Law: Income Tax Act, 1961

Section: 11

Law: Income Tax Rules, 1962

Section: 17

Income Tax-Charitable purposes---Charitable trust---Exemption---Accumulation of income---Notice of accumulation must be given to Assessing Authority--­Notice must be given before assessment is concluded---Indian Income Tax Act, 1962, S.11---[CIT v. Nagpur Hotel Owners' Association (1994) 209 ITR 441 reversed]. It is abundantly clear from the wording of subsection (2) of section 11 of the Income Tax Act, 1961, that it is mandatory for the person claiming the benefit of section 11 to intimate to the assessing authority the particulars required, under rule 17 in Form No. 10 of the Income Tax Rules, 1962. If during the assessment proceedings, the Assessing Officer does not have the necessary information, the question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from section 11 and is subject to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time he completes the assessment. In the absence of any such information, it will not be possible for the assessing authority to give the benefit of such exclusion. Even assuming that there is no valid limitation prescribed under the Act and the Rules, it is reasonable to presume that the intimation required under section 11 has to be furnished before the assessing authority completes the concerned assessment because such requirement is mandatory and without the particulars of this income the assessing authority cannot entertain the claim of the assessee under section 11 of the Act, therefore, compliance with the requirement of the Act will have to be any time before the assessment proceedings. Further, any claim for giving the benefit of section 11 on the basis of information supplied subsequent to the completion of assessment would mean that the assessment order will have to be reopened. The Act does not contemplate such reopening of the assessment. CIT v. Nagpur Hotel Owners' Association (1994) 209 ITR 441 (Bom.) reversed. THIS JUDGMENT DELIVERED BY N. SANTOSH HEGDE, J.---In the abovesaid appeals, though the respondent…

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