COMMISSIONER OF INCOME TAX Vs. ANJUMAN MOINIA FAKHARIA

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal has referred the following question of law arising out of its order dated February 17, 1981, in respect of the assessment years 1974 -75, 1975 -76 and 1976 -77 under Section 256 of the Income -tax Act, 1961 :

(2.) THE brief facts of the case are that the assessee has been registered as a charitable institution with the Commissioner of Income -tax under Section 12A(a) of the Income -tax Act, 1961. It derives income from the services rendered to Dargah Khawaja of Ajmer and then applies the same for charitable purposes. The assessee has not furnished the returns of income for the years 1974 -75 and 1975 -76 on the ground that it had no taxable income. The Income -tax Officer issued notices under Section 148 for the years 1974 -75 and 1975 -76 and under Section 139(2) for the year 1976 -77. The assessee filed the returns and claimed that the sum of Rs. 90,000, Rs. 10,000 and Rs. 60,000, respectively, set apart and accumulated for application for charitable purposes for the above years as per the resolutions dated July 2, 1977, September 2, 1977, and June 6, 1976, respectively, were not liable to be taxed. The Income -tax Officer negatived the claim on the ground that in accordance with the provisions of Rule 17 accumulation for the purpose of capital expenditure was not permissible. The resolution was as under :

(3.) IN the appeal before the Appellate Assistant Commissioner of Income -tax it was contended that the provisions of Rule 17 imposing a time -limit for submission of the application were ultra vires the rule -making authority and reliance was placed on the decisions in M. Ct. Muthiah Chettiar Family Trust v. Fourth ITO : [1972]86ITR282(Mad) ; Second ITO v. M. C. T. Trust : [1976]102ITR138(Mad) and in the case of CIT v. Shri Krishen Chand Charitable Trust .