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Section 11 of the Income-tax Act, 1961 and rule 17 of the Income-tax rules, 1962 read with form no. 10-Charitable or religious trusts-Notice for accumulation of income by charitable or religious trusts-Whether time element stipulated in para 2 of form no. 10 is beyond provisions of section 11 and rule 17-Held, yes Facts The assessee was a charitable and religious trust. The question for determination was whether the provision of a time element in para 2 of Form No. 10 is beyond the scope of section 11 read with rule 17 of the Income-tax Rules. The Tribunal gave the decision in the affirmative. On reference : Held 1.Rule 17 as such does not provide for any period of time within which the amount set apart for charitable purpose is to be invested in any Government security or in post office savings bank or in any financial corporation, etc. Section 11 authorises prescription of the manner of specifying by notice to the ITO, the purpose for which the income is being accumulated. 2.Time element incorporated in Form No. 10 in the matter of investment of the accumulated amounts in the said securities isultra vires and is clearly beyond the provisions of section 11 and rule 17. 3.The Tribunal was, therefore, justified in holding that the investment made after the expiry of the period mentioned in para 2 of Form No. 10 prescribed by rule 17 have to be considered for the purpose of section 11(2) and the income of the trust was, there fore, exempt from tax. Case review STO v. Abraham [1967] 20 STC 367 (SC), Second ITO v. M.C.T. Trust [1976] 102 ITR 138 (Mad.) and CIT v. Shri Krishen Chand Charitable Trust [1975] 98 ITR 387 (J & K) followed. Cases referred to STO v. Abraham [1967] 20 STC 367, ITO v. M.C.T. Trust [1976] 102 ITR 138 (Mad.) and CIT v. Krishen Chand Chrritable Trust [1975] 98 ITR 387 (J&K). JUDGMENT Gopalan Nambiyar, CJ. - These are references by the Income-tax Appellate Tribunal, Cochin Bench, under section 256(1) of the Income-tax Act, 1961, sent up at the instance of the revenue. The two references arise out of an appeal filed to the Tribunal by the revenue and a cross-objection preferred to it by the assessee. Both related to the assessment year…

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