as appearing at p. 1 of the report as also the decision of the Third Member, which in fact became the majority opinion of the Bench (pp. 23 to 25 of the report) as follows :

"Section 11 of the Income Tax Act, 1961-Charitable or religious trust-Exemption of income from property held under-assessed, a charitable trust, notified ADIT (Exemption) in prescribed Form 10 about its decision for accumulation of funds for purposes of fulfillling six objects out of 19 objects listed in trust deed-assessing officer denied necessary benefits on ground that accumulation of surplus funds was not for specific purposes-Whether setting out of six objects in application for accumulation indicated due application of mind on part of trustees for having decided to confine themselves to two important aspects of charitable activities, i.e., education and medical aid, as mentioned in these six objects Held, yesWhether it was impossible to specify type of educational institution or medical institution which would be set up during the period of 10 years-Held, yesWhether assessed would be justified in making up its mind during said long period and deciding at what stage it was feasible or practicable to work out modalities vis-a-vis type of institution it wanted to set up and nature of charitable activities which it wanted to engaged itself in-Held, yes-Whether, therefore, assessed was entitled to benefit of accumulation of income under section 11(2)-Held, yes."

"I have examined the rival contentions-and have also perused minutely the orders passed by the learned members constituting the Division Bench. Both the learned Members have set out at length the facts of the case as also the scheme of the Act vis-a-vis the point under consideration. There is definitely a distinction between the two relevant provisions of the Act-one allowing accumulation up to 25 per cent of the income where the objects do not have to be specific and the other allowing accumulation up to 75 per cent of the income and the period of accumulation being as long as 10 years but setting out specific objects. In the present case, the assessed while applying for accumulation in Form No. 10 mentioned six objects out of 19 and a minute perusal of these shows with reference to p. 7 of the order of the learned accountant member that the first three broadly pertained to education since they mention about setting up of schools, colleges, libraries, reading rooms and hostels for boys and girls studying in schools and colleges, etc. The next three objects, i.e., 4, 5 and 6 are in the field of medical education and medical aid since these pertain to the setting up of health centres, nursing homes, maternity centers as also construction of dharamshalas or sarais in or around hospitals in Delhi or New Delhi to accommodate poor patients and their attendants. The setting out of six objects in the application for accumulation indicates due application of mind on the part of the trustees since they decided to confine themselves to two important aspects of charitable activities, i.e., education and medical aid, whereas in the trust deed there were 19 objects, some quite unconnected with the two categories in which the six objects can be categorized. In the judgment of the Calcutta High Court of Trustees of Singhania Charitable Trust case (supra) heavily relied upon by the revenue an the objects of the trust were mentioned in the application in Form No. 10 and their Lordships considering this aspect of the matter took the view that there was no preciseness or definiteness or specifics about the objects and these were general and vague. Their Lordships, however, did not rule out the plurality of the purposes for which accumulation was intended. In the present case, the learned accountant member has rightly held after considering the provisions of law, facts of the case, the decisions cited, and lastly, the judgment of the Hon'ble Calcutta High Court itself in the case of Trustees of Singhania Charitable Trust (supra) that the assessed was entitled to accumulate the funds as provided under section 11(2) of the Act since the application in Form No. 10 did mention specific objects/purposes for which the accumulation had been requested for. The learned counsel for the appellant, in my opinion, has rightly contended that it is not possible to specify the type of educational institution or medical institution which would be set up during the period of 10 years following and the assessed would be quite justified in making up its mind during the said long period and deciding at whatever stage it was feasible or practicable to work out the modalities vis-a-vis the type of institution which it wanted to set up and the nature of charitable activities which it wanted to engaged itself in. It has been noted by both the learned members of the Division Bench and on which there is no difference that the concession was provided by Act :

Perhaps to meet the contingency where the fulfillment of a project requires heavy outlay and calls for accumulation of funds as observed in the case of Singhania Charitable Trust (supra).

I would like to add further to this that a charitable institution which wants to accumulate its income for a long period of 10 years to carry out the charitable objects as set out in the trust deed does required time to think, time to plan and time to garner its resources, etc., to fulfill those objects for which it has sought accumulation of funds and the legislature in its wisdom has allowed a long period of 10 years and I, therefore, really cannot appreciate the arguments of the learned Departmental Representative on behalf of the revenue that even when the application for accumulation is filed the applicant trust must mention the type of institution, medical or educational, which it will set up as also the type of education or medical treatment which it will impart. This, in my opinion, it was never the intention of the law makers when the provision in the form of a concession was introduced whereby a charitable institution need not pay any tax on its income earned for a good period of 10 years provided it, carried out charitable activities with a view to fulfillling the specific objects mentioned in the application seeking accumulation.

In the final analysis, I am of the view that the decision of the Hon'ble Calcutta High Court in Trustees of Singhania Charitable Trust's case (supra), relied upon by the department does not advance the revenue's case on the facts of the present case but the same in turn supports the view point canvassed on behalf of the assessed. No other decision was relied upon by the learned Departmental Representative during the course of the hearing of the present reference as against which the learned counsel for the assessed reiterated reliance on certain decisions of the Tribunals which do advance the view point canvassed. The current negotiations with the Delhi Government for acquiring land to set up dharamshalas although a subsequent event does come in the period of 10 years for which accumulation was sought and even going by the argument of the learned Departmental Representative that the assessed has woken up towards the fag end of the decade stipulated, my view is that this is not strictly relevant to the point at issue and if there is a violation of law on the part of the assessed, the same can be taken care of by other provisions of the Income Tax Act, 1961. In conclusion, I agree with the view expressed by the learned accountant member.

37. In the case of Sir Sobha Singh Pubhc Charitable Trust (supra), six objects out of 19 were listed in Form No. 10 and the learned Third Member took the view that the objects were specific and there was an application of mind on the part of the assessed-trust and there was a further reference to the relevant provisions of law pertaining to accumulation and what would be the effect if the funds are not utilized for the purposes for which these had been accumulated. The learned Third Member further observed that in the application seeking accumulation it would not be possible to set out anything with certainty vis-a-vis the type of institution, which would be set up or for that matter to detail the other connected activities. In the present case, the Commissioner (Appeals) has mentioned at quite a few places in his order that the money is not being sent for the purposes of which accumulation had been sought, but in our opinion, we need to concern ourselves only with the facts prevailing in the year under appeal vis-a-vis the question of accumulation. As noted from the copy of Form No. 10 placed at p. 25, the assessed has sought accumulation till the previous year ending 31-3-2002, and even as per the relevant provision of the Income Tax Act, i.e., section 11 read with its various sub-sections the assessed is not expected to show immediately as to how the money has been utilized and we keep in mind the specific provision which seeks to penalize the assessed in case the money is not spent in the manner in which it should have been so done within the period laid down and in that eventuality how it would be brought to tax. The law is quite clear as to what has to be done if the amount is spent in a manner different to the one for which a request for accumulation has been made and there is also another condition, namely, the mode in which the funds shall remain invested. Any violation of this clause also leads to adverse action on the part of the revenue. In concluding this aspect of the matter, we really wonder as to whether the Commissioner (Appeals) was justified in referring to the manner in which the money was spent by the assessed. No doubt, in the present case, there is material on record, which would show that substantial money had been paid for acquisition of land at Mohali for setting up a center, which according to the assessed is an educational center with a lot of facilities including computer facilities.

38. A perusal of the material on record further shows that the assessed has made requisite entries in its books of accounts creating a provision of the amount for which accumulation has been sought and one of the objections of the Commissioner (Appeals) that the entry in the books of accounts or for that matter, the depiction in the audited accounts is not adequate, it must be appreciated that what is relevant is the statement made in the form seeking accumulation since entries in the books of accounts or depiction in the audited accounts can be concise.

39. We also note from the record and in fact this clearly emerges from the orders of the tax authorities that the objects were listed as (a) to (e) whereas for purposes of accumulation the assessed only mentioned item (b) in Form No. 10. A perusal of item (b) shows that whereas numerous objects/activities are stated therein, but most of these pertain to running of schools, colleges, training centers, vocational technical and industrial institutions and these could be broadly placed in the category of education whereas certain other objects can be placed in the category of medical aid and these are setting up of hospitals, nursing homes and there is a reference to research centers, which could be again for purposes of education and lastly, there is a reference to gurudwaras and dharamshalas, the former being in the category of religion.

40. In our opinion, the aforesaid objects are quite categorical and specific and once again, we go back to the decision of the Tribunal in the case of Sir Sobha Singh Public Charitable Trust (supra) where six out of 19 objects were mentioned in Form No. 10 and on the basis of the detailed discussion (already reproduced earlier), the Tribunal allowed the benefit of accumulation and decided not to apply the judgment of the Hon'ble Calcutta High Court in the case of Singhania Charitable Trust (supra) and which is fact has been applied by the assessing officer as also by the Commissioner (Appeals) in the case of the present assessed. We hold likewise in the present appeal, i.e., the judgment of the Hon'ble Calcutta High Court (supra) is not applicable and the point at issue vis-a-vis the facts of the present case being squarely covered by the Third Member decision in the case of Sir Sobha Singh Public Charitable Trust (supra).

41. Coming to some of the decisions relied upon by the parties, the unreported decision of the Delhi Bench of the Tribunal in the case of Sir Sri Ram Foundation (supra) also advances the assessed's line of argument, whereas (2000) 245 ITR 400 (Mad) (supra), relied upon by the revenue is not found to be applicable. In the said case the issue strictly was not one of the accumulation vis-a-vis the facts in the present case, but the issue was one of ulilisation, i.e., that the assessed-trust had handed over accumulated money to another charitable trust for carrying out charitable purposes for which income had been accumulated. Their Lordships of the Hon'ble Madras High Court took the view that the assessed was entitled to exemption under section 11.

42. In the final analysis, we set aside the orders passed by the tax authorities and direct the assessing officer to accept the assessed's request for accumulation made in Form No. 10 in the year under appeal. In the view that we have taken, we do not find it necessary to deal with the alternative claim for exemption under section 10(22).

43. In the result, the appeal of the assessed is treated as partly allowed.