Kanohar Lal Trust Society, Meerut V. Addl. CIT, Meerut

ITA 1724/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2713 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 27-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 24-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY VERMA
• Assessee Lawyers: V RAJ KUMAR; K SAMPTH
• Keywords: Charitable institution
• Section: 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. AMIT SHUKLA , JM ITA NO. 1724/DEL/2014 : ASSTT. YEAR : 2007 - 08 KANOHAR LAL TRUST SOCIETY, 125, HARI NAGAR, ME ERUT VS ADDL. COMMISSIONER OF INCOME TAX, RANGE - 1, MEERUT (APPELLANT) (RESPONDENT) PAN NO. A A BTS3019G ASSESSEE BY : SH. K. SAMPTH, ADV. & SH. V. RAJKUMAR, ADV. REVENUE BY : SH. VIJAY VERMA, CIT DR DATE OF HEARING : 2 7 .07 .201 7 DATE OF PRONOUNCEMENT : 28 . 0 7 .201 7 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 31.12.2013 OF LD. CIT(A) , MEERUT . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT THE LD. CI T(A) HAS ERRED FIRSTLY IN RENAMING THE CARRY FORWARD OF SURPLUS APPLICATION OF FUNDS TO BE DEFICIT OF EXPENDITURE. TO THIS EXTENT, THE RELIEF ALLOWED DESERVES TO BE CORRECTED. 2. THAT THE LD. CIT(A) HAS ERRED IN RESTRICTING THE CARRY FORWARD OF APPLICATIO N OF INCOME MINUS LOANS, ADVANCES OR VOLUNTARY DONATIONS WHEREAS THE SAME ITA NO. 1724 /DEL /201 4 KANOHAR LAL TRUST SOCIETY 2 SHOULD BE CALCULATED AND ALLOWED TO BE CARRIED FORWARD IN TOTALITY AS CLAIMED. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 22.10.2007 DECLARIN G A LOSS OF RS.29,22,679/ - WHICH INCLUDED BROUGHT FORWARD LOSS OF EARLIER YEARS. THE SAID RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE AO OBSERVED THAT T HE OBJECTS OF THE ASSESSEE TRUST AS PER THE COPY OF THE TRUST DEED WERE MAINLY RUNNING EDUCATIONAL INSTITUTIONS AND RELATED ACTIVITIES WHICH WERE FOUND TO BE IN ACCORDANCE WITH BYE - LAWS AND CHARITABLE IN NATURE. THE AO ASSESSED THE INCOME AT NIL BY OBSERVI NG IN PARA 4 OF THE ASSESSMENT ORDER DATED 27.11.2009 AS UNDER: 4. THE BOOKS OF ACCOUNTS WERE CALLED FOR AND TEST CHECKED VIS - - VIS THE OBJECTS OF THE SOCIETY AND REASONABLENESS OF THE EXPENDITURE DONE. IT IS ALSO FOUND THAT ALL THE CONDITIONS PRESCRIBED U/S 11 AND 12 OF THE I.T. ACT, 1961 HAVE BEEN FULFILLED AND THE PERCENTAGE OF RECEIPTS APPLIED TOWARDS CHARITABLE PURPOSES, BEING MORE THAN 85%, THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 11 OF THE I.T. ACT, 1961. ACCORDINGLY, AFTER DISCUSSION THE TOTAL IN COME IS ASSESSED AT NIL. 4 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) ON THE GROUND THAT THE AO FAILED TO GIVE A FINDING THAT ITA NO. 1724 /DEL /201 4 KANOHAR LAL TRUST SOCIETY 3 THE SURPLUS EXPENDITURE COVER THE INCOME CALCULATED AS PER THE SECTION 11 OF THE ACT SHOULD BE ALLOWED TO BE CARRY FORWARD TO THE SUBSEQUENT YEAR. THE LD. CIT(A) DIRECTED THE AO TO ASCERTAIN THE EXTENT OF APPLICATION OF INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES WHICH HAD BEEN SOURCED OUT OF INCOME OF THE ASSESSEE (AND NOT LOANS, ADVANCES OR VOLUNTARY DON ATIONS) AND ALLOW THE BENEFIT OF CARRY FORWARD ONLY TO THAT EXTENT. 5 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INCOME OF THE ASSESSEE FROM ALL THE SOURCE S TO BE CONSIDERED FOR THE APPLICATION TOWARDS CHARITABLE OR RELIGIOUS PURPOSES . 6 . IN HIS RIVAL SUBMISSIONS THE LD. DR SUBMITTED THAT IF ANY DONATION IS THERE FOR THE CORPUS FUND THAT SHOULD NOT BE CONSIDERED AS INCOME TO BE UTILIZED FOR CHARITABLE AND RELIGIOUS PURPOSES. 7 . AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES, WE MODIFY THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) TO THE EXTENT AND DIRECT THE AO TO CONSIDER THE VOLUNTARY DONATIONS , IF NOT RECEIVED FOR CORPUS FUND AS APPLICATION FOR CHARITABLE AND RELIGIOUS PURPOSE S AND ANY EXCESS EXPENDITURE OR CONVERSELY, THE DEFICIT OF INCOME IS PERMITTED TO BE CARRY ITA NO. 1724 /DEL /201 4 KANOHAR LAL TRUST SOCIETY 4 FORWARD TO BE TREATED AS APPLICATION OF INCOME IN SUBSEQUENT YEAR . 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ( ORDER PRON OUNCED IN THE COURT ON 28 /0 7 /2017 ) SD/ - SD/ - ( AMIT SHUKLA ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: 28 /07 /2017 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASS ISTANT REGISTRAR