Appeal details
Counselvise Citation
[2020] 111 COUNSELVISE.COM (IT) 7157 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 9 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
03-02-2020
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
E
Assessment Year
2012-2013
Appeal Filed On
06-04-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.2061/DEL./2017 ASSESSMENT YEAR: 2012-13 ITO(E), ROOM NO. 105, CGO COMPLEX-2, KAMLA NEHRU NAGAR, GHAZIABAD VS. OM CHARITABLE TRUST, 47/L-4, JAWAHAR QUARTER, MEERUT. PAN :AAATO1865D (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THE PRESENT APPEAL BY THE REVENUE IS DIRECTED AGAI NST ORDER DATED 20.01.2017 PASSED BY LEARNED COMMISSIONER OF INCOME TAX(APPEALS), MEERUT [IN SHORT THE CIT(A)] PERTAI NING TO ASSESSMENT YEAR 2012-13. THE REVENUE HAS RAISED FOL LOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1.60.62.0 47/- BY OPINING THAT THE PROVISION OF SECTION 13 IS NOT APPLICABLE WITHOUT CONSIDERING THE FACT THAT ASSESSEE HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITY. APPELLANT BY SHRI V. RAJA KUMAR, ADV. RESPONDENT BY MS. RAKHI VIMAL, SR.DR DATE OF HEARING 23.01.2020 DATE OF PRONOUNCEMENT 03.02.2020 2 ITA NO.2061/DEL/2017 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN DIRECTING TO ALLOW TO THE ASSESSEE BROUGHT FORWARD LOSS (BEING EXCESS APPLICATION) AMO UNTING TO RS.5,80,12,138/- TO CARRY FORWARDED TO NEXT YEAR(S) FOR SETTING OLD AGAINST INCOME OF SUBSEQUENT YEAR. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS DIRECTING TO ALLOW BROUG HT FORWARD OF LOSS OF RS.5,80.12.138/- WITHOUT CONSIDERING THE FA CTS THAT ASSESSEE IS REGISTERED U/S 12AA OF THE I.T. ACT, AN D THE PROVISION OF SECTION 11/12 A A OF THE L.T. ACT. DOES NOT ALLO W CARRYING FORWARD OF EXCESS APPLICATION TO SUBSEQUENT YEAR(S) . 4. APPELLANT CRAVES LEAVE TO MODIFY/ AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. 2. THE BRIEF FACT OF THE CASE ARE THAT THE ASSESSEE F ILED INCOME TAX RETURN ON 05.10.2012 DECLARING NIL INCOME. THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICE UNDER SE CTION 143(2) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) WAS I SSUED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FROM THE PERU SAL OF THE DETAILS FILED BY THE ASSESSEE, THE ASSESSING OFFICE R FOUND THAT THE ASSESSEE HAD MADE INVESTMENT IN PURCHASE OF LAND AN D FLATS AMOUNTING TO RS.13,80,840/- AND RS. 1,03,86,970/- AND HAD ALSO GIVEN ADVANCE OF RS.42,94,237/- FOR FLAT. THE ASSESSEE WAS ASKED BY THE ASSESSING OFFICER TO EXPLAIN THE INVES TMENT MADE OF RS.1,17,67,810/- IN PURCHASE OF LAND AND ADVANCE MA DE OF RS.42,94,237/- FOR PURCHASE