The Dy. Commissioner of Income Tax (Exemptions), Circle-1, Ahmedabad V. The Kantilal Jaikishandas Choksi Charitable Trust, Ahmedabad

ITA 2379/AHD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9175 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 01-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: P M MEHTA
• Keywords: Charitable institution
• Section: 143(3); 11

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 2379/AHD/2017 ( ASSESSMENT YEAR : 2014-15) DEPUTY COMMISSIONER OF INCOME-TAX (EXEMPTIONS) CIRCLE-1, 2 ND FLOOR, NATURE VIEW BUILDING, NEAR H. K. HOUSE, ASHRAM ROAD, AHMEDABAD - 380009 / VS. KANTILAL JAIKISHANDAS CHOKSI CHARITABLE TRUST MADHUBAN, OPP. GUJARAT COLLEGE, MADALPUR, ELLISBRIDGE, AHMEDABAD 380006 ./ ./ PAN/GIR NO. : AAATK1759N ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI L. P. JAIN, SR.D.R. / RESPONDENT BY : SHRI P. M. MEHTA, A.R. DATE OF HEARING 23/09/2019 !'# / DATE OF PRONOUNCEMENT 04/10/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-4, AHMEDABAD (CIT(A) IN SHORT), DATED 16.08.2017 ARIS ING IN THE ASSESSMENT ORDER DATED 19.12.2016 PASSED BY THE ASS ESSING OFFICER (AO) ITA NO. 2379/AHD/17 [DCIT(E) VS. KANTILAL J. CHOKSI] A.Y. 2014-15 - 2 - UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE AC T) CONCERNING AY 2014-15. 2. THE GROUND OF APPEAL RAISED BY REVENUE READS AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN THE LAW AND ON FACT S IN ALLOWING CARRY FORWARD EXCESS EXPENDITURE OF RS.12,60,38,028 /- FOR FUTURE YEARS AGAINST ITS FUTURE INCOME IN ABSENCE O F ANY EXPRESS PROVISION IN THE ACT REGARDING THE SAME. 2 THAT THE LD. CIT(A) HAS ERRED IN LAW ON FACTS BY ADJUDICATING ON AN INCOME WHICH IS NOT RELEVANT FOR THE YEAR UND ER CONSIDERATION AS THE HON'BLE SUPREME COURT HAS ABSO LVED THAT THE SET-OFF OF CARRY FORWARD LOSSES WOULD BE GOVERN ED BY THE LAW AS EXISTING IN YEAR SUCH OF SET OFF. 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. THE ASSESSEE IS A PUBLIC CHARITABLE TRUST AND HAS BEEN GRANTED REGISTRATION UNDER S.12A(A) OF THE INCOME TAX ACT. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE TRUST HAS CLAIMED SET OFF OF DEFICITS OF RS.12,60,38,028/- ARISING ON EXCESS APPLICATION OF INCOME IN VARIOUS ASSESSMENT YEARS UPTO THIS YEAR AGAINST ITS INCOME TO BE GENERATED IN SUBSEQUENT YEARS. THE AO WHILE PASSING THE ASSESSM ENT ORDER UNDER S.143(3) OF THE ACT DISALLOWED CARRIED FORWARD DEFI CIT FOR BEING SET OFF ALLEGING ABSENCE OF ANY EXPRESS PROVISIONS IN THE I NCOME TAX ACT REGARDING THE SAME. 4. IN THE FIRST APPEAL AGAINST THE AFORESAID ACTION OF THE AO, THE CIT(A) ALLOWED CARRY FORWARD OF EXCESS EXPENSES OVE R NEXT YEARS AS APPLICATION FOR CHARITABLE PURPOSES UNDER S.11(1)(A ) OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE THE TRIBUNAL. ITA NO. 2379/AHD/17 [DCIT(E) VS. KANTILAL J. CHOKSI] A.Y. 2014-15 - 3 - 6. THE LEARNED DR FOR THE REVENUE RELIED UPON THE O RDER OF THE AO WHILE THE LEARNED AR FOR THE ASSESSEE RELIED UPON T HE ORDER OF THE CIT(A) AS WELL AS VARIOUS JUDICIAL PRONOUNCEMENTS I N THIS REGARD. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE SOLITARY QUESTION THAT ARISES FOR ADJUDICATION IS WHETHER WH ERE THE TRUST HAS INCURRED DEFICIT DUE TO EXCESS SPENDING ON THE OBJE CT OF THE TRUST DURING A PARTICULAR YEAR IS ELIGIBLE FOR CARRY FORWARD AND S ET OFF AGAINST THE INCOME OF SUBSEQUENT YEAR BY INVOKING SECTION 11 OF THE ACT. THE ISSUE IS NO LONGER RES INTEGRA . THE HONBLE GUJARAT HIGH COURT IN CIT VS. SHRI PLOT SHWETAMBER MURTI PUJAK JAIN MANDAL (1995) 211 ITR 0293 (GUJ) HAS RENDERED DECISION FAVOURABLE TO THE ASSESSEE ON THE VERY ISSUE. THE HONBLE GUJARAT HIGH COURT HAS HELD THAT THERE IS N OTHING IN THE LANGUAGE OF SECTION 11(1)(A) OF THE ACT TO INDICATE THAT THE INCOME FROM TRUST PROPERTY SHOULD HAVE BEEN APPLIED FOR CHARITA BLE OR RELIGIOUS TRUSTS ONLY IN THE YEAR IN WHICH SUCH INCOME HAS ARISEN. THE EXPENDITURE INCURRED IN THE EARLIER YEAR CAN BE MET OUT OF THE INCOME OF THE SUBSEQUENT YEAR AND UTILIZATION OF SUCH INCOME FOR MEETING THE EXPENDITURE OF THE EARLIER YEAR WOULD AMOUNT TO SUC H INCOME BEING APPLIED FOR CHARITABLE OR RELIGIOUS TRUSTS. THE HO NBLE GUJARAT HIGH COURT FURTHER HELD THAT INCOME DERIVED FROM TRUST P ROPERTY HAS TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND CONSEQUENTLY DEFICIT ARISING OUT OF EXPENDITURE OVER INCOME FOR THE PREVIOUS YEAR SH OULD, THEREFORE, BE SET OFF AGAINST SURPLUS OF INCOME OVER EXPENDITURE RELATING TO THE SUBSEQUENT YEAR. SIMILAR VIEW HAS BEEN EXPRESSED I N CIT VS. MAHARANA OF MEWAR CHARITABLE FOUNDATION (1987) 164 ITR 439 ( RAJ) AND CIT VS. MATRISEVA TRUST (2000) 242 ITR 20 (MAD). WHATEVER LITTLE CONTROVERSY MIGHT BE EXISTING, HAS BEEN PUT TO REST BY THE RECE NT DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT(EXEMPTION) VS. SUBROS EDUCATION SOCIETY (2018) 303 CTR 1 (SC). HENCE, THE CIT(A) IN OUR VIEW HAS CORRECTLY APPLIED THE LAW AS EVOLVED BY TH E JUDICIAL PRECEDENTS. WE ALSO NOTICE THAT IDENTICAL ISSUE CAME UP IN ASSE SSEES OWN CASE IN AY ITA NO. 2379/AHD/17 [DCIT(E) VS. KANTILAL J. CHOKSI] A.Y. 2014-15 - 4 - 2012-13 WHERE THE CLAIM OF THE ASSESSEE TRUST TOWAR DS EXCESS EXPENDITURE AS APPLICATION OF INCOME WAS ENDORSED BY THE CO-ORD INATE BENCH AND CONSEQUENTLY, THE APPEAL OF THE REVENUE WAS DISMISS ED IN IDENTICAL SET OF FACTS. WE THUS FIND NO INFIRMITY IN THE ORDER O F THE CIT(A) AND HENCE, WE DECLINE TO INTERFERE THEREWITH. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 04/10/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 04/10/2019