Charitable accumulation relief under section 11(2) cannot be restricted by a time-limit added through Form No. 10.

Section 11(2) permits a charitable trust to claim exemption for accumulated income where notice is given in the prescribed manner and the amount is invested in approved securities. The court held that "in the prescribed manner" authorises rules on form and particulars, but not a new time-limit for investment or a condition making the benefit dependent on the Income-tax Officer's discretion. Subordinate legislation cannot curtail the statutory concession or override the parent Act, so the impugned paragraphs of Form No. 10 were ultra vires and unenforceable. On the facts, the trust had given notice, resolved to accumulate income, and acted with diligence in seeking approved investment, so relief under section 11(2) was available subject to the statute.

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Issues: (i) Whether paragraphs 2 and 4 of Form No. 10, requiring investment within a prescribed time and making the allowance dependent on the Income-tax Officer, were within the rule-making power under the Income-tax Act, 1961; (ii) Whether the assessee was entitled to the benefit of section 11(2) on the facts relating to accumulation and investment of trust income.

Issue (i): Whether paragraphs 2 and 4 of Form No. 10, requiring investment within a prescribed time and making the allowance dependent on the Income-tax Officer, were within the rule-making power under the Income-tax Act, 1961.

Analysis: Section 11(2) permits exemption where the trust gives notice in the prescribed manner and invests the accumulated income in approved securities. The expression "in the prescribed manner" was held to authorise prescription of particulars and procedural details, but not to introduce a time-limit for investment or to convert the statutory concession into one dependent on discretion of the Income-tax Officer. The subordinate legislation cannot abridge or negate a benefit conferred by the parent statute, and a rule or form inconsistent with the legislative scheme must yield to the Act.

Conclusion: Paragraphs 2 and 4 of Form No. 10 were held to be ultra vires and unenforceable.

Issue (ii): Whether the assessee was entitled to the benefit of section 11(2) on the facts relating to accumulation and investment of trust income.

Analysis: The trust had resolved to accumulate income for charitable purposes, had given notice in Form 10, and had taken steps to place the funds in what it believed to be an approved investment. The Court accepted that the assessee had acted with diligence and that the investment efforts were made within a reasonable time. The revenue was left to examine the matter reasonably in the light of the statutory requirements, without applying the impugned time restriction in the form.

Conclusion: The assessee was held entitled to the relief under section 11(2), subject to the statutory requirements, and the adverse assessment orders were not sustained.

Final Conclusion: The statutory concession for charitable accumulation could not be curtailed by a time-limit introduced through subordinate legislation, and the writ petitions challenging the denial of exemption succeeded to that extent.

Ratio Decidendi: Where the parent statute confers a tax concession on compliance with specified conditions, delegated legislation may prescribe the form and particulars of compliance but cannot add a new time-limit or other restriction that defeats the statutory benefit.

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