OF FLAT BECAUSE, ACCORD ING TO THE AO, THEY ARE NOT INVESTED FOR CHARITABLE PURPOSES. THE ASSESSEE FILED REPLY; HOWEVER, THE ASSESSING OFFICER WAS NOT SATIS FIED WITH THE REPLY AND HELD THAT THE ASSESSEE DID NOT FILE ANY E VIDENCE IN SUPPORT OF THE CLAIM THAT LAND AND FLATS HAD BEEN P URCHASED FOR CARRYING OUT CHARITABLE ACTIVITIES. ACCORDING TO TH E LEARNED AO, THE ASSESSEE ALSO DID NOT PRODUCE ANY EVIDENCE THAT ACT IVITIES OF THE 3 ITA NO.2061/DEL/2017 TRUST AS MENTIONED IN THE DEED CAN BE DONE IN THE F LATS AND LANDS PURCHASED BY THE TRUST. CONSEQUENTLY, THE ASSESSING OFFICER MADE DISALLOWANCE OF RS. 13,80,840/- AND RS.1,03,86,970/ - FOR PURCHASE OF LAND AND RS.42,94,237/- FOR PURCHASE OF FLAT, TOTALING RS.1,60,62,047/-. 2.1 ON FURTHER APPEAL, LEARNED CIT(A) QUASHED THE ORDE R OF THE AO AND HELD THAT THE INVESTMENTS MADE BY THE ASSESS EE IN PURCHASE OF LAND AT VILLAGE SAMASPUR, JHUNJHUNI AND SIKANDARABAD AS ALSO FOR PURCHASE OF FLATS ARE IN P REPARATION TO ESTABLISHING A UNIVERSITY AND NOT IN THE NATURE OF ANY REAL ESTATE OPERATION. THE ASSESSEE IS, THEREFORE, ENTITLED TO BENEFITS OF SECTION 11 OF THE ACT. THE LEARNED CIT(A) ALSO ALL OWED THE BENEFIT OF CARRY FORWARD OF LOSSES TO NEXT ASSESSMENT YEAR. HENCE, THE REVENUE IS BEFORE THE ITAT. 3. GROUND NO. 1 OF THE APPEAL OF REVENUE RELATE TO DE NYING THE BENEFIT OF SECTION 11 OF THE ACT AND ADDITION OF RS .1,60,62,047/-. 3.1 BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE THAT TH E INVESTMENT WAS FOR THE PURPOSES OF CHARITABLE ACTIVITIES AND, THEREFORE, THE ASSESSING OFFICER IS JUSTIFIED IN DENYING THE BENEF IT OF EXEMPTION UNDER SECTION 11 OF THE ACT. 3.2 ON THE CONTRARY, THE LEARNED AUTHORIZED REPRESENTA TIVE SUBMITTED THAT IDENTICAL ISSUE WAS INVOLVED IN ASSE SSMENT YEAR 2011-12, I.E., IMMEDIATELY PRECEDING ASSESSMENT YEA R, WHEREIN THE ASSESSEES INVESTMENT IN PURCHASE OF LAND, TUB E WELL, FLAT ETC., TOTALING TO RS.2,67,51,128/-, WHICH WAS NOT ALLOWED BY THE ASSESSING OFFICER AS INVESTMENT MADE FOR THE PURPOS E OF THE 4 ITA NO.2061/DEL/2017 CHARITABLE. HE SUBMITTED THAT THE TRIBUNAL IN ITA N O. 4961/DEL/2015 FOR ASSESSMENT YEAR 2011-12 (ORDER DA TED 01.01.2019) HAS DISMISSED THE APPEAL OF THE REVENUE AND ALLOWED THE BENEFIT TO THE ASSESSEE. ACCORDINGLY, HE SUBMIT TED THAT THE ISSUE IN DISPUTE IS COVERED IN FAVOUR OF THE ASSESS EE, THUS, THE APPEAL OF THE REVENUE MIGHT BE DISMISSED. 3.3 WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN THE YEAR UNDER CONSIDERATION ALSO, THE ASSESSEE HAS MADE INV ESTMENT IN LAND AND ADVANCES FOR CONSTRUCTION TOWARDS CORPUS D ONATIONS. THE LEARNED CIT(A) HAS ACCORDINGLY AFTER CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE, ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: I AGREE WITH THE CONTENTIONS OF THE ASSESSEE FOR T HE IMPUGNED YEAR THAT THE INVESTMENT IS MADE TOWARDS PURCHASE OF LAN D AND FLATS TO MAKE APPROPRIATE COMPLIANCE WITH UP PRIVATE UNIVERS ITIES ACT, 2010 WHICH REQUIRES A MINIMUM OF 50 ACRES OF LAND FOR ES TABLISHING A UNIVERSITY. I ALSO FIND THAT THE TRUSTEES OF THE AS SESSEE TRUST WERE ALSO A PART OF THE CITY EDUCATIONAL AND SOCIAL WELF ARE SOCIETY WHICH IS ALREADY RUNNING SEVERAL EDUCATIONAL INSTITUTION AND VIDE A COURT ORDER IN MISC. CASE NUMBER 87 OF 2007, THE HONBLE COURT OF ADDITIONAL DISTRICT JUDGE, COURT NO. 2, MEERUT HAS VIDE ORDER DATED 05.03.2008 ORDERED TRANSFER OF PROPERTIES AND INSTI TUTIONS FROM CITY EDUCATIONAL AND SOCIAL WELFARE SOCIETY TO THE ASSES SEE TRUST WHICH AFFIRMS THE INTENTION OF THE ASSESSEE TO ESTABLISH A UNIVERSITY. THE ARGUMENT THAT A UNIVERSITY CANNOT BE ESTABLISHE D WITHOUT HAVING INVESTED IN THE REQUISITE INFRASTRUCTURE FIR ST IS OF SUBSTANCE AND I HOLD THAT THE INVESTMENTS MADE BY THE ASSESSE E IN PURCHASE OF LAND AT VILL. SAMASPUR, JHUNJHUNI AND SIKANDARA BAD AS ALSO FOR PURCHASE OF FLATS ARE IN PREPARATION TO ESTABLISHIN G A UNIVERSITY AND NOT IN THE NATURE OF ANY REAL ESTATE OPERATION. T HE ASSESSEE IS THEREFORE ENTITLED TO BENEFITS OF SECTION 11 OF THE INVOCATION OF SECTION 13(1)(B) BY THE AO IS MISDIRECTED AND UNFOUNDED AND THEREFORE QUASHED. GROUND NO. 1-6 ARE, THEREFORE, ALLOWED. 5 ITA NO.2061/DEL/2017 3.4 WE FIND THAT IDENTICAL ISSUE WAS INVOLVED IN THE I MMEDIATELY PRECEDING ASSESSMENT YEAR, WHEREIN THE TRIBUNAL IN ITA NO. 4961/DEL/2015 (SUPRA) HAS DECIDED THE ISSUE IN FAVO UR OF THE ASSESSEE BY OBSERVING AS UNDER: 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. IT IS AN ADMITTED FACT THAT ASSESSEE TRUST IS REGISTERED U/S 12AA OF THE ACT. T HE MAIN OBJECTS OF THE ASSESSEE TRUST ARE TO WORK FOR UPLIFTMENT OF TH E RURAL AREA AND TO PROMOTE EDUCATION. THE ASSESSEE IN PURSUANCE OF THE OBJECTS OF THE TRUST CARRIED OUT CERTAIN ACTIVITIES AS EXPLAINED A BOVE. THE ASSESSEE FURTHER EXPLAINED THAT IT WANTED TO OPEN A PRIVATE UNIVERSITY AND FOR THAT EFFORTS WERE GOING ON TO ACQUIRE HUGE LAND AND TO COMPLY WITH THE RULES AND REGULATIONS FOR FORMING PRIVATE UNIVE RSITY. IN REFERENCE THERETO ASSESSEE MADE INVESTMENT IN LAND AND FLATS WHICH WERE ULTIMATELY TO BE CONVERTED INTO SOURCE OF OPENING O F A PRIVATE EDUCATIONAL UNIVERSITY. IT IS A FACT THAT SECTION L L(5)(X) AUTHORIZES INVESTMENT IN IMMOVABLE PROPERTY. THE AO HAS NOT CO NSIDERED THE INVESTMENT IN LAND AND FLAT HAS BEEN DONE FOR CHARI TABLE PURPOSES. HE HAS NOT ACCEPTED THE EXPLANATION OF ASSESSEE THA T INVESTMENT IN IMMOVABLE PROPERTY HAS BEEN DONE AS PRELIMINARY STE PS TOWARDS ESTABLISHMENT OF UNIVERSITY. THE AO WAS UNDER THE I MPRESSION THAT IN ORDER TO QUALIFY FOR CHARITABLE PURPOSE, THE TRU ST HAS TO SPEND THE AMOUNT ON CHARITABLE ACTIVITIES ONLY. HOWEVER, SECT ION LL(5)(X) OF THE ACT CLEARLY AUTHORIZE INVESTMENT IN IMMOVABLE PROPE RTY FOR CLAIMING EXEMPTION U/S 11 OF THE ACT. IF THE FINDINGS OF THE AO ARE ACCEPTED THEN NO INVESTMENT WOULD BE QUALIFIED U/S 11(5) OF THE ACT. SINCE THE INVESTMENT IN IMMOVABLE PROPERTY IS PERMITTED AS PE R SECTION LL(5)(X) OF THE ACT, THEREFORE, THERE WAS NO NECESSITY FOR T HE ASSESSEE TO PROVE THAT IT WAS DONE SO FOR CHARITABLE PURPOSES. SECTION 11(5) PROVIDES THAT ACCUMULATED AMOUNT U/S 11(2) HAS TO B E KEPT IN SPECIFIED MOODS OF INVESTMENT WHICH INCLUDE INVESTM ENT IN IMMOVABLE PROPERTY. IT DOES NOT PROVIDE SUCH IMMOVA BLE PROPERTY MUST BE MEANT FOR ANY SPECIFIC PURPOSES. THEREFORE, THERE IS NOTHING WRONG COMMITTED BY ASSESSEE SO AS TO VIOLATE ANY PR OVISIONS OF LAW. THE IDENTICAL ISSUE WAS CONSIDERED AND DECIDED BY I TAT DELHI G BENCH IN THE CASE OF M/S THE SCIENTIFIC & EDUCATION AL ADVANCEMENT SOCIETY (SUPRA) IN WHICH IN PARA 13 IT WAS HELD AS UNDER: 13. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ONE RECO RD. THE LD.CIT(A) RECORDED IN THE ORDER THAT LAND AT DHOKRA WAS PURCHASED BY THE ASSESSEE-SOCIETY IN THE YEARS 2001 AND 2003. IT WAS SOLD FOR A CONSIDERATION OF RS. 9.11 C RORES IN AY 2007-08 WHICH RESULTED INTO PROFIT/INCOME AT RS. 8. 44 CRORES WHICH WAS CLAIMED AS EXEMPT U/S 11(1 A) OF THE I.T. ACT, 6 ITA NO.2061/DEL/2017 1961, IN AY 2007-08. THE ASSESSEE-SOCIETY ALSO FILE D FORM-10 ALONG WITH RETURN OF INCOME IN WHICH INCOME TO THE EXTENT OF RS. 7,22,67,210/ - WAS SET APART FOR UTILIZATION IN FUTURE PURSUANT TO THE RESOLUTION DATED 31.10.2007 WHEREIN IT WAS RESOLVED THAT MONEY RECEIVED AFTER SALE OF THE ABOV E PROPERTY MAY BE REINVESTED FOR PURCHASE OF LAND IN GURGAON F OR EDUCATIONAL/VOCATIONAL PURPOSES. THE ASSESSEE-SOCIE TY, OUT OF THE SALE CONSIDERATION, MADE INVESTMENT IN IMMOVABL E PROPERTIES AT SADHRANA, ARAVALLI, GOPALPURA AND LOH ARI. IT IS NOT IN DISPUTE THAT LAND AT VILLAGE-DHOKRA HELD FOR EDUCATIONAL PURPOSES WHICH IS ALSO EVIDENT LOHARI. IT IS NOT IN DISPUTE THAT LAND AT VILLAGE-DHOKRA HELD FOR EDUCATIONAL PURPOSE S WHICH IS ALSO EVIDENT FROM THE ORDERS PASSED UNDER SECTION 1 0(23C)(VI) BY CCIT FOR A.YS. 2002-2003 TO 2004-2005 AND FOR A .Y. 2005- 2006. THE LD. CCIT WOULD NOT HAVE GRANTED APPROVAL UNDER THIS PROVISION IF SUCH LAND HAD NOT BEEN MEANT FOR EDUCATIONAL PURPOSES. SIMILARLY, THE ASSESSMENT ORDER FOR A.Y. 2006-2007 WAS PASSED UNDER SECTION 143(3)/148, BUT, PROCEEDIN GS UNDER SECTION 148 HAVE BEEN DROPPED VIDE ORDER DATED 16.1 2.2010 BY VERIFYING THAT ASSESSEE-SOCIETY IS REGISTERED UN DER SECTION 12A OF THE I.T. ACT. SIMILARLY, ASSESSMENT ORDER FO R A.Y. 2007- 2008 WAS PASSED UNDER SECTION 143(3) WHICH WAS APPE ALED BEFORE LD. CIT(A) WHO HAS GRANTED BENEFIT UNDER SEC TIONS 11 AND 12 OF THE I.T. ACT TO THE ASSESSEE-SOCIETY. THE ORDER OF LD. CIT(A) HAVE BEEN UPHELD BY THE TRIBUNAL. THE LD. CI T(A) IN THE ORDER FOR A.Y. 2007-2008 HAS SPECIFICALLY NOTICED T HAT IN RESPECT OF UNUTILIZED AMOUNTS, ASSESSEE-SOCIETY HAS FOR THE PURPOSE OF SECTION 11(1) SET APART/ACCUMULATED PROF ITS OF RS. 7,22,67,210/ - FILED FORM NO. 10 ALONG WITH RETURN OF INCOME AND ALSO SUBSEQUENTLY, MADE INVESTMENT IN PURCHASE OF LAND TO THE EXTENT OF RS.8,71,42,582/-. HENCE, THE INCOM E TO THE EXTENT OF RS. 7.22 CRORES WAS TREATED TO HAVE BEEN APPLIED FOR CHARITABLE PURPOSES. IT IS WELL SETTLED LAW THAT EX EMPTION UNDER SECTION 11(1 A) FOR CAPITAL GAINS FOR A CHARI TABLE TRUST HAS BEEN UPHELD IN THE CASE OF CIT VS. AUROBINDO ME MORIAL FUND SOCIETY (2001) 247 ITR 93 (MAD.) AND DIT (EXEM PTIONS) VS. DLF QUTAB ENCLAVE COMPLEX MEDICAL CHARITABLE TR UST (2001) 248 ITR 41 (DEL.) (SUPRA). IF THE LAND AT DH OKRA VILLAGE WAS NOT MEANT FOR CHARITABLE PURPOSES, THE ASSESSEE -SOCIETY WOULD NOT HAVE GOT BENEFIT OF SECTIONS 11 AND 12 FO R ALL THESE YEARS. WE, THEREFORE, HELD THAT THE LAND AT VILLAGE - DHOKRA WHICH WAS SOLD IN A.Y. 2007-2008 WAS MEANT FOR EDUC ATIONAL PURPOSES ONLY. COPY OF FORM NO. 10 IS FILED AT PAGE -146 OF THE PAPER BOOK AND COPY OF THE RESOLUTION OF ASSESSEE- SOCIETY IS FILED AT PAGE-147 OF THE PAPER BOOK AND CONTENTION OF ASSESSEE-SOCIETY HAS BEEN ACCEPTED BY LD. CIT(A) IN A.Y. 2007-2008 ABOVE AND HIS VIEW HAVE BEEN CONFIRMED BY THE TRIBUNAL. IT IS ALSO NOT IN DISPUTE THAT ASSESSEE-S OCIETY 7 ITA NO.2061/DEL/2017 PURCHASED LANDS AT SADHRANA, GOPALPURA AND LOHARI AGGREGATING TO RS.7,20,56,368/-. THEREFORE, SHORT F ALL OF RS.2,10,842/- IS THE INCOME REMAINING TO BE APPLIED TO FIVE YEARS PERIOD ALLOWED UNDER SECTION 11 (2) WHICH HAS NOT BEEN EXPIRED IN ASSESSMENT YEAR UNDER APPEAL I.E., A.Y. 2008- 2009. THEREFORE, THIS AMOUNT ALSO CANNOT BE BROUGHT TO TAX. SINCE THE ASSESSEE- SOCIETY PURCHASED THE LANDS FOR A SUM OF RS. 7.20 CRORES FOR EDUCATIONAL PURPOSES, THEREFORE , THERE IS NOTHING WRONG IN THE EXPLANATION OF ASSESSEE-SOCIET Y. THE LD. CIT(A) ALREADY FOUND THAT LAND AT SADHAMA HAVE BEEN USED FOR EDUCATIONAL PURPOSES. THE REMAINING TWO PROPERT IES AT GOPALPURA AND LOHARI CANNOT BE TREATED AS NOT FOR C HARITABLE PURPOSES MERELY FOR THE REASONS THAT THESE HAVE NOT BEEN USED. NON-USER OR PASSIVENESS OF THE LANDS PURCHASE D CANNOT BE TREATED AS USER FOR NON-CHARITABLE PURPOSES. SEC TION 11(5) PROVIDES THAT ACCUMULATED AMOUNT UNDER SECTION 11(2 ) HAS TO BE KEPT IN SPECIFIED MODES OF INVESTMENT, WHICH INC LUDE INVESTMENT IN IMMOVABLE PROPERTY. IT DOES NOT PROVI DE THAT SUCH IMMOVABLE PROPERTY MUST BE MEANT FOR ANY SPECI FIC PURPOSE. THEREFORE WHERE IS NOTHING WRONG IN EXPLAN ATION OF ASSESSEE-SOCIETY IN PURCHASING THE PROPERTIES. IN T HE CASE OF SHRI SURAT PANJARAPOLE TRUST VS. AC IT (SUPRA), IT WAS HELD THAT NONE-USE OF THE LAND OR PASSIVENESS OF LAND IS NOT EQUAL TO ITS HOLDING THE LAND FOR NON-CHARITABLE PURPOSES . THUS, IN OUR VIEW, THE ASSESSEE- SOCIETY HAVING PURCHASED TH E ABOVE- MENTIONED LAND, HAS USED THE ACCUMULATED AMOUNT FOR CHARITABLE AND EDUCATIONAL PURPOSES. NO EVIDENCE HA VE BEEN BROUGHT ON RECORD BY THE REVENUE TO PROVE THAT LAND AT GOPALPURA AND LOHARI WERE USED FOR NON-EDUCATIONAL AND NON- CHARITABLE PURPOSES. THE LD. CIT(A) MADE A REFERENC E TO TWO PROPERTIES AT ARAVALLI WHICH HAVE GOT NO BEARING ON THE ISSUE, AS THE SAID TWO PROPERTIES ACCORDING TO THE EXPLANA TION OF ASSESSEE-SOCIETY, ARE NOT UTILIZED FOR ACCUMULATED PROFITS UNDER SECTION 11(2) OF THE I.T. ACT BECAUSE THE ACC UMULATION HAVE BEEN MADE UNDER SECTION 11(2) IN RESPECT OF TH REE PROPERTIES ONLY I.E., SADHARNA, GOPALPURA AND LOHAR I. LD. CIT(A) WRONGLY APPLIED SECTION 11 (IB) OF THE I.T. ACT AS THE ASSESSEE-SOCIETY ACCUMULATED ITS INCOME UNDER SECTI ON 11 (2) AND IN THAT SITUATION SECTION 11 (IB) IS NOT APPLIC ABLE. ACCUMULATION WAS UNDER SECTION 11(2) AND NOT UNDER EXPLANATION TO SUB-SECTION 11(1) AS IS CLEAR FROM T HE ORDER PASSED BY THE LD. CIT(A) AND THE TRIBUNAL IN AY 200 7-2008 AND IT WAS CLEARLY NOTICED THAT FORM-10 HAVE BEEN F ILED IN A.Y. 2007-2008 WHICH IS APPLICABLE FOR ACCUMULATION OF I NCOME UNDER SECTION 11 (2) ONLY. THE FINDINGS OF THE LD. CIT(A) AT SECTION 11 (3) IS APPLICABLE IS ALSO NOT CORRECT BE CAUSE INCOME ACCUMULATED UNDER SECTION 11 (2) WAS APPLIED FOR ED UCATIONAL PURPOSES. CONSIDERING THE TOTALITY OF THE FACTS AND 8 ITA NO.2061/DEL/2017 CIRCUMSTANCES OF THE CASE NOTED ABOVE IN THE LIGHT OF FINDING OF FACT RECORDED BY THE LD. CIT(A) AND TRIBUNAL IN A.Y . 2007- 2008, IT IS CLEAR THAT NO ADDITION COULD BE MADE AG AINST THE ASSESSEE- SOCIETY OF SUCH NATURE. THE ORDER OF THE LD. CIT(A), THEREFORE, CANNOT BE SUSTAINED IN LAW FOR ENHANCING THE INCOME OF ASSESSEE-SOCIETY OF RS.6,77,16,875/- AND THAT TOO BY INVOKING SECTION 11 (IB) AND SECTION 11(3) OF TH E I.T. ACT, WHICH ARE NOT APPLICABLE TO THE CASE OF THE ASSESSE E- SOCIETY. THE DECISIONS RELIED UPON BY THE LD. D.R. ARE NOT A PPLICABLE TO THE FACTS OF THE CASE. IN VIEW OF THE ABOVE DISCUSS ION, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE THE AD DITION OF RS.6,77,16,875/-. ACCORDINGLY, APPEAL OF THE ASSESS EE-SOCIETY IS ALLOWED. 10. FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, WE D O NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD . CIT(A). WE MAY ALSO NOTE THAT ASSESSEE HAS EXPLAINED THAT OUT OF THE AD DITION IN QUESTION AS MADE BY AO, THE AMOUNT OF RS. 2,25,50,000/- WAS IN FACT TOWARDS CORPUS DONATION. THE ASSESSEE PRODUCED CONF IRMATION AND BANK ACCOUNT AND RELEVANT DETAILS TO PROVE IT WAS A CORPUS DONATION. THEREFORE, IT COULD NOT BE ADDED TO THE INCOME OF T HE ASSESSEE. THE LD. CIT(A) CORRECTLY DIRECTED TO DELETE THE ADDITIO N. THE REVENUE DID NOT CHALLENGE THE DELETION OF ADDITION ON ACCOUNT O F CORPUS DONATION. THEREFORE, FINDINGS OF FACT RECORDED BY LD. CIT(A) ARE CONFIRMED. IF THE CORPUS DONATION IS EXCLUDED NOTHING WOULD SURVI VE AGAINST THE ASSESSEE SO AS TO MAKE ANY ADDITION. IN THIS VIEW O F THE MATTER, THERE IS NO MERIT IN DEPARTMENTAL APPEAL. SAME IS A CCORDINGLY DISMISSED. 3.5 THUS, RESPECTFULLY FOLLOWING THE DECISION OF THE T RIBUNAL (SUPRA), THE GROUND NO. 1 OF APPEAL OF THE REVENUE IS DISMISSED. 4. THE GROUND NO. 2 AND 3 RELATE TO DIRECTIONS OF LEA RNED CIT(A) FOR ALLOWING THE CARRY FORWARD LOSS OF RS.5,80,12,1 38/- TO NEXT YEAR FOR SETTING OFF AGAINST INCOME OF SUBSEQUENT Y EAR. 4.1 WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. THOUGHT TH E ASSESSING OFFICER DID NOT GIVE ANY COMMENT ON THE CARRY FORWA RD OF THE LOSSES, HOWEVER, THE LEARNED CIT(A) ALLOWED THE CAR RY FORWARD OF THE LOSSES OBSERVING AS UNDER: 9 ITA NO.2061/DEL/2017 I, THEREFORE FIND THAT THE CONTENTION OF T HE ASSESSEE IS CORRECT AND THE LOSS OF RS (-) 4,15,70,160/- TO BE BROUGHT FORWARD, SET OFF FROM THE CURRENT INCOME, IF ANY OR IN CASE OF LOSS OF CURRENT YEAR I.E RS.(-)1,64,41,978/- IN THE IMPUGNED MATTER THE TOTAL OF RS(-) 5,80,12,138/- IS HEREBY CARRIED FORWARD TO THE SUBS EQUENT YEARS. I AM FURTHER FORTIFIED IN MY ABOVE FINDINGS BY VARIOU S JUDGMENTS OF THE HONBLE ITAT DELHI BENCHES WHICH HAVE CONSISTENTLY HELD IN FAVOUR OF THE ASSESSEE ON THIS ISSUE. IN THE CASE OF DIRECTOR OF INCOME TAX VS RAGHUVANSH I CHARITABLE TRUST [2011] 197 TAXMANN 170 DELHI IT HAS BEEN HELD THAT SECTION 11 OF THE INCOME TAX ACT, 1961 CHARITABLE OR RELIGI OUS TRUST- EXEMPTION OF INCOME FROM PROPERTY HELD UNDER TRUST- WHETHER A TRUST CAN BE ALLOWED TO CARRY FORWARD DEFICIT OF CURRENT YEAR