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Moksh Majahan, Accountant Member

1. These two appeals filed by the assessee as well by the revenue are consolidated and disposed of by a single order as common issue is involved in both the appeals.

2. Taking up the assessee's appeal filed in ITA No. 2524/Delhi/96 first, Shri Ajay Vohra, the ld. AR submitted that the assessee is a Charitable Trust. The aforesaid Trust was started in 1961 by Late Sir Sobha Singh. It has been accepted as a Charitable Trust right till assessment year 1991-1992. The objects of the Trust have been listed in clause 30 of the Trust Deed (page 60 of the paper book). There are as many as 19 objects listed on pages 6 and 7 of the aforesaid Trust Deed. As per the provisions of section 11(2) of the Act, the assessee is allowed to accumulate 75% of the income, subject to certain conditions. It has to give a notice in writing to the officer in the prescribed manner specifying the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, not exceeding however 10 years. Secondly, that the money so accumulated or set apart is to be invested or deposited in the forms or modes specified in sub-section (5) of section 11 of the Act. The assessee passed a resolution in a meeting held on 26-3-1992 resolving that the funds of the Trust available at the end of the current financial year ending on 31-3-1992 be accumulated up to a period of 10 years, i.e. till 31-3-2002 (page 32 of the paper book). In pursuance of this resolution, the assessee addressed a letter to the Assistant Director of the Income-tax (Exemption) in the form of a notice as prescribed in Form No. 10 intimating its decision for accumulation of funds. The purposes for the aforesaid funds were given in the notice. As would be evident, accumulation was for the purposes of fulfilling 6 objects out of 19 objects as listed in the Trust Deed. The Assessing Officer after holding that the accumulation of surplus funds was not for specific purpose denied, the benefit to the assessee. The ld. CIT(A) concurred with the finding of the Assessing Officer. While doing so, he relied on the decision of the Calcutta High Court in case of Director of income-tax (Exemption) v. Trustees of Singhania Charitable Trust[1993] 199 ITR 819. As per the reasoning given, there has to be a specific purpose for accumulation and the objects of the Trust cannot be listed for the purpose of accumulation. Citing certain observations of their Lordship of Calcutta High Court, it was held that the assessee was not entitled to the benefit under section 11(2) of the Act.

3. The assessee-Trust was started in 1961 by Late Sir Sobha Singh and it is a matter of record that the same has been accepted as a charitable Trust in all these years upto assessment year 1991-92. As per the Trust deed there arc 19 objects. As per provisions of section 11(2) of the Act a charitable Trust is entitled to accumulation of 75 per cent of its income subject to certain conditions and these being-

(1) It has to give a notice in writing to the Assessing Officer in the prescribed manner specifying the purpose for which the income is being accumulated or set apart and the period for which the income is to be so accumulated or set apart not exceeding 10 years.

22. I have examined the rival contentions and have also perused minutely the orders passed by the learned Members constituting the Division Bench. Both the learned Members have set out at length the facts of the case as also the scheme of the Act vis-a-vis the point under consideration. There is definitely a distinction between the two relevant provisions of the Act - one allowing accumulation upto 25 per cent of the income where the objects do not have to be specific and the other allowing accumulation upto 75 per cent of the income and the period of accumulation being as long as 10 years but setting out specific objects. In the present case, the assessee while applying for accumulation in Form No. 10 mentioned six objects out of 19 and a minute perusal of these shows with reference to page 7 of the order of the learned Accountant Member that the first three broadly pertained to education since they mention about setting up of schools, colleges, libraries, reading rooms and hostels for boys and girls studying in schools and colleges etc. The next three objects i.e., 4,5 and 6 are in the field of medical education and medical aid since these pertain to the setting up of health centres, Nursing homes, Maternity centres as also construction of Dharamashalas or Sarais in or around hospitals in Delhi or New Delhi to accommodate poor patients and their attendants. The setting out of six objects in the application for accumulation indicates due application of mind on the part of the trustees since they decided to confine themselves to two important aspects of charitable activities i.e., education and medical aid whereas in the Trust Deed there were 19 objects some quite unconnected with the two categories in which the six objects can be categorised. In the judgment of the Calcutta High Court of Trustees of Singhania Charitable Trust's case (supra) heavily relied upon by the revenue all the objects of the Trust were mentioned in the application in Form No. 10 and their Lordships considering this aspect of the matter took the view that there was no preciseness or definiteness or specifics about the objects and these were general and vague. Their Lordships, however, did not rule out the plurality of the purposes for which accumulation was intended. In the present case, the learned Accountant Member has rightly held after considering the provisions of law, facts of the case, the decisions cited and lastly the judgment of the Hon'ble Calcutta High Court itself in the case of Trustees of Singhania Charitable Trust (supra) that the assessee was entitled to accumulate the funds as provided under section 11(2) of the Act since the application in Form No. 10 did mention specific objects/purposes for which the accumulation had been requested for. The learned counsel for the appellant, in my opinion, has rightly contended that it is not possible to specify the type of educational institution or medical institution which would be set up during the period of 10 years following and the assessee would be quite justified in making up its mind during the said long period and deciding at whatever stage it was feasible or practicable to work out the modalities vis-a-vis the type of institution which it wanted to set up and the nature of charitable activities which it wanted to engage itself in. It has been noted by both the learned Members of the Division Bench and on which there is no difference that the concession was provided by the Act:

"Perhaps to meet the contingency where the fulfilment of a project requires heavy outlay and calls for accumulation of funds as observed in the case of Singhania Charitable Trust."

23. I would like to add further to this that a charitable institution which wants to accumulate its income for a long period of 10 years to carry out the charitable objects as set out in the Trust Deed does require time to think, time to plan and lime to garner its resources etc. to fulfil those objects for which it has sought accumulation of funds and the Legislature in its wisdom has allowed a long period of 10 years and I, therefore, really cannot appreciate the arguments of the learned D.R. on behalf of the revenue that even when the application for accumulation is filed the applicant Trust must mention the type of institution medical or educational which it will set up as also the type of education or medical treatment which it will impart. This, in my opinion, was never the intention of the law makers when the provision in the form of a concession was introduced whereby a charitable institution need not pay any tax on its income earned for a good period of 10 years provided it carried out charitable activities with a view to fulfilling the specific objects mentioned in the application seeking accumulation.