Delhi High Court
Director Of Income Tax vs Mitsui And Co. Environmental ... on 27 February, 2007
Equivalent citations: (2007) 211 CTR Del 352
Bench: M B Lokur, V Gupta
ORDER
1. The Revenue is aggrieved by an order dt. 31st Jan., 2006 passed by the Tribunal, Delhi Bench 'F' in ITA Nos. 944 and 945/Del/2002 relevant for the asst. yrs. 1997-98 and 1998-99.
2. The assessed is registered with the Revenue under Section 12A of the IT Act, 1961 as a charitable organisation. The objects of the assessed have been reproduced in the order of the CIT(A) and they are as follows:
(i) Development and improvement of environmental preservation technology.
(ii) Exchange of technical communication and information between the Japanese institutions engaged in the similar works and the Indian institutions.
(iii) To undertake joint study, research and development of various measures relating to environmental protection with Japanese institutions and for that purpose to institute exchange programme.
(iv) To gather information from various fields with a view to possible harmonization throughout the community of measure of protection of environment.
(v) To undertake the implementation of the activities, systems and programmes for the implementation of environmental protection, and
(vi) To carry out such objects and activities that are incidental or ancillary to the main objects.
The assessed filed an application in Form No. 10 in terms of Rule 17 of the IT Rules for permission to accumulate Rs. 14,88,047 and Rs. 16,43,650 in the two assessment years that we are concerned with. The application was made with reference to Section 11(2) of the Act.
3. In the application, the assessed stated that the amount would be utilised for the objects of the trust. The AO was of the view that the purpose of accumulation had not been specified, but only mentioned in a general manner and, therefore, the primary condition of Section 11(2) of the Act was not fulfillled. It was also held by the AO that the amount so accumulated or set apart was not invested by the assessed as provided under Section 11(5) of the Act. The view taken by the AO was accepted by the CIT(A) but the Tribunal reversed this view and that is how the Revenue is before us under Section 260A of the Act.
4. That the trust is a charitable trust is not in dispute because the AO has recorded that he had considered the activities of the trust as charitable activities covered by Section 2(15) of the Act.
5. As regards the first issue considered by the AO, namely, that the assessed had not specified in Form No. 10 the purpose for which the accumulation was sought to be made, our attention has been drawn to a decision of this Court in CIT v. Hotel & Restaurant Association . In that case, a similar argument was raised by the learned senior standing counsel for the Revenue to the effect that the assessed had failed to indicate in the prescribed form the specific purpose for which the income was sought to be accumulated and, therefore, the statutory requirement had not been strictly complied with, disentitling the assessed from relief under Section 11(2) of the Act.
This Court rejected the contention and held that the purpose or purposes to be specified cannot be beyond the objects of the trust. Plurality of purposes for accumulation is not precluded. In other words, it need not necessarily be specifically stated for which purpose the accumulation is sought.
6. While we reiterate the view already taken by this Court, we may mention that the Calcutta High Court had taken different view in Director of IT (Exemption) v. Trustees of Singhania Charitable Trust .
7. The second issue relates to actual utilisation of the amount for the purposes of the trust. The Tribunal has taken the view that since the assessed had not complied with the provisions of the Foreign Contribution (Regulation) Act, 1976, an order was passed under Section 12 thereof prohibiting the bank in which the amount was deposited from dealing with it. Consequently, no income was received by the assessed. It is not necessary for us to go that far. If it is assumed that income was received by the assessed even then, because of the supervening facts, namely, that an order was passed under Section 12 of the Foreign Contribution (Regulation) Act, 1976 prohibiting utilisation of the amount received by the assessed (though not physically), it could not have utilised the amount for the purpose for which it was accumulated. The assessed could not have been expected to violate the law and utilise the amount disregarding a prohibitory order.
Under the circumstances, we are of the view that the Tribunal did not err in the view taken by it and, therefore, no substantial question of law arises for our consideration.
8. Learned Counsel for the Revenue submits that the actual utilisation of the amount was not in issue but the Tribunal did not address the first issue, namely, the specific purpose for which accumulation was intended. We have dealt with both issues above and find no substantial question of law arises for our consideration, dismissed.
