M/s. M.J. Charitable Trust, Meerut V. ACIT, Meerut

ITA 3526/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6498 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 02-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH CHAND DUBEY
• Keywords: Charitable institution; Revised return
• Section: 143(3); 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 3526/DEL/2015 (AY. 2010-11) M/S M.J. CHARITABLE TRUST, 28, BAGHPAT ROAD, MEERUT (PAN: AACTM0207F) VS. ACIT, CIRCLE-1, MEERUT (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAJ KUMAR, ADV. DEPARTMENT BY : SH. UMESH CHAND DUBEY, SR. DR ORDER PER H.S. SIDHU, JM ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER DATED 2 3.4.2015 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)M EERUT PERTAINING TO ASSESSMENT YEAR 2010-11 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER:- 1. THE LD. CIT(A) HAS FAILED TO APPRECIATE THE CONTENT AND TENOR OF VARIOUS HIGH COURT AND TRIBUNAL JUDGMENTS CITED BEFORE HIM WHICH ARE A DIRECT AUTHORITY ON THE ISSUE AT HAND AND H AS THEREBY VIOLATED THE PRINCIPLES OF JUDICIAL PRINCIPLES. 2. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT INCOME HAS TO BE COMPUTED COMMERCIALLY EVEN IN CASE COVERED U/S. 11-13 O F 2 THE INCOME TAX ACT, 1961 AND RESULTANT LOSS, IF ANY, ARI SING DUE TO SURPLUS APPLICATION OF INCOME, HAS TO BE COMPUTED AND CARRIED FORWARD TO NEXT YEAR TO BE SET OFF THEREIN ACCORDINGL Y. 3. THE LD. CIT(A) HAS ALSO FAILED TO APPRECIATE THAT NEITHER SECTION 11 NOR SECTION 72 OF THE INCOME TAX ACT, 1961 HAVE A MU TUAL RIDER FOR COMPUTATION OF INCOME OR FOR ITS CARRY FORWAR D AND SET OFF AND HENCE THE IMPUGNED ORDER DESERVES TO BE QUASHE D. 3. THE BRIEF FACTS OF THE CASE ARE THAT AO NOTED THAT THE ASSESSEE IN ITS COMPUTATION OF INCOME HAS CLAIMED, EXCESS APPLICATION MADE DURING THE YEAR AND EXCESS APPLICATION OF INCOME OF EARLIER YEAR TO BE CARRIED FORWARD AND TO BE SET OFF AGAINST THE FUTURE INCOME RECEIPTS. AS PER AO THAT EVEN THOUGH THE CAPITAL EXPENSES IN THE CASE OF THE CHARITAB LE INSTITUTION ARE ALLOWABLE AS APPLICATION OF INCOME, NO CLAIM FOR CARR Y FORWARDS OF LOSS ON ACCOUNT OF CAPITAL EXPENSES IS ALLOWABLE. THE AO DID NOT ALLOW THE CARRY FORWARD OF EITHER THE CURRENT YEAR LOSS OR THAT OF EAR LIER YEAR LOSS. THE OBSERVED THAT THE ASSESSEE SATISFIES THE CONDITION FOR EXEMP TION U/S. 11 AND 12 AND COMPLETED THE ASSESSMENT AT NIL VIDE HIS ORDER DA TED 12.2.2013 PASSED U/S. 143(3) OF THE I.T. ACT, 1961. 4. AGAINST THE ASSESSMENT ORDER DATED 12.2.2013, ASSESSEE A PPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATE D 23.4.2015 HAS DISMISSED THE APPEAL OF THE ASSESSEE. 3 5. AGGRIEVED WITH THE AFORESAID ORDER OF THE LD. CIT (A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. DURING THE HEARING, LD. COUNSEL OF THE ASSESSEE HAS SUB MITTED THAT THE ISSUES INVOLVED IN THE PRESENT ASSESSMENT YEAR I.E. 201 0-11 ARE SQUARELY COVERED BY THE DELHI BENCH MEERUT CAMP ORDER DATED 29.2.2016 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10 PASSED IN IT A NO. 5549/DEL/2014 (AY 2009-10). IN THIS BEHALF, HE FILE D THE COPY OF THE TRIBUNALS ORDER DATED 29.2.2016 BEFORE US AND REQUEST ED THAT THE SAME MAY BE RESPECTFULLY FOLLOWED IN THE INSTANT CASE AND T HE GROUND RAISED BY THE ASSESSEE MAY BE ACCORDINGLY ALLOWED. 7. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND REQUESTED THAT SAME MAY BE UPHELD. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE LEVANT RECORDS AVAILABLE WITH ME, ESPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES AND THE TRIBUNALS DELHI BENCH MEERUT CAMP ORDER DA TED 29.2.2016 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10 PASSED IN IT A NO. 5549/DEL/2014 (AY 2009-10). FOR THE SAKE OF CONVENIE NCE, WE ARE REPRODUCING THE RELEVANT PARA NO. 6 TO 10 AT PAGE NO . 3 TO 5 AS UNDER:- 6. IN SUPPORT OF THE GROUND, THE LD. AