ACIT (E), CIRCLE- 1(1), NEW DELHI V. INDRAPRASTHA INSTITUTE OF INFORMATION TECHNOLOGY, NEW DELHI

ITA 1685/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9549 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 09-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA
• Keywords: Charitable institution; Question of law
• Section: 12A; 13; 28; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCING) ITA NO.1685/DEL/2018 ASSESSMENT YEAR: 2014-15 ACIT (E) CIRCLE -1 (1), NEW DELHI VS INDRAPRASTHA INSTITUTE OF INFORMATION TECHNOLOGY, IIT DELHI, OKHLA INDUSTRIAL AREA, PHASE-III, NEW DELHI PAN NO. AAALI0123Q (APPELLANT) (RESPONDENT) APPELLANT BY MS. ANIMA, SR. DR RESPONDENT BY MS. LALITHA KRISHNA MURTHY, CA MS. HIMANI JAIN, CA DATE OF HEARING: 28/07/2021 DATE OF PRONOUNCEMENT: 28/07/2021 ORDER PER N. K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST TH E ORDER OF THE CIT(A)-40, DELHI DATED 22.12.2017 PERTAINING TO A.Y. 2014-15. 2 2. THE GRIEVANCE OF THE REVENUE READ AS UNDER :- I) WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE AND IN LAW, LD. CIT (A) WAS CORRECT IN ALLOWING THE CARRY FORWARD OF DEFICIT OF RS.6,40,70,201/- AND IGNORING THE FACT THAT IN C ASE OF AN ASSESSEE REGISTERED U/S 12A OF THE ACT, ITS TOTAL I NCOME IS REQUIRED TO BE COMPUTED IN ACCORDANCE WITH SECTION 11,12 & 13 O F THE ACT AND PROVISION OF THESE SECTIONS DO NOT ENVISAGE SET-OFF OF DEFICIT/LOSS/EXCESS EXPENDITURE OF EARLIER ASSESSME NT YEAR? II) THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARIN G. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE SOCIETY IS REGISTERED U/S 12A OF THE INCOME-TAX ACT VIDE ORDER F.N.DIT(E)/2009-10/DEL-IR20110-10072009/453 DATED 10.07.2009. IT IS ALSO REGISTERED U/S- 80G(5)(VI) V IDE ORDER NO. DIT(E) 2011-12/DEL-IE22568-08042011/35 DATED 08.04. 2011. THE MAIN OBJECT AND ACTIVITIES OF THE INSTITUTION A RE AS:- (A) TO ESTABLISH AND INCORPORATE A NON-AFFILIATING TEACHING INSTITUTE FOR IMPARTING IT EDUCATION IN DELHI. (B) TO FACILITATE AND PROMOTE STUDIES, RESEARCH AND CONSULTANCY WORK IN INFORMATION TECHNOLOGY AND ITS APPLICATION DOMAINS. (C) TO ACHIEVE EXCELLENCE IN IT AND MATTERS CONNECT ED THEREWITH OR INCIDENTAL THERETO (D) TO CREATE A PARADIGM SHIFT IN THE WAY IT CAN BE SUED FOR IMPROVING THE DELIVERY OF SERVICE IN SELECTED DOMAI NS. 3 4. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDING THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED CARRY FORW ARD OF EXCESS APPLICATION OF INCOME TO THE TUNE OF RS.64070201/- FOR NEXT YEARS SET OFF. THE ASSESSEE WAS ASKED TO JUSTIFY AND SUB STANTIATE AS TO WHY NOT THE CLAIM OF EXCESS APPLICATION OF INCOME B E DISALLOWED TO BE CARRY FORWARD. THE ASSESSEE FILED A DETAILED RE PLY IN SUPPORT OF ITS CLAIM WHICH DID NOT FIND ANY FAVOUR WITH THE AO WHO PROCEEDED TO DISALLOW THE CARRY FORWARD OF THE EXCE SS APPLICATION OF INCOME. 5. ASSESSEE AGITATED THE MATTER BEFORE THE CIT(A) AND REITERATED ITS CONTENTION. 6. AFTER CONSIDERING THE FACTS AND THE SUBMISSION S THE CIT(A) DRAWING SUPPORT FROM THE DECISION OF THE HONBLE HI GH COURT OF DELHI IN THE CASE OF RAGHUVANSHI CHARITABLE TRUST 1 97 TAXMAN 170 DIRECTED THE AO TO ALLOW THE SET OFF OF CARRY F ORWARD DEFICIT. 7. BEFORE US THE DR STRONGLY SUPPORTED THE FINDINGS OF THE AO. IT IS THE SAY OF THE DR THAT THERE IS NO PROVISION IN THE ACT WITH REGARD TO TRUST WHICH ALLOWS FOR DETERMINATION OF L OSS U/S.11, CARRY FORWARD OF THE SAME THE SUBSEQUENT YEARS TO B E SET OFF AGAINST INCOMES OF THE SUBSEQUENT YEARS. THE COUNS EL STRONGLY SUPPORTED THE FINDINGS OF THE CIT(A). 4 8. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. THE HONBLE DELHI HIGH COUR T IN THE CASE OF RAGHUVANSHI CHARITABLE TRUST 971 TAXMAN 170 HELD AS UNDER :- 8. IT WOULD BE FRUITFUL TO REFER TO THE DISCUSSIONS CONTAINED IN INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS)' S CASE (SUPRA), PER HON'BLE MR. JUSTICE S.H. KAPADIA, WHIC H IS ADVANCED BEFORE US BY THE LEARNED COUNSEL FOR THE R EVENUE TO REPEL THE SAME IN THE FOLLOWING WORDS : 'NOW COMING TO QUESTION NO.3, THE POINT WHICH ARISE S FOR CONSIDERATION IS : WHETHER EXCESS OF EXPENDITUR E IN THE EARLIER YEARS CAN BE ADJUSTED AGAINST THE INCOME OF THE SUBSEQUENT YEAR AND WHETHER SUCH ADJUSTMENT SHOULD BE TREATED AS APPLICATION OF INCOME IN THE SUBSEQUENT YEAR FOR CHARITABLE PURPOSES? IT WAS ARGUED ON BEHALF OF THE DEPARTMENT THAT EXPENDITURE INCURRED IN THE EARLIER YEARS CANN OT BE MET OUT OF THE INCOME OF THE SUBSEQUENT YEAR AND THAT UTILIZATION OF SUCH INCOME FOR MEETING THE EXPENDITURE OF EARLIER YEARS WOULD NOT AMOUNT TO APPLICATION OF INCOME FOR CHARITABLE OR RELIGIOUS 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 TH E SUBSEQUENT YEARS ON THE GROUND THAT IN THE CASE OF A 5 CHARITABLE TRUST, THEIR INCOME WAS ASSESSABLE UNDER SELF-CONTAINED CODE MENTIONED IN SECTION 11 TO SECT ION 13 OF THE INCOME-TAX ACT AND THAT THE INCOME OF THE CHARITABLE TRUST URNS NOT ASSESSABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS' UNDER SECTION 28 IN WHICH THE PROVISION FOR CARRY FORWARD OF LOSSES WAS RELEVANT. THAT, IN THE CASE OF 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 THIS ARGUMENT OF THE DEPARTMENT. INCOME DERIVED FROM THE TRUST PROPERTY HAS ALSO GOT TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND IF COMMERCIAL PRINCIPLES ARE APPLIED THEN ADJUSTMENT OF 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 HAV E TO BE REGARDED AS APPLICATION OF INCOME OF THE TRUS T FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE SUBSEQUENT YEAR IN WHICH ADJUSTMENT HAS BEEN MADE HAVING REGARD TO THE BENEVOLENT PROVISIONS CONTAINED IN THE SECTION 11 OF THE ACT AND THAT SUC H ADJUSTMENT WILL HAVE TO BE EXCLUDED FROM THE INCOME OF THE TRUST UNDER SECTION 11(1)(A) OF THE ACT. OUR VIEW IS ALSO SUPPORTED BY THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF CIT V. SHRI PLOT 6 SWETAMBERMURTIPUJAK JAIN MANDAL [1995] 211 ITR 293. ACCORDINGLY, WE ANSWER QUESTION NO. 3 IN THE AFFIRMATIVE, I.E., IN FAVOUR OF 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 SIMILAR MANNER. LEARNED COUNSEL FOR THE REVENUE COULD NOT S HOW ANY JUDGMENT WHERE ANY OTHER HIGH COURT HAS TAKEN CONTR ARY VIEW. SINCE WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE AFORESAID HIGH COURT, WE ANSWER THESE QUESTIONS IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 10. BEFORE WE PART WITH, WE MAY POINT OUT THAT LEAR NED COUNSEL FOR THE ASSESSEE IN IT A NO. 589/2008 AND I TA NO. 25/2009 SUBMITTED THAT THE QUESTIONS INVOLVES IN TH ESE TWO APPEALS ARE PURELY ACADEMIC. IN THESE CASES EVEN IN THE CURRENT YEAR, MORE THAN 75 PER CENT/85 PER CENT (AS THE CASE MAY BE) OF THE INCOME WAS APPLIED FOR CHARITABLE PU RPOSE AND THEREFORE, NO SET OFF WAS REQUIRED TO BE CLAIMED. F URTHER, IT IS NOT NECESSARY TO GO INTO THIS ISSUE ONCE WE HAVE DE CIDED THE QUESTION OF LAW IN FAVOUR OF THE ASSESSEE.' 9. THE HONBLE SUPREME COURT IN THE CASE OF CIT (E) VS. SUBROS EDUCATIONAL SOCIETY IN M.A. 941/2018 IN C. A. NO. 5 171/2016 WAS SEIZED WITH THE FOLLOWING QUESTION :- 7 (A) WHETHER ANY EXCESS EXPENDITURE INCURRED BY THE TRUST/ CHARITABLE INSTITUTION IN EARLIER ASSESSMENT YEAR COULD BE ALLOWED TO BE SET OFF AGAINST INCOME OF SUBSEQUENT YEARS BY INVOKING SECTION 11 OF THE INCO ME TAX ACT, 1961 ? 10. AND THE ORDER OF THE HONBLE SUPREME COURT HELD AS UNDER :- ORDER IN THIS APPLICATION FILED BY THE INCOME TAX DEPARTM ENT IT IS STATED THAT CIVIL APPEAL NO. 5171 OF 2016 ARISES OUT OF SP ECIAL LEAVE PETITION (C) . . . CC NO. 8 982/2016 WAS TAGGED WITH OTHER APPEALS AND THE BATCH MATTERS WERE DECIDED BY THIS COURT ON 13.12.2017. HOWEVER, THE FOLLOWING QUESTION WAS ALSO RAISED IN THE INSTANT APPEAL WHICH WAS NOT THE SUBJECT MATTER OF THOSE APPEALS: (A)WHETHER ANY EXCESS EXPENDITURE INCURRED BY THE TRUST/CHARITABLE INSTITUTION IN EARLIER ASSESSMENT YEAR COULD BE ALL OWED TO BE SET OFF AGAINST INCOME OF SUBSEQUENT YEARS BY INVOKING SECT ION 11 OF THE INCOME TAX ACT, 1961?' TO THIS EXTENT, MR. K. RADHAKRISHNAN, LEARNED SENIO R COUNSEL APPEARING ON BEHALF OF THE APPLICANT/APPELLANT IS C ORRECT. THEREFORE, WE HAVE HEARD HIM ON THE AFORESAID QUESTION OF LAW AS WELL BUT DID NOT FIND ANY MERIT THEREIN. THE MISCELLANEOUS APPLICATION IS DISMISSED. 11. AS NO DISTINGUISHING DECISION HAVE BEEN BROUGHT TO OUR NOTICE AND AS THE CIT(A) HAS FOLLOWED THE DECISION OF THE HONBLE 8 JURISDICTIONAL HIGH COURT (SUPRA) WE DO NOT FIND ER ROR OR INFIRMITY IN THE FINDINGS OF THE CIT(A). 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ACCORDING DISMISSED. 13. DECISION ANNOUNCED IN THE OPEN COURT IN THE PR ESENCE OF BOTH THE REPRESENTATIVES ON 28.07.2021. SD/- SD/- ( K.NARASIMHA CHARY ) (N. K. BILLAIYA) JUDICIAL MEMBER A CCOUNTANT MEMBER *NEHA* DATE:-28.07.2021 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI 9 DATE OF DICTATION 28.07. 2021 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. TH E DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER