DCIT (Exemptions), Circle-2, Ahmedabad V. Ashara Mubaraka Dai Al Husain Trust, Surat

ITA 2856/AHD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7740 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 18-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RICHA RASTOGI
• Keywords: Charitable institution
• Section: 143(3); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO. 2856/AHD/2017 (ASSESSMENT YEAR : 2014-15) DCIT(EXEMPTION), CIRCLE 2, AHMEDABAD. VS. ASHARA MUBARKA DAI AL HUSAIN TRUST, GROUND FLOOR, 3/783, YUSUF MANZIL ZAPA BAZAR, SURAT- 395 003. [PAN NO. AACTA 0991 J] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI RICHA RASTOGI, SR. D.R. RESPONDENT BY : --NONE-- DATE OF HEARING 17/07/2019 DATE OF PRONOUNCEMENT 14/10/2019 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 11.10.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 9, AHMEDABAD ARISING OUT OF THE ORDER DATED 11.11.2016 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED AS TO THE ACT) FOR THE ASSESSMENT YEAR 2014-15 WHEREBY AND WHEREUNDER THE CARRY FORWARD OF DEFICIT OF EARLIER YEARS OF THE ASSESSEE WAS ALLOWED. 2. THE ASSESSEE, A REGISTERED RELIGIOUS TRUST UNDER THE BOMBAY PUBLIC TRUSTS ACT, 1950 VIDE REGISTRATION NO. B/23/SURAT WITH THE CONC ERNED ASSISTANT CHARITY - 2 - ITA NO.2856/AHD/2017 DCIT VS. ASHARA MUBARAKA DAI AL HUSAIN TRUST, ASST.YEAR 2014-15 COMMISSIONER, SURAT WORKING FOR THE DAWOODI BOHRA C OMMUNITY, FILED ITS RETURN OF INCOME ON 27.09.2014 DECLARING INCOME AT NIL AFTER CLAIMING THE EXEMPTION OF RS.27,31,32,753/-, WHICH WAS PROCESSED U/S 143(3) O F THE ACT. DURING SCRUTINY PROCEEDING, IT WAS FOUND THAT THE ASSESSEE HAS CLAI MED DEFICIT FOR A.Y. 2012-13 ADJUSTED TO THE EXTENT OF RS.3,21,370/- AGAINST THE SURPLUS OF CURRENT YEAR INCOME OF RS.3,21,370/- WHICH ACCORDING TO THE LEARNED AO WAS NOT IN TERMS OF LAW. ASSESSEES INCOME, IS THEREFORE, DETERMINED AT RS.3,21,370/- BY THE LEARN ED AO. HE WAS OF THE OPINION THAT NO CARRY FORWARD OF DEFICIT IS ALLOWED AS THERE IS NO SUCH PROVISION U/S 11 UNDER WHICH THE ASSESSEE CAN CLAIM SET OFF EXCESS EXPENDITURE INCUR RED IN EARLIER YEARS AGAINST THE INCOME OF THE RELEVANT ASSESSMENT YEAR. ULTIMATELY, THE SA ID CLAIM OF SET OFF OF DEFICIT OF EARLIER YEARS FOR RS.5,40,90,439/- HAS BEEN DISALLOWED BY T HE LEARNED AO WHICH, IN TURN, WAS ALLOWED IN APPEAL PREFERRED BY THE ASSESSEE FOLLOWI NG THE JUDGMENT PASSED BY THE JURISDICTIONAL HIGH COURT IN THE MATTER OF CIT-VS-S HRI PLOT SWETAMBER MURTIPUJAK JAIN MANDAI REPORTED IN 211 ITR 293 (GUJ.). WHILE DOING SO THE LEANRED CIT(A) OBSERVED AS FOLLOWS: 5.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS THE OBSERVATIONS OF THE A.O. THE A.O HAS NOT ALLOWED DEFICITS OF EAR LIER A.YRS. FOR RS.5,40,90,439/- IN THE ORDER. THE APPELLANT HAS RELIED UPON THE ORD ER OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS SHRI PLOT SHWETAMBAR MURTIPUJ AK JAIN MANDAL 211 ITR 293(GUJ.), CIT VS MAHARANA OF MEWAR CHARITABLE FOUN DATION 29 TAXMAN 476 (RAJ) AND GOVINDU NAICKER ESTATE V. ASSTT.DIT [2001 ] 248 ITR 368 (MAD). HON'BLE GUJARAT HIGH COURT IN THE CASE OF SHRI PLOT SHWETAMBAR MURTIPUJAK JAIN MANDAL HAS HELD AS FOLLOWS:- 'A BARE PERUSAL OF SECTION 11 OF THE INCOME-TAX ACT , 1961, SHOWS THAT THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLL Y FOR CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT TO WHICH SUCH INCO ME IS APPLIED TO SUCH PURPOSES IN INDIA IS TO BE EXCLUDED FOR THE PURPOSE S OF COMPUTING THE INCOME OF THE TRUST FOR THE PURPOSE OF ASSESSMENT. THERE ARE NO WORDS OF LIMITATION IN THIS SECTION PROVIDING THAT THE INCOM E SHOULD HAVE BEEN APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES ONLY I N THE YEAR IN WHICH THE INCOME HAD ARISEN. THE WORD 'APPLY' MEANS 'TO PUT T O USE' OR 'TO TURN TO - 3 - ITA NO.2856/AHD/2017 DCIT VS. ASHARA MUBARAKA DAI AL HUSAIN TRUST, ASST.YEAR 2014-15 USE' OR 'TO MAKE USE' OR 'TO PUT TO PRACTICAL USE'. HAVING REGARD THE PROVISIONS OF SECTION 11 OF THE ACT, IT IS CLEAR TH AT WHEN THE INCOME OF A TRUST IS USED OR PUT TO USE TO MEET THE EXPENSES IN CURRED FOR RELIGIOUS OR CHARITABLE PURPOSES, IT IS APPLIED FOR CHARITABLE O R RELIGIOUS PURPOSES. THE APPLICATION OF THE INCOME FOR CHARITABLE OR RELIGIO US PURPOSES TAKES PLACE IN THE YEAR IN WHICH THE INCOME IS ADJUSTED TO MEET THE EXPENSES INCURRED FOR CHARITABLE OR RELIGIOUS PURPOSES. IN OTHER WORD S, EVEN IF EXPENSES FOR CHARITABLE AND RELIGIOUS PURPOSES HAVE BEEN INCURRE D FOR THE EARLIER YEAR AND THE SAID EXPENSES ARE ADJUSTED AGAINST THE INCO ME OF A SUBSEQUENT YEAR, THE INCOME OF THAT YEAR CAN BE SAID TO HAVE B EEN APPLIED FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE YEAR IN WH ICH THE EXPENSES INCURRED FOR CHARITABLE AND RELIGIOUS PURPOSES HAD BEEN ADJUSTED. THERE IS NOTHING IN THE LANGUAGE OF SECTION 11(1)(A) OF THE ACT TO INDICATE THAT THE EXPENDITURE INCURRED IN THE EARLIER YEAR CANNOT BE MET OUT OF THE INCOME OF THE SUBSEQUENT YEAR AND UTILIZATION OF SUCH INCOME FOR MEETING THE EXPENDITURE OF THE EARLIER YEAR, WOULD NOT AMOUNT T O SUCH INCOME BEING APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES. INCOM E DERIVED FROM TRUST PROPERTY HAS TO BE DETERMINED ON COMMERCIAL PRINCIP LES AND IF COMMERCIAL PRINCIPLES FOR DETERMINING THE INCOME ARE APPLIED, IT IS BUT NATURAL THAT THE ADJUSTMENT OF THE EXPENSES INCURRED BY THE TRUST FO R CHARITABLE AND RELIGIOUS PURPOSES IN THE EARLIER YEAR AGAINST INCO ME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAVE TO BE REGARDED AS APP LICATION OF INCOME OF THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE SUBSEQUENT YEAR IN WHICH SUCH ADJUSTMENT HAS BEEN MADE HAVING REGARD T O THE BENEVOLENT PROVISIONS CONTAINED IN SECTION 11 OF THE ACT AND W ILL HAVE TO BE EXCLUDED FROM THE INCOME OF THE TRUST UNDER SECTION 11(1)(A) .' 5.3 I AGREE WITH THE CONTENTION OF THE APPELLAN T AS WELL AS THE RELIANCE PLACED ON THE DECISION OF JURISDICTIONAL GUJARAT HIGH COUR T AND HEREBY DIRECT THE A.O TO ALLOW THE BENEFIT OF THE DEFICIT OF EARLIER A.Y. 20 10-11 FOR RS.2,55,52,566 AND A.Y. 2012-13 FOR RS.2,85,37,873/- AGGREGATING TO RS.5,40 ,90,439/- AGAINST THE FUTURE INCOMES, AFTER DUE VERIFICATION. SUBJECT TO THIS RE MARK, GROUNDS OF APPEAL NO.2 TO 7 ARE ALLOWED. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE JURIS DICTIONAL HIGH COURT IN THE MATTER OF SHRI PLOT SHWETAMBAR MURTIPUJAK JAIN MAND AL, THE CLAIM OF SET OFF OF DEFICIT OF EARLIER YEARS HAS RIGHTLY BEEN ALLOWED BY THE LEARN ED CIT(A), WHICH DOES NOT CALL FOR ANY - 4 - ITA NO.2856/AHD/2017 DCIT VS. ASHARA MUBARAKA DAI AL HUSAIN TRUST, ASST.YEAR 2014-15 INTERFERENCE. HENCE, THE SAME IS UPHELD. THE REVENU ES APPEAL THUS FOUND TO BE DEVOID OF ANY MERIT AND HENCE DISMISSED. 3. IN THE RESULT, REVENUES APPEAL IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 14/10/2019 SD/- SD/- ( WASEEM AHMED ) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 14/10/2019 PRITI YADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-9, AHMEDABAD. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 17.07.2019 (COVERED CASE 2) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 22.07.2019 3. OTHER MEMBER. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 15.10.2019 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER