Commissioner of Income Tax vs Warangal District Development Fund Council

S. Parvatha Rao, J.—Being unsuccessful before the Income Tax Appellate Tribunal in his application made under sub-section (1) of section 256 of the Income Tax Act, 1961, numbered as R.A. No. 311/(Hyd) of 1989, the Commissioner of Income Tax, Andhra Pradesh-II, approaches this court by way of the present Income Tax case under sub-section (2) of section 256 for reference of the following three questions of law :

"(i) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the notice in Form No. 10 given to the Income Tax Officer by the assessee-trust for the assessment year 1982-83 on May 2, 1984, after the expiry of the time-limit prescribed u/s 139(1), is well within time prescribed under rule 17 of the Income Tax Rules, 1962, for claiming exemption u/s 11(2)(a) of the Income Tax Act, 1961 ?

(ii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the time-limit prescribed under rule 17 for issuing notice to the Income Tax Officer for claiming exemption u/s 11(2)(a) is beyond the competence of the rule-making authority, in spite of the fact that section 11(2)(a) itself does not prescribe any time-limit for issuing such notice ?

(iii) Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is justified in law in holding that the notice in Form No. 10 issued by the assessee for the assessment year 1982-83 is valid for claiming exemption u/s 11(2)(a) of the Income Tax Act on the ground that as section 11(2) allows the assessee a long period often years for accumulation of unapplied income, the time limit prescribed for issuing notice of such accumulation, etc., should be interpreted liberally and as such section 139(1) mentioned in rule 17 should also be read section 139(4)?"

It is not in dispute that the three questions arise from out of the order dated February 23, 1989, of the Income Tax Appellate Tribunal in I.T.A. No. 1655/(Hyd) of 1986 relating to the assessment year 1982-83. Learned counsel for the respondent does not dispute that the three question is covered by the decision of the Supreme Court in Commissioner of Income Tax, Punjab Vs. Kulu Valley Transport Co. P. Ltd., . But, that decision dealt with the question whether a return disclosing loss filed voluntarily beyond the time fixed in general notice under sub-section (1) of section 22 of the Indian Income Tax Act, 1922, before the assessment, was a valid return or not. We are, prima facie, of the view that that decision did not even remotely deal with the question whether notice in Form No. 10 read with rule 17 of the Income Tax Rules, 1962, filed within the time allowed under sub-section (4) of section 139 of the Income Tax Act, 1961, can be said to have been filed within the time allowed or extended under sub-section (1) of section 139. Learned counsel for the respondent also contends that the Madras High Court, the Kerala High Court and the Bombay High Court have answered questions similar to question No. (ii) above in favour of the assessee in Commissioner of Income Tax Vs. S. R.M. C.T.M. Tiruppani Trust and Another, (Mad) (following Second Second Income Tax Officer and Others Vs. M.C.T. Trust and Others, ; Commissioner of Income Tax Vs. Shree Padmanabhaswami Temple Trust, and Commissioner of Income Tax Vs. Trustees of Shri Teckchand Chandiram Trust, , respectively. However, learned counsel for the respondent accepts that there is no decision of this court or Supreme Court covering the said question.

We are of the view that, as already stated above, all the three questions of law arise out of the order of the Tribunal and inasmuch as there is no authoritative decision of this court on the said questions, this Income Tax case has to be allowed.

In the result, we require the Appellate Tribunal to state the case and refer the three questions mentioned in paragraph 1 above, at the earliest.