AND TO SET OFF SAME AGAINST INCOME OF SUBSEQUENT YEAR WOULD AMOUNT TO APPLICATION OF INCOME OF TRUST FOR CHARITABLE PURPO SES IN SUBSEQUENT YEAR WITHIN THE MEANING OF SECTION LL(L)(A) - HELD YES. I HAVE ALSO DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE IN THE CASE OF DEVENDER KUMAR GARG CHARITABLE TRUST FOR TH E A/Y 2011-12 VIDE ORDER DATED 18-11-2015 IN ITA NUMBER 541/2013- 14. THUS FOLLOWING THE RULE OF CONSISTENCY AND IN RESPECTFUL AGREEMENT WITH THE AFORESAID ORDER OF HONBLE ITAT, I ALLOW THE SU RPLUS/LOSS OF RS (- )4,15,70,160/- AS BROUGHT FORWARD FROM A/Y 2011-12 ALONG WITH CURRENT YEARS LOSS OF RS.1,64,41,978/- TOTALING TO RS (- )5,80,12,138/- BE ALLOWED TO BE CARRIED FORWARD TO A/Y 2013-14. THE AO IS DIRECTED TO COMPUTE THE LOSS ACCORDINGLY AND ALLOW THE SAME TO BE CARRIED FORWARD TO A/Y 2012-14. 4.2 THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNA L (SUPRA) IN ASSESSMENT YEAR 2011-12 OBSERVING AS UNDER: 15. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY JUSTIFICATION FOR LD. CIT(A) TO REJECT THE CLAIM OF ASSESSEE. LD. COUNSEL FOR ASSESSEE RIGHTLY CONTENDED THAT THE AUT HORITIES BELOW HAVE FAILED TO APPRECIATE THAT INCOME HAS TO BE COM PUTED COMMERCIALLY EVEN IN CASES COVERED U/S 11-13 OF THE ACT AND RESULTANT LOSS, IF ANY, ARISING DUE TO SURPLUS APPL ICATION OF INCOME HAS TO BE COMPUTED AND CARRY FORWARD TO THE NEXT YE AR TO BE SET OFF THEREIN. THE AO HAS NOT GIVEN ANY FINDINGS ON THE S AME. THE LD. CIT(A) WITHOUT EXAMINING THE ISSUE IN DETAIL DISMIS SED THE CLAIM OF ASSESSEE BECAUSE SECTION 11 PROVIDES FOR EXEMPTION OF INCOME OF CHARITABLE ORGANIZATION. HOWEVER, IT IS A FACT THAT ASSESSEE CLAIMED CARRY FORWARD OF THE LOSSES FOR SUBSEQUENT YEAR AS PER LAW WHICH SHOULD HAVE BEEN APPRECIATED AND SHOULD BE CONSIDER ED IN FAVOUR OF THE ASSESSEE. THIS ISSUE IS COVERED BY ABOVE JUDGME NT REFERRED ABOVE. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE CIT(A) AND RESTORE THIS ISSUE TO THE FILE OF THE AO WITH DIREC TION TO ALLOW THE 10 ITA NO.2061/DEL/2017 CLAIM OF ASSESSEE AFTER VERIFYING THE FACTS ON RECO RD. THE AO SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE. IN THE RESULT, CROSS OBJECTION OF THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 4.3 RESPECTFULLY FOLLOWING THE FINDING OF THE TRIBUNAL (SUPRA), THE FINDING OF THE LEARNED CIT(A) IS UPHELD. GROUND NOS . 2 & 3 OF APPEAL OF THE REVENUE ARE DISMISSED. 5. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 3 RD FEBRUARY, 2020. SD/- SD/- ( BHAVNESH SAINI ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 RD FEBRUARY, 2020. RK/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI
