The Dy. Commissioner of Income Tax (Exemptions), Circle-1, Ahmedabad V. Dawat Properties Trust, Ahmedabad

ITA 261/AHD/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7564 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 02-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 143(3); 11

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 261/AHD/2018 ( ASSESSMENT YEAR : 2014-15) THE DY. COMMISSIONER OF INCOME-TAX (EXEMPTIONS) CIRCLE-1, AHMEDABAD 2 ND FLOOR, NATURE VIEW BUILDING, NR. H. K. HOUSE, ASHRAM ROAD, AHMEDABAD - 380009 / VS. DAWAT PROPERTIES TRUST QUTBI MAZAR, SYEDNA QUTBUDDIN SHAHEED, AMDUPURA, AHMEDABAD 382345 ./ ./ PAN/GIR NO. : AAATD1474D ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MUDIT NAGPAL, SR.D.R. / RESPONDENT BY : NONE DATE OF HEARING 16/07/2019 !'# / DATE OF PRONOUNCEMENT 23/07/2019 / 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 IN COME TAX (APPEALS)-7, AHMEDABAD, (CIT(A) IN SHORT), DATED 17.11.2017 ITA NO. 261/AHD/18 [DCIT(EXEMP.) VS. DAWAT PROPERTIES TRUST] A.Y. 2014-15 - 2 - ARISING IN THE ASSESSMENT ORDER DATED 28.12.2016 PA SSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) OF THE INCOM E TAX ACT, 1961 (THE ACT) CONCERNING AY 2014-15. 2. THE SUBSTANTIVE GROUND OF APPEAL RAISED BY REVEN UE READS AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE BENEFIT OF THE DEFICIT OF RS.5,78,95,663/- FOR EARL IER YEARS AGAINST THE INCOME OF SUBSEQUENT YEAR IN ABSENCE OF ANY EXPRESS PROVISION IN THE ACT REGARDING THE SAME AND ALSO BY OVERLOOKING THE DECISIONS IN FAVOUR OF REVENUE IN T HIS REGARD. 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 CL AIMED ALLOWABILITY OF DEFICIT TO BE CARRIED FORWARD AMOUN TING TO RS.5,78,95,663/-. THE AO WHILE PASSING THE ORDER U NDER S.143(3) OF THE ACT DISALLOWED THE CARRY FORWARD OF DEFICIT FOR BEING SET OFF IN THE FORTHCOMING YEAR. 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. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LEARNED DR FOR THE REVENUE RELIED UPON THE O RDER OF THE AO. NONE APPEARED ON BEHALF OF THE ASSESSEE. ITA NO. 261/AHD/18 [DCIT(EXEMP.) VS. DAWAT PROPERTIES TRUST] A.Y. 2014-15 - 3 - 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. THE SOLITARY QUESTION THAT ARISES FOR ADJUD ICATION WHETHER THE TRUST HAS INCURRED DEFICIT DUE TO EXCESS SPENDI NG ON THE OBJECT OF THE TRUST DURING THE PARTICULAR YEAR AND WHETHER EXCESS EXPENDITURE INCURRED IN EARLIER YEARS OR IN THE CUR RENT YEAR BY THE TRUST COULD BE ALLOWED TO BE SET OFF AGAINST THE IN COME 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 HEL D THAT THERE IS NOTHING IN THE LANGUAGE OF SECTION 11(1)(A) OF THE ACT TO INDICATE THAT THE INCOME FROM TRUST PROPERTY SHOULD HAVE BEE N APPLIED FOR CHARITABLE OR RELIGIOUS TRUSTS ONLY IN THE YEAR IN WHICH SUCH INCOME HAS ARISEN. THE EXPENDITURE INCURRED IN AN EARLIER YEAR CAN BE MET OUT OF THE INCOME OF THE SUBSEQUENT YEAR AND UTILIZATION OF SUCH INCOME FOR MEETING THE EXPENDIT URE OF THE EARLIER YEAR WOULD AMOUNT TO SUCH INCOME BEING APPL IED FOR CHARITABLE OR RELIGIOUS TRUSTS. THE HONBLE GUJARA T HIGH COURT FURTHER HELD THAT INCOME DERIVED FROM TRUST PROPERT Y HAS TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND CONSEQUENTLY DEFICIT ARISING OUT OF EXPENDITURE OVER INCOME FOR THE PREV IOUS YEAR SHOULD, THEREFORE, BE SET OFF AGAINST SURPLUS OF IN COME OVER EXPENDITURE RELATING TO THE SUBSEQUENT YEAR. SIMIL AR VIEW HAS BEEN EXPRESSED IN 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 RECENT DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF CIT(EXEMPTION) VS. SUBROS ITA NO. 261/AHD/18 [DCIT(EXEMP.) VS. DAWAT PROPERTIES TRUST] A.Y. 2014-15 - 4 - EDUCATION SOCIETY (2018) 303 CTR 1 (SC). HENCE, THE CIT(A) IN OUR VIEW HAS CORRECTLY APPLIED THE LAW AS EVOLVED B Y THE JUDICIAL PRECEDENTS. IN THE ABSENCE OF ANY INFIRMITY IN THE ORDER OF THE CIT(A), 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 23/07/2019 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 23/07/ 2019