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2008] 303 ITR 111 [2008] 167 TAXMAN 43 (DELHI) HIGH COURT OF DELHI Director of Income-tax v. Mitsui & Co. Environmental MADAN B. LOKUR AND V.B. GUPTA, JJ. IT APPEAL NO. 1182 OF 2006 FEBRUARY 27, 2007 Section 11 of the Income-tax Act, 1961, read with rule 17 of the Income-tax Rules, 1962 - Charitable or religious trust - Exemptions of income from property held under - Assessment years 1997-98 and 1998-99 - Assessee, a charitable trust, filed an application in terms of rule 17 for permission to accumulate certain sum in relevant assessment years - It was stated in application that amount would be utilized for objects of trust - Assessing Officer rejected said application on ground that purpose of accumulation was not specified, but only mentioned in a general manner, and, therefore, primary condition of section 11(2) was not fulfilled - Whether Assessing Officer was justified - Held, no Section 11 of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under - Assessment years 1997-98 and 1998-99 - Assessee trust claimed exemption - Assessing Officer held that amount so accumulated or set apart was not invested by assessee as provided under section 11(5) and denied exemption - Tribunal had observed that since assessee had not complied with provisions of Foreign Contribution (Regulation) Act, 1976, an order was passed under section 12 thereof, prohibiting bank in which amount was deposited from dealing with it and, consequently, no income was received by assessee - Whether assuming that income was received by assessee even then, because of supervening facts, namely, that an order was passed under section 12 of 1976 Act prohibiting utilization of amount, assessee could not have utilized amount for purpose for which it was accumulated; moreover, assessee could not have been expected to violate law and utilize amount disregarding a prohibitory order -Held, yes - Whether, therefore, Tribunal was justified in reversing view of Assessing Officer - Held, yes CASES REFERRED TO CIT v. Hotel & Restaurant Association [2003] 261 ITR 190 (Delhi) [Para 6] and DIT (Exemption) v. Trustees of Singhania Charitable Trust [1993]…

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