Law:

Section:

Section 11 of the Income-tax Act, 1961, read with Form No. 10 prescribed under rule 17 of the Income-tax Rules, 1962 - Charitable or religious trust - Exemption of income from property held under - Assessment year 1964-65 - Assessee trust failed to invest its accumulated income under section 11(2) in Government securities within prescribed time limit of four months given in Form No. 10 - On this ground, ITO denied exemption to assessee under section 11(1) - Whether since legislature did not delegate power to impose any other time limit to rule making authority, latter could not take upon itself such a power - Held, yes - Whether therefore, ITO was not justified in denying exemption under said rule - Held, yes FACTS The assessee-trust had invested its income in fixed deposits in the "M.I.I.C.", a company sponsored by the Government of Madras in which 51 per cent of the shares was held by it and the balance by banks and insurance companies. On 4-5-1963, the Commissioner of Income-tax sent a reply saying that the fixed deposit with M.I.I.C. had not been approved by the Government of India as a security for the purpose of section 11 and that, as such, the investment in the said fixed deposit would not entitle the assessee to the exemption under section 11. The trustees thereupon informed the M.I.I.C. about the Commissioner's reply. The M.I.I.C. intimated that it had decided to take up the matter with the Government for inclusion of the investment in it as an approved security. The fixed deposit continued with M.I.I.C. pending the matter being taken up with the Government. Failing in its efforts to get the investment in it as approved securities, M.I.I.C. returned the deposits to the trustees on 28-8-1964. The trustees immediately thereafter arranged to purchase Government securities from the market. The purchases were completed by November, 1964. The ITO passed the assessment order on 28-8-1968 and held that 75 per cent of assessee's income was not exempt from assessment on the ground that the assessee had not invested in Government securities to the extent of accumulation. The assessee pointed out that rule 17 did not require the investment to be made within any…

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