DCIT (E), New Delhi V. Educate India Society, New Delhi

ITA 164/DEL/2015

• Counselvise Citation: 16420114 RSA 2015
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 15-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 08-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KR CHOPRA
• Assessee Lawyers: LALIT KRISHNAMURTHY
• Keywords: Charitable institution
• Section: 12; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC-2, NEW DELHI) BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER I.T.A. NO.164 /DEL/2015 ASSESSMENT YEAR : 2010-11 DCIT, (E), VS. EDUCATE INDIA SOCIETY, CIRCLE 1(1), 19,RAJDOOT MARG, NEW DELHI NEW DELHI GIR / PAN:AAAAE0085E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANOJ KR. CHOPRA, SR. DR RESPONDENT BY : SMT. LALIT KRISHNAMURTHY, CA DATE OF HEARING : 15.07.2015 DATE OF PRONOUNCEMENT : 17.07.2015 ORDER THIS IS AN APPEAL FILED BY ASSESSEE DIRECTED AGAIN ST THE ORDER OF LD. CIT(A) XXI, NEW DELHI, DATED 27.02.2014 FOR THE ASS ESSMENT YEAR 2010- 11 ON THE FOLLOWING GROUNDS: I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE CARRY FORW ARD OF LOSSES DISREGARDING THE FACTS THAT THE SET-OFF AND CARRY F ORWARD OF LOSSES HAVE BEEN DEALT WITH BY THE PROVISIONS OF SECTION 71,72, 73 & 74 OF THE I. T. ACT, 1961. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE CARRY FORW ARD OF LOSSES DISREGARDING THE FACTS THAT THE PROVISIONS OF SECTI ON ARE APPLICABLE TO CASES WHOS INCOME ARE TAXABLE AS PER PROVISIONS OF THE ACT AND NOT APPLICABLE IN THE CASES WHO ARE CLAIMING EXEMPTION U/S 11 AND 12 OF THE I. T. ACT, 1961. 2. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT TH E FIRST APPELLATE AUTHORITY HAS FOLLOWED THE JUDGEMENT OF HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF DIT VS RAGHUVANSHI CHARITABLE TRUST 197 TAXMAN 170 (DEL.) AND HELD AS UNDER:- ITA NO.164/DEL/2015 2 8. IT WOULD BE FRUITFUL TO REFER TO THE DISCUSSION S CONTAINED IN INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS)'S C ASE (SUPRA ), PER HON'BLE MR. JUSTICE S.H. KAPADIA, WHICH IS ADVANCED BEFORE US BY THE LEARNED COUNSEL FOR THE REVENUE TO REPEL THE SAME I N THE FOLLOWING WORDS: 'NOW COMING TO QUESTION NO.3, THE POINT WHICH ARISE S FOR CONSIDERATION IS WHETHER EXCESS OF EXPENDITURE IN THE EARLIER YEARS CAN BE ADJUSTED AGAINST THE INCOME OF THE SUB SEQUENT YEAR AND WHETHER SUCH ADJUSTMENT SHOULD BE TREATED AS APPLICATION OF INCOME IN THE SUBSEQUENT YEAR FOR CH ARITABLE PURPOSES? IT WAS ARGUED ON BEHALF OF THE DEPARTMENT THAT EXPENDITURE INCURRED IN THE EARLIER YEARS CANNOT BE MET OUT OF THE INCOME OF THE SUBSEQUENT YEAR AND THAT UTILIZAT ION OF SUCH INCOME FOR MEETING THE EXPENDITURE OF EARLIER YEARS WOULD NOT AMOUNT TO APPLICATION OF INCOME FOR CHARITABLE OR R ELIGIOUS PURPOSES. IN THE PRESENT CASE, THE ASSESSING OFFICE R DID NOT ALLOW CARRY FORWARD OF THE EXCESS OF EXPENDITURE TO BE SET OFF AGAINST THE SURPLUS OF THE SUBSEQUENT YEARS ON THE GROUND .THAT IN THE CASE OF A CHARITABLE TRUST, THE INCOME WAS ASSESSABLE UNDER SELF-CONTAINED CODE MENTIONED IN SECTION 11 T O SECTION 13 OF THE INCOME-TAX ACT AND THAT THE INCOME OF THE CH ARITABLE TRUST WAS NOT ASSESSABLE UNDER THE HEAD 'PROFITS AND GAIN S OF BUSINESS' UNDER SECTION 28 IN WHICH THE PROVISION F OR CARRY FORWARD OF LOSSES WAS RELEVANT. THAT, IN THE CASE O F A CHARITABLE TRUST, THERE WAS NO PROVISION FOR CARRY FORWARD OF THE EXCESS OF EXPENDITURE OF EARLIER YEARS TO BE ADJUSTED AGAINST INCOME OF THE SUBSEQUENT YEARS. WE DO NOT FIND ANY MERIT IN T HIS ARGUMENT OF THE DEPARTMENT. INCOME DERIVED FROM THE TRUST PR OPERTY HAS ALSO GOT TO BE COMPUTED ON COMMERCIAL PRINCIPLES AN D IF COMMERCIAL PRINCIPLES ARE APPLIED THEN ADJUSTMENT O F EXPENSES INCURRED BY THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE EARLIER YEARS AGAINST THE INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAVE TO BE REGARDED AS APPLICA TION OF INCOME OF THE TRUST FOR CHARITABLE AND RELIGIOUS PU RPOSES IN THE SUBSEQUENT YEAR IN WHICH ADJUSTMENT HAS BEEN MADE H AVING REGARD TO THE BENEVOLENT PROVISIONS CONTAINED IN TH E SECTION 11 OF THE ACT AND THAT SUCH ADJUSTMENT WILL HAVE TO BE EXCLUDED FROM THE INCOME OF THE TRUST UNDER SECTION 11(1XA) OF THE ACT. ITA NO.164/DEL/2015 3 OUR VIEW IS ALSO SUPPORTED BY THE JUDGMENT OF THE G UJARAT HIGH COURT IN THE CASE OF CIT V. SHRI PLOT SWETAMBER MUR TI PUJAK JAIN MANDAL [1995]211 ITR 293. ACCORDINGLY, WE ANSW ER QUESTION NO.3 IN THE AFFIRMATIVE, I.E., IN FAVOUR O F THE ASSESSEE AND AGAINST THE DEPARTMENT.' 9. IT IS CLEAR FROM THE ABOVE THAT AS MANY AS FIVE HIGH COURTS HAVE INTERPRETED THE PROVISION IN AN IDENTICAL AND SIMIL AR MANNER. LEARNED COUNSEL FOR THE REVENUE COULD NOT SHOW ANY JUDGMENT WHERE ANY OTHER HIGH COURT HAS TAKEN CONTRARY VIEW. SINCE WE ARE I N AGREEMENT WITH THE VIEW TAKEN BY THE AFORESAID HIGH COURT, WE ANSW ER THESE QUESTIONS IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 3. CONSISTENT WITH THE VIEW THEREIN, WE UPHOLD THE ORDER OF FIRST APPELLATE AUTHORITY WHEREIN HE DIRECTED THE A.O. TO ALLOW THE BENEFIT OF CARRY FORWARD AND DEFICIT / LOSS. 4. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMIS SED. 5. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JULY, 2015. SD./- (J. S. REDDY) ACCOUNTANT MEMBER DATE: 17 TH JULY, 2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.164/DEL/2015 4 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 16/7 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 17/7 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 17/7/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 17/7 SR. PS/PS 7 FILE SENT TO BENCH CLERK 17/7 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER