ITO (Exemptions), New Delhi V. Pearey Lal Bhawan Association, New Delhi

ITA 2548/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6853 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 07-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 30-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Assessee Lawyers: R M MEHTA
• Keywords: Depreciation; Charitable institution
• Section: 143(3); 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 2548/DEL/2015 ASSESSMENT YEAR: 2011-12 INCOME TAX OFFICER, VS. PEAREY LAL BHAWAN ASSOC IATION WARD 2(4), PEAREY LAL BUILDING, 42, JANPATH NEW DELHI NEW DELHI 110 001 (PAN: AAATP5748G) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. AMRIT LAL, SR. DR ASSESSEE BY : SH. R.M. MEHTA, CA ORDER PER H.S. SIDHU, J.M. THE DEPARTMENT HAS FILED THE APPEAL AGAINST THE IM PUGNED ORDER DATED 6.2.2015 OF LD. CIT(A)-40, NEW DELHI PE RTAINING TO ASSESSMENT YEAR 2011-12. THE GROUNDS RAISED IN THE REVENUES APPEAL READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A O TO ALLOW BENEFIT OF CARRY FORWARD OF DEFICIT / LOSS OF RS. 34,46,030/- IGNORING THE FACT THAT THERE IS NO SPEC IFIC PROVISIONS U/S. 11, 12 & 13 OF THE ACT FOR ALLOWING THE CARRY FORWARD OR ADJUSTMENT OF DEFICIT OR LOSS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A O TO ALLOW BENEFIT OF CARRY FORWARD OF DEFICIT / LOSS OF RS. 34,46,030/- IN VIEW OF THE DECISION OF THE DELHI TRIBUNAL IN THE CASE OF PUSHPAWATI SINGHANIA 2 RESEARCH INSTITUTE FOR LIVER, RENAL & DIGESTIVE DISEASES VS. DDIT(E) (2009) 29 SOT 316 (DEL) 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEN D ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASS ESSEE HAD FILED THE RETURN OF INCOME ON 1.8.2011 ALONGWITH THE AUDIT RE PORT DATED 14.6.2011. THE RETURN WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 AND THE CASE WAS SELECTED FOR SCRUTINY. N OTICES U/S. 143(2) WAS ISSUED ON 2.8.2012 AND NOTICE U/S. 142( 1) WAS ISSUED ON 3.4.2013. IN RESPONSE THERETO, THE ASSESSEES AR ATTENDED THE HEARING FROM TIME TO TIME AND FILED THE REQUISITE D ETAILS WHICH WERE EXAMINED. THE BOOKS OF ACCOUNTS WERE ALSO PRODUCED AND THE SAME WERE ALSO EXAMINED ON TEST CHECK BASIS. THEREAFTER, THE AO OBSERVED THAT THE ACTIVITIES OF THE ASSESSEE SOCIET Y ARE APPARENTLY CHARITABLE IN NATURE AND WITHIN THE MEANING OF SECT ION 2(15) OF THE I.T. ACT, HE DID NOT ALLOW THE BENEFIT OF CARRY FO RWARDS OF DEFICIT / LOSS OF RS. 34,46,030 VIDE HIS ORDER 21.1.2014 PASS ED U/S. 143(3) OF THE I.T. ACT, 1961. 3. AGGRIEVED WITH THE AFORESAID ORDER, ASSESSEE PR EFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 6.2.2015 HAS ALLOWED THE APPEAL OF THE ASSESSEE. 4. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNE D ORDER AND FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL. 3 6. ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE HAS RELIED UPON THE ORDER OF THE LD. CIT(A). HE STATED THAT LD. CIT (A) HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFE RENCE ON MY PART, HENCE, THE SAME MAY BE UPHELD AND ACCORDINGLY , THE APPEAL OF THE REVENUE MAY BE DISMISSED. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE IMPUGNED ORDER PASSED BY THE LD. CI T(A). I FIND THAT LD. FIRST APPELLATE AUTHORITY HAS ELABORATELY DISCU SSED THE ISSUES IN DISPUTE BY CONSIDERING THE SUBMISSIONS OF THE ASSES SEE AND ADJUDICATED THE ISSUES VIDE PARAS NO. 4.2 TO 5 AT P AGE NO. 2 TO 3 OF THE IMPUGNED ORDER. THE SAID RELEVANT PARAS ARE RE PRODUCED AS UNDER:- 4.2 I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I PERSONALLY DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE ASSESSEE. HOWEVER, IT IS SEEN TH AT THE EXEMPTION PROVISIONS U/S 11, 12, 12A, 12AA & 13 ARE INDEPENDENT VISIONS FOR THE COMPUTATION OF INCOME IN THE CASE O F NGDS, TRUST OR SOCIETIES ETC. AND FOR ALLOWING EXEMPTION IN THE CA SE OF CHARITABLE OR RELIGIOUS INSTITUTIONS AND IN THESE PROVISIONS THER E ARE NO PROVISIONS FOR ADJUSTMENT OR SET OFF OF DEFICIT OR LOSS AGAINS T INCOME OF THE CURRENT YEAR (SECTION 70) OR ADJUSTMENT OF BROUGHT FORWARD LOSS AGAINST THE CURRENT YEAR'S INCOME OR CARRY FORWARD OF CURRENT YEAR'S-LOSS AGAINST THE ADJUSTMENT OF THE SUBSEQUEN T YEAR'S INCOME OR FOR ALLOWING ANY DEPRECIATION IN FIXED ASSETS WH ICH ARE APPLICABLE IN THE CASE OF BUSINESS CONCERNS ONLY. BUT IT IS AL SO SEEN THAT THE VARIOUS HIGH COURTS HAVE TAKEN A VIEW IN FAVOUR OF THE ASSESSEES THAT THE INCOME IS TO BE COMPUTED IN COMMERCIAL PRI NCIPLES AND AS SUCH ADJUSTMENT OF BROUGHT FORWARD LOSS OR DEFICIT AND CARRY 4 FORWARD OF LOSS/ DEFICIT IS TO BE ALLOWED AND THE S EVERAL CASE LAWS ARE AS UNDER:- I) CIT VS. MAHARANA OF MEWAR CHARITABLE FOUNDATIO N, 164 ITR 439 (RAJ) 1987. II) CIT VS. SHRI PLOT SWETAMABER MURTI PUJAK JAIN MANDAI, 211 ITR 293 (GUJ) 1995. (III) CIT VS. MATRISEWA TRUST, 242 ITR 20 (MAD) 2000 (IV) GOVINDU NAICKER ESTATE VS. ADIT, 248 ITR 110 (BOM) 2003. (V) CIT VS. INSTITUTE OF BANKING, 264 ITR 110 (BO M) 2003 . (VI) DIT VS. RAGHUVANSHI CHARITABLE TRUST, 197 TAXMANN 170 (DELHI) 2011 VII) CIT VS. GUJARAT SAMAJ, 349 ITR 559 (MP) 2012 4.3 AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANC ES OF THE CASE, I AM OF THE VIEW THAT EVEN THOUGH THERE IS NO MERIT I N THE SUBMISSIONS OF THE ASSESSEE AS THERE IS NO SPECIFIC PROVISIONS U/S 11, 12, 12A, 12AA & 13 FOR ALLOWING THE BENEFIT OF CARRY FORWARD OR ADJUSTMENT OF DEFICIT OR LOSS ETC. BUT KEEPING IN V IEW THE DECISIONS OF THE VARIOUS HIGH COURTS IN FAVOUR OF THE ASSESSE E ON THE SAME ISSUE, THE SAME IS FOLLOWED TO MAINTAIN THE JUDICIA L DISCIPLINE AND ACCORDINGLY THE AO IS DIRECTED TO ALLOW THE BENEFIT OF CARRY FORWARD OF THE DEFICIT OR LOSS AND AS SUCH THE APPEAL OF TH E A SESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 7.1 AFTER GOING THROUGH THE FINDINGS OF THE LD.CIT( A), I AM IN AGREEMENT WITH THE VIEW OF THE LD. CIT(A) THAT THE EXEMPTION PROVISIONS U/S 11, 12, 12A, 12AA & 13 ARE INDEPENDE NT PROVISIONS FOR THE COMPUTATION OF INCOME IN THE CASE OF NGOS, TRUST OR SOCIETIES ETC. AND FOR ALLOWING EXEMPTION IN THE CA SE OF CHARITABLE OR RELIGIOUS INSTITUTIONS AND IN THESE PROVISIONS THER E ARE NO PROVISIONS FOR ADJUSTMENT OR SET OFF OF DEFICIT OR LOSS AGAINS T INCOME OF THE CURRENT YEAR (SECTION 70) OR ADJUSTMENT OF BROUGHT FORWARD LOSS 5 AGAINST THE CURRENT YEAR'S INCOME OR CARRY FORWARD OF CURRENT YEAR'S-LOSS AGAINST THE ADJUSTMENT OF THE SUBSEQUEN T YEAR'S INCOME OR FOR ALLOWING ANY DEPRECIATION IN FIXED ASSETS WH ICH ARE APPLICABLE IN THE CASE OF BUSINESS CONCERNS ONLY. BUT THE VARI OUS HONBLE HIGH COURTS HAVE TAKEN A VIEW IN FAVOUR OF THE ASSESSEES THAT THE INCOME IS TO BE COMPUTED IN COMMERCIAL PRINCIPLES A ND AS SUCH ADJUSTMENT OF BROUGHT FORWARD LOSS OR DEFICIT AND C ARRY FORWARD OF LOSS/ DEFICIT IS TO BE ALLOWED AND THE SEVERAL CASE LAWS ARE AS UNDER:- I) CIT VS. MAHARANA OF MEWAR CHARITABLE FOUNDATIO N, 164 ITR 439 (RAJ) 1987. II) CIT VS. SHRI PLOT SWETAMABER MURTI PUJAK JAIN MANDAI, 211 ITR 293 (GUJ) 1995. (III) CIT VS. MATRISEWA TRUST, 242 ITR 20 (MAD) 2000 (IV) GOVINDU NAICKER ESTATE VS. ADIT, 248 ITR 110 (BOM) 2003. (V) CIT VS. INSTITUTE OF BANKING, 264 ITR 110 (BO M) 2003 . (VI) DIT VS. RAGHUVANSHI CHARITABLE TRUST, 197 TAXMANN 170 (DELHI) 2011 VII) CIT VS. GUJARAT SAMAJ, 349 ITR 559 (MP) 2012 7.2 AFTER CAREFUL CONSIDERATION OF THE FACTS AND C IRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THERE IS NO SPECIFI C PROVISIONS U/S 11, 12, 12A, 12AA & 13 FOR ALLOWING THE BENEFIT OF CARRY FORWARD OR ADJUSTMENT OF DEFICIT OR LOSS ETC. BUT KEEPING IN V IEW THE DECISIONS OF THE VARIOUS HIGH COURTS IN FAVOUR OF THE ASSESSE E ON THE SAME ISSUE, AND TO MAINTAIN THE JUDICIAL DISCIPLINE, LD. CIT(A) HAS RIGHTLY FOLLOWED THE SAME AND DIRECTED THE AO TO ALLOW THE BENEFIT OF CARRY FORWARD OF THE DEFICIT OR LOSS. ACCORDINGLY, I AM OF THE VIEW THAT THE LD. CIT(A) HAS PASSED A WELL REASONED ORDER ON THE ISSUE IN DISPUTE, WHIC H 6 DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHOLD THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE. A CCORDINGLY, THE ISSUE IN DISPUTE IS DECIDED AGAINST THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/10/2016 . SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 18/10/2016 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR