Maharshi Karve Stree Shikshan Samstha, V. Income-tax Officer,

ITA 1409/PUN/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9802 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-08-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 30-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DIVYA BAJPAI
• Keywords: Charitable institution; Maximum Marginal Rate; Tangible material; Difference of opinion; Change of opinion; Revenue expenditure; Capital expenditure
• Section: 143(3); 12A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / IT A NO. 1 409 /P U N/201 6 / ASSESSMENT YEAR : 20 08 - 09 MAHARSHI KARVE STREE SHIKSHAN SAMSTHA KARVENAGAR, PUNE 41 1052 . / APPELLANT PAN: A A ATM1969L VS. THE INCOME TAX OFFICER , WARD 11(1), PUNE . / RESPONDENT . / IT A NO. 1 715 /P U N/201 6 / ASSESSMENT YEAR : 2008 - 09 THE DY. COMMISSIONER OF INCOME TAX, (EXEMPTIONS) CIRCLE, PUNE . / APPELLANT VS. MAHARSHI KARVE STREE SHIKSHAN SAMSTHA KARVENAGAR, PUNE 41 1052 . / RESPONDENT PAN: AAATM1969L ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : MS. DIVYA BAJPAI, CIT / DATE OF HEARING : 2 6 . 1 1 .201 8 / DATE OF PRONOUNCEMENT: 12 . 1 2 .201 8 IT A NO S . 1409 & 1715 /P U N/20 1 6 MAHARSHI KARVE STREE SHIKSHAN SAMSTHA 2 / ORDER PER SUSHMA CHOWLA, J M : TH E CROSS APPEAL S FILED BY ASSESSEE AND REVENUE ARE AGAINST ORDER OF CIT (A) , PUNE - 10 , PUNE, DATED 0 9 . 0 5 .201 6 RELATING TO ASSESSMENT YEAR 20 08 - 09 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE CROSS APPEALS FILED BY ASSESSEE AND REVENUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE IN ITA NO.1409/PUN/2016 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE LEARNED C.L.T. (A) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE RE - OPENING OF THE CASE OF THE ASSESSEE U/S 148 ON A MERE CHANGE OF OPINION AND HENCE THE RE - ASSESSMENT ORDER PASSED U/S 147 BE DECLARED NULL AND VOID. 2. THE RE - OPENING U/S 148 IS B AD IN LAW SINCE THE REASONS RECORDED CLEARLY INDICATE THAT THE RE - OPENING IS MADE WITHOUT ANY TANGIBLE MATERIAL AND HENCE, THE RE - ASSESSMENT ORDER PASSED U/S 147 BE DECLARED NULL AND VOID. 3. THE LEARNED C.L.T. (A) HAS ERRED IN, LAW AND FACTS IN CONFIRMIN G THE ASSESSING OFFICER'S VIEW IN DENYING THE EXEMPTION U/S.10 (23C) (VI) TO THE ASSESSEE TRUST AND NOT APPRECIATING THE FACT THAT THE INCOME OF THE ASSESSEE TRUST WAS EXEMPT FROM TAX UNDER THE SAID SECTION. 4. THE LEARNED C.L.T. APPEALS HAS ERRED IN LAW AND FACTS IN HOLDING THAT THE DECISION IN THE CASE OF DECCAN EDUCATION SOCIETY IN APPEAL NO.PN/ CIT (A) - 10/ DCIT.CIR 1 (2)/ 858/ 14 - 15 FOR A.Y. 2010 - 11 DTD. 15.01.2016 IS NOT APPLICABLE TO THE APPELLANT'S CASE AND HAVE WRONGLY RELIED UPON THE DECISION IN THE CASE OF CHILDREN EDUCATION SOCIETY (264 ITR 389). THE INCOME EXEMPTION CLAIM OF THE ASSESSEE U/S. 10 (23C) (VI) SHOULD HAVE BEEN ALLOWED ON THE BASIS OF THE DECISION IN DECCAN EDUCATION SOCIETY'S CASE CITED ABOVE. 4. THE REVENUE IN ITA NO.1715/PUN/201 6 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - IT A NO S . 1409 & 1715 /P U N/20 1 6 MAHARSHI KARVE STREE SHIKSHAN SAMSTHA 3 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, A CLAIM FOR CARRY FORWARD OF DEFICIT IN THE CASE OF A TRUST CAN BE ACCEPTED AND BE ALLOWED AS HELD IN THE CASE OF TRUSTEES OF SHRI SATYA SAI TRUST DECIDED BY THE HON'BLE ITAT , MUMBAI BENCH IN 33 ITD 320, MUMBAI ? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRUST IS ENTITLED TO CLAIM BENEFIT U/S. 11(1)(A) OF THE I.T.ACT , 1961 WHEN THE APPLICATION OF INCOME DU RING THE YEAR IS MORE THAN THE GROSS RECEIPTS ? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW , THE CIT(A) HAS ERRED IN HOLDING THAT THE TRUST WOULD BE ENTITLED TO CLAIM EXCESSIVE CARRY FORWARD OF DEFICIT WHICH RESULTS AFTER MAKIN G AN ALLOWANCE @ 15 % GROSS RECEIPTS U/S. 11 ( 1 )(A) OF THE INCOME TAX ACT , 1 961 AND THEN CLAIMING THE APPLICATION OF INCOME TO THE EXTENT OF THE EXPENSES INCURRED ON THE OBJECTS OF THE TRUST ? 5. FIRST, WE SHALL TAKE UP THE APPEAL OF REVENUE, WHEREIN THE FIR ST ISSUE RAISED BY WAY OF GROUND OF APPEAL NO.1 IS AGAINST ORDER OF CIT(A) IN ALLOWING THE CLAIM FOR CARRY FORWARD OF DEFICIT IN THE HANDS OF ASSESSEE TRUST. 6. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE TRUST WAS RUNNING SEVERAL SCHOOLS IN P UNE. THE CASE OF ASSESSEE WAS REOPENED UNDER SECTION 147/148 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE INCOME OF ASSESSEE SOCIETY SHOULD NOT BE COMPUTED AS PROPOSED IN THE REASONS RECORDED WH ILE REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT. THE PROPOSAL OF ASSESSING OFFICER WAS TO TAX THE INCOME OF ASSESSEE TRUST AT MAXIMUM MARGINAL RATES UNDER SECTION 11(4) R.W.S. 11(1)(A) OF THE ACT AND THE ASSESSEE WAS ALSO ASKED TO EXPLAIN EXEMPT ION CLAIMED UNDER SECTION 10(23C)(VI) OF THE ACT AS GRANTED TO THE ASSESSEE TRUST BY CCIT. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD 51 INSTITUTIONS AND THE EXEMPTION WAS CLAIMED BY IT AS ASSESSEE AND APPLICATION WAS NOT MADE FOR EXEMPTION FOR ALL INSTITUTIONS SEPARATELY . HE WAS OF THE VIEW THAT THIS WAS IN VIOLATION OF PROVISIONS OF SECTION 10(23C)(VI) OF THE ACT, UNDER WHICH EXEMPTION WAS ONLY AVAILABLE TO UNIVERSITY OR OTHER EDUCATIONAL INSTITUTIONS AND HENCE THE CLAIM MADE BY ASSESSEE WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THE ASSESSEE WAS ALSO ASKED TO IT A NO S . 1409 & 1715 /P U N/20 1 6 MAHARSHI KARVE STREE SHIKSHAN SAMSTHA 4 EXPLAIN ITS CLAIM OF DEDUCTION UNDER SECTION 11 OF THE ACT. IN RESPONSE, THE ASSESSEE FILED WRITTEN SUBMISSIONS WHICH ARE REPRODUCED IN THE ASSESSMENT ORDER. THE ASSESSEE MADE VARIOUS ALTERNATE PLEAS BEFORE THE ASSESSING OFFICER. THE FIRST ISSUE WHICH WAS ADDRESSED BY THE ASSESSING OFFICER WAS WHETHER 15% WAS TO BE DEDUCTED FROM GROSS RECEIPTS BEFORE DEDUCTING ANY EXPENSES INCURRED DURING THE YEAR. THE VIEW OF THE ASSESSING OF FICER IN THIS REGARD WAS THAT SECTIONS 11 AND 12 OF THE ACT PROVIDED THE SAME. THE ASSESSING OFFICER RE - COMPUTED THE BENEFIT OF ACCUMULATION OF 15% BY OBSERVING THAT THE SURPLUS WAS 40,58,789/ - AS PER INCOME & EXPENDITURE ACCOUNT, TO WHICH SUM OF 11,0 0,15,480/ - BEING THE AMOUNT TRANSFERRED TO RESERVE WAS TO BE ADDED AND THEREAFTER, BENEFIT OF ACCUMULATION OF 15% TO THE EXTENT OF 9,69,63,129/ - WAS TO BE ALLOWED. THE ASSESSING OFFICER ALSO DENIED THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 10( 23C)(VI) OF THE ACT REJECTING THE PLEA OF ASSESSEE THAT THE SAID EXEMPTION WAS AVAILABLE TO THE ENTIRE TRUST AND NOT TO THE INDIVIDUAL INSTITUTE/S. 7. THE CIT(A) DECIDE D THE FIRST ISSUE OF CLAIM OF EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT AGAINST AS SESSEE. IT MAY BE POINTED OUT HEREIN ITSELF THAT THE ASSESSEE IS IN APPEAL AGAINST THE SAID DENIAL OF EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT. 8. NOW, COMING TO THE NEXT CLAIM OF ASSESSEE BEFORE THE CIT(A) THAT IT IS ENTITLED TO THE DEDUCTION UN DER SECTION 11 OF THE ACT, SINCE THE ASSESSEE TRUST WAS GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT. THE CIT(A) NOTED THAT SINCE THE ASSESSEE HAD FULFILLED ALL THE CONDITIONS AS REQUIRED UNDER SECTIONS 11 TO 13 OF THE ACT AND NOTHING ADVERSE HAD BEE N NOTED BY THE ASSESSING OFFICER IN ASSESSMENT PROCEEDINGS, THE ASSESSEE D ESERVES THE BENEFIT OF AFORESAID IT A NO S . 1409 & 1715 /P U N/20 1 6 MAHARSHI KARVE STREE SHIKSHAN SAMSTHA 5 DEDUCTION UNDER SECTION 11 OF THE ACT. IN RESPECT OF ORDER OF ASSESSING OFFICER MAKING DISALLOWANCE OF 11,00,15,480/ - , WHICH WAS TAXED BY ASSESSING OFFICER ON THE GROUND THAT THE SAID AMOUNT WAS NOT EXPENDITURE BUT MERE CREATION OF RESERVE, THE CIT(A) NOTED THE SUBMISSIONS OF ASSESSEE IN THIS REGARD WHEREIN THE ASSESSEE HAD STRESSED THAT THE SAID AMOUNT W AS NOT CLAIMED AS EXPENDITURE. ON PERUSAL OF COMPUTATION OF INCOME AND INCOME & EXPENDITURE ACCOUNT, THE CIT(A) OBSERVED AS UNDER: - 11IT WAS POINTED OUT BY THE APPELLANT THAT IN THE COMPUTATION OF INCOME, THE TOTAL AMOUNT OF REVENUE EXPENDITURE INCURR ED ON THE OBJECTS OF THE TRUST WAS CLAIMED AT RS.32,22,02,781/ - , HOWEVER, EXPENDITURE OF CAPITAL NATURE WAS CLAIMED FOR RS.15,37,19,866/ - FOR THE OBJECTS OF THE TRUST, BUT, THE AMOUNT OF RS.11,00,15,480/ - SHOWN UNDER HEAD TRANSFERRED TO RESERVE, ACTUALLY D EBITED IN INCOME AND EXPENDITURE A/C HAS NOT BEEN FURTHER CLAIMED AS EXPENDITURE IN COMPUTATION OF INCOME. IN NUTSHELL, THE APPELLANT HAS NOT CLAIMED DEDUCTION OF THE SAID AMOUNT OF RS.11,00,15,480/ - WHILE COMPUTING THE INCOME AND HENCE, THE QUESTION OF M AKING ANY DISALLOWANCE OF THE SAID AMOUNT DOES NOT ARISE. I FIND NO INFIRMITY IN THE WORKING OF THE APPELLANT AND IT IS AS PER THE PROVISION OF LAW AND ACCOUNTING PRINCIPLE BEING FOLLOWED. ACCORDINGLY, A.O. IS NOT JUSTIFIED IN MAKING THE IMPUGNED ADDITIO N AND GROUND NO.6 IS ALLOWED. 9. THE ASSESSEE ALSO POINTED OUT BEFORE THE CIT(A) THAT AFTER CONSIDERING THE APPLICATION OF INCOME, TOTAL EXPENDITURE INCURRED WAS MUCH HIGHER THAN THE TOTAL RECEIPTS EARNED DURING THE YEAR AND HENCE, THE ASSESSEE HAD NOT G ENERATED SURPLUS DURING THE YEAR AND SINCE THE ASSESSEE HAD COMPLIED WITH ALL THE CONDITIONS LAID DOWN BY IN SECTIONS 11 TO 13 OF THE ACT, THEN A PLEA WAS RAISED THAT DEDUCTION SHOULD BE ALLOWED TO THE ASSESSEE. THE CIT(A) HELD THAT SINCE THE INSTITUTION WAS NOT BEING RUN ON COMMERCIAL LINE, THERE WAS MERIT IN THE PLEA OF ASSESSEE AND THE RELIANCE PLACED UPON BY ASSESSING OFFICER ON ANOTHER DECISION WAS NOT CORRECT. THE ASSESSEE FOR THE PAST SEVERAL YEARS WAS SHOWING LOSSES I.E. IT HAD INCURRED MORE EXPEN DITURE IN COMPARISON TO THE INCOME EVERY YEAR WHICH SUPPORTED THE VIEW THAT IT WAS NOT COMMERCIAL VENTURE BUT A GENUINE CHARITABLE TRUST ESTABLISHED FOR EDUCATIONAL PURPOSES. THE NEXT PLEA OF ASSESSEE THAT IT HAD MADE EXCESS APPLICATION OF ITS INCOME AND HENCE, THERE WAS NO MERIT IN MAKING ANY ADDITION WAS ALSO ACCEPTED BY THE CIT(A), IT A NO S . 1409 & 1715 /P U N/20 1 6 MAHARSHI KARVE STREE SHIKSHAN SAMSTHA 6 WHEREIN TOTAL RECEIPTS DECLARED WERE TO THE TUNE OF 45.91 CRORES (APPROX.) AND DEDUCTION OF 15% COMES TO 6.88 CRORES. HENCE, BALANCE AMOUNT WHICH WAS REQUIRED TO BE UTIL IZED ON THE OBJECTS OF TRUST WAS 39.03 CRORES (APPROX.), AGAINST WHICH EXPENDITURE INCURRED ON THE OBJECTS OF TRUST AMOUNTED TO 47.59 CRORES AND HENCE, THERE WAS EXCESS APPLICATION OF INCOME OF 8.56 CRORES. THE ASSESSING OFFICER HAD NOT ACCEPTED THE SAID MANNER OF COMPUTING INCOME AS ACCORDING TO HIM, THE ASSESSEE WAS ELIGIBLE TO ACCUMULATE 15% OF INCOME ONLY IF IT GENERATED SURPLUS AND NOT WHEN THERE WAS DEFICIT. THE CIT(A) HELD THAT THE OBSERVATION OF ASSESSING OFFICER IN THIS REGARD W ERE NOT CORR ECT. HE REFERRED TO SECTION 11(1)(A) OF THE ACT, WHEREIN THE ASSESSEE TRUST WAS ENTITLED TO ACCUMULATE 15% OF ITS GROSS RECEIPTS AND BALANCE 85% OF RECEIPTS WERE TO BE APPLIED ON THE OBJECTS OF TRUST. IN THIS REGARD, RELIANCE WAS PLACED ON THE DECISION O F HON'BLE SUPREME COURT IN CIT VS. RAO CHARITABLE T R UST (ALN) (216 ITR 697) (SC). THE NEXT RELIANCE WAS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF PROGRAMME FOR COMMUNITY ORGANIZATION (248 ITR 1) (SC), WHEREIN IT WAS HELD THAT CHARITAB LE TRUST WAS ENTITLED TO ACCUMULATE 15% OF RECEIPTS WITHOUT CONSIDERING THE EXPENDITURE AND APPLICATION MADE ON THE OBJECTS OF TRUST. THE CIT(A) THUS, UPHELD THE METHOD OF COMPUTATION OF DEFICIT BY THE ASSESSEE. IT WAS FURTHER HELD THAT EXCESS APPLICATIO N WAS PERMITTED TO BE CARRIED FORWARD IN THE SUBSEQUENT YEARS IN TURN, RELYING ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (264 ITR 110) (BOM) , WHEREIN IT WAS HELD THAT THE ADJUSTMENT OF EXPENSES INC URRED FOR THE TRUST FOR CHARITABLE PURPOSES, IN EARLIER YEARS, AGAINST THE INCOME EARNED BY TRUST IN THE SUBSEQUENT YEAR, WILL HAVE TO BE REGARDED AS AN APPLICATION OF INCOME FOR CHARITABLE PURPOSES IN THE SUBSEQUENT YEAR, IN WHICH THE ADJUSTMENT WAS MADE. SIMILAR VIEW HAS ALSO BEEN TAKEN BY THE HONBLE HIGH COURT OF DELHI IN DIT VS. RAGHUVANSHI IT A NO S . 1409 & 1715 /P U N/20 1 6 MAHARSHI KARVE STREE SHIKSHAN SAMSTHA 7 CHARITABLE TRUST AND ORS. (44 DTR 223) (DEL) AND IN VIEW THEREOF, THE CIT(A) HELD THE ASSESSEE TO BE JUSTIFIED IN CARRYING FORWARD EXCESS APPLICATION OF THE CURREN T YEAR TO THE SUBSEQUENT YEARS. 10. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 11. THE FIRST ISSUE WHICH HAS BEEN RAISED IS AGAINST CLAIM OF CARRIED FORWARD OF DEFICIT IN THE CASE OF ASSESSEE TRUST TO BE ADJUSTED AGAINST INCOME OF TRUST IN THE SUCCEEDING YEARS. THE LINKED ISSUE WHICH IS RAISED BY THE REVENUE IS WHETHER THE TRUST WAS ENTITLED TO CLAIM THE BENEFIT OF SECTION 11(1)(A) OF THE ACT WHEN THE APPLICATION OF INCOME DURING THE YEAR WAS MORE THAN THE GROSS RECEIPTS. THE LAST ISSUE R AISED VIDE GROUND OF APPEAL NO.3 IS AGAINST ORDER OF CIT(A) IN HOLDING THAT THE TRUST COULD BE ENTITLED TO CLAIM EXCESSIVE CARRY FORWARD OF DEFICIT WHICH RESULTED AFTER MAKING AN ALLOWANCE OF 15% OF GROSS RECEIPTS UNDER SECTION 11(1)(A) OF THE ACT AND THEN CLAIMING THE APPLICATION OF INCOME TO THE EXTENT OF EXPENSES INCURRED ON THE OBJECTS OF TRUST. 12. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRONGLY POINTED OUT THAT THE ISSUES RAISED WERE SQUARELY COVERED BY THE ORDERS OF APEX COURT AND HE NCE, THERE IS NO MERIT IN THE SAID GROUNDS OF APPEAL. 13. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE C IT(A) AFTER DISCUSSING ALL THE ISSUES IN THE CASE HAS CONCLUDED THE APPEAL VIDE PARA 13(II) OF APPELLATE ORDER WHICH READS AS UNDER: - IT A NO S . 1409 & 1715 /P U N/20 1 6 MAHARSHI KARVE STREE SHIKSHAN SAMSTHA 8 13(I) (II) I HAVE CONSIDERED THE SUBMISSION CAREFULLY. THE CONTENTION OF THE A.O. IS NOT CORRECT. AS PER SECTION 11(1 )(A), IT IS ENTITLED TO ACCUMULATE 15% OF ITS GROSS RECEIPTS AND THE BALANCE 85% OF THE RECEIPTS ARE TO BE APPLIED ON THE OBJECTS OF THE TRUST. RELIANCE MAY BE PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT V. RAO CHARITABLE TRUST (ALN ) [216 ITR 697]. IN THIS CASE, IT HAS BEEN HELD THAT THE EXEMPTION U/S 11(1)(A) I.E. OF 15% IS AN ABSOLUTE EXEMPTION AND THE APPLICATION OF SECTION 11(2) DOES NOT EXTEND TO NULLIFY THE ABSOLUTE EXEMPTION. FURTHER, HON'BLE SUPREME COURT IN THE CASE OF PRO GRAMME FOR COMMUNITY ORGANIZATION [248 ITR 1] HELD THAT A CHARITABLE TRUST IS ENTITLED TO ACCUMULATE 15% OF THE RECEIPTS WITHOUT CONSIDERING THE EXPENDITURE AND THE APPLICATION MADE ON THE OBJECTS OF THE TRUST. ACCORDINGLY, IN VIEW OF THE ABOVE DECISIONS, THE METHOD OF COMPUTATION OF DEFICIT IS CORRECT. THE EXCESS APPLICATION IS PERMITTED TO BE CARRIED FORWARD IN THE SUBSEQUENT YEARS. FURTHER, HONBLE BOMBAY H.C. IN THE CASE OF CIT V. INSTITUTE OF BANKING PERSONNEL SELECTION [264 ITR 110] HAS HELD THAT IN COME DERIVED FROM THE TRUST PROPERTY HAS TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND IF THE COMMERCIAL PRINCIPLES ARE APPLIED THEN THE ADJUSTMENT OF EXPENSES INCURRED FOR THE TRUST FOR CHARITABLE PURPOSES IN THE EARLIER YEARS AGAINST INCOME EARNED BY THE T RUST IN THE SUBSEQUENT YEAR WILL HAVE TO BE REGARDED AS AN APPLICATION OF INCOME FOR CHARITABLE PURPOSES IN THE SUBSEQUENT YEAR IN WHICH ADJUSTMENTS HAS BEEN MADE. SIMILAR VIEW HAS BEEN TAKEN BY HONBLE DELHI H.C. IN THE CASE OF DIT V. RAGHUVANSHI CHARITA BLE TRUST AND ORS. [44 DTR 223]. IN VIEW OF THE ABOVE DECISIONS, THE APPELLANT IS JUSTIFIED IN CARRYING FORWARD THE EXCESS APPLICATION OF THE CURRENT YEAR TO THE SUBSEQUENT YEARS. ACCORDINGLY GROUND NO.8 IS ALLOWED. 15. THE FIRST ISSUE WHICH WAS DECIDE D BY CIT(A) WAS POINT OF TIME WHEN 15% OF RECEIPTS ARE TO BE TAKEN INTO CONSIDERATION. IN THIS REGARD, REFERENCE WAS MADE TO PROVISIONS OF SECTION 11(1)(A) OF THE ACT AND THE RATIOS LAID DOWN BY DIFFERENT DECISIONS OF THE HON'BLE SUPREME COURT. 16. WE FI ND THAT THE HON'BLE SUPREME COURT IN DIT VS. RAGHUVANSHI CHARITABLE TRUST AND ORS. (SUPRA) HAD HELD THAT EXEMPTION UNDER SECTION 11(1)(A) OF THE ACT I.E. OF 15% OF INCOME WAS ABSOLUTE EXEMPTION AND APPLICATION OF SECTION 11(2) OF THE ACT DOES NOT EXTEND TO NULLIFY ABSOLUTE EXEMPTION. IT HAS FURTHER BEEN HELD BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF PROGRAMME FOR COMMUNITY ORGANIZATION (SUPRA) THAT A CHARITABLE TRUST WAS ENTITLED TO ACCUMULATE 15% OF THE RECEIPTS WITHOUT CONSIDERING THE E XPENDITURE AND APPLICATION MADE ON THE OBJECTS OF TRUST. THE CIT(A) APPLYING THE SAID PROPOSITION HAS ALLOWED THE CLAIM OF ASSESSEE. WE FIND NO MERIT IN THE GROUNDS OF APPEAL RAISED BY REVENUE IN THIS REGARD AND WE IT A NO S . 1409 & 1715 /P U N/20 1 6 MAHARSHI KARVE STREE SHIKSHAN SAMSTHA 9 UPHOLD THE METHOD OF COMPUTATION OF DEF ICIT APPLIED BY CIT(A) IN LINE WITH THE PROVISIONS OF SECTION 11(1)(A) OF THE ACT. 17. NOW, COMING TO THE SECOND ASPECT OF THE ISSUE RAISED BEFORE US I.E. WHETHER IN THE INSTANT ASSESSMENT YEAR THE APPLICATION OF INCOME WAS MORE THAN THE RECEIPTS OF THE Y EAR, CAN THE EXCESS APPLICATION OF INCOME I.E. EXPENDITURE IN THE HANDS OF ASSESSEE, BE CARRIED FORWARD TO THE SUCCEEDING YEAR. 18. THE HONBLE BOMBAY HIGH COURT IN CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) HAD HELD THAT THE INCOME DERIVE D FROM TRUST PROPERTY HAS TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND THE ADJUSTMENT OF EXPENSES INCURRED FOR THE TRUST FOR CHARITABLE PURPOSES IN EARLIER YEARS IS ALLOWABLE AGAINST THE INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEARS AND THE SAME HAS TO BE REGARDED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES IN THE SUBSEQUENT YEAR IN WHICH THE AFORESAID ADJUSTMENT WAS MADE. THE CIT(A) HAS ALLOWED THE CLAIM OF ASSESSEE IN TURN, RELYING ON THE AFORESAID DECISION AND ALSO HAD RELIED ON THE DECISION OF THE HONBLE HIGH COURT OF DELHI IN DIT VS. RAGHUVANSHI CHARITABLE TRUST AND ORS. (SUPRA). IN VIEW OF THE SETTLED POSITION OF JURISDICTIONAL HIGH COURT, WHICH HAS BEEN APPLIE D BY THE CIT(A), WE FIND NO MERIT IN THE ISSUE RAISED BY THE REVENUE IN THIS REGARD AND THE SAME IS DISMISSED. ONCE THE GROUNDS OF APPEAL RAISED BY REVENUE ARE DISMISSED, THEN ADMITTEDLY, THERE IS NO TAXABLE INCOME IN THE HANDS OF ASSESSEE TRUST. UPHOLDI NG THE ORDER OF CIT(A), WE DISMISS THE GROUNDS OF APPEAL RAISED BY REVENUE. SINCE THE INCOME OF ASSESSEE HAS BEEN HELD TO BE ELIGIBLE FOR EXEMPTION UNDER SECTIONS 11 TO 13 OF THE ACT, WE HOLD THAT THE ALTERNATE CLAIM MADE BY ASSESSEE OF EXEMPTION UNDER SE CTION 10(23C)(VI) OF THE ACT BECOMES ACADEMIC IN NATURE. IT A NO S . 1409 & 1715 /P U N/20 1 6 MAHARSHI KARVE STREE SHIKSHAN SAMSTHA 10 19. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT THE SAID DEDUCTION HAS BEEN ALLOWED TO THE ASSESSEE IN PRECEDING AND SUBSEQUENT ASSESSMENT YEARS. HOWEVER, WE ARE OF THE VI EW THAT IN VIEW OF OUR DECISION WITH REGARD TO REVENUES APPEAL, THE GROUNDS OF APPEAL RAISED BY ASSESSEE AT PRESENT BECOME ACADEMIC AND WE KEEP THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 10(23C)(VI) OF THE ACT ALIVE, WHICH SHALL BE ADJUDICATED U PON AT THE RELEVANT TIME, IF RELEVANT TIME ARISES. 20 . IN THE RESULT, BOTH THE APPEALS OF ASSESSEE AND REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 12 TH DAY OF DECEMBER , 201 8 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 12 TH DECEMBER , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) , PUNE - 10 ; 4. THE CIT (EXEMPTIONS) , PUNE ; 5. 6. , , / DR A , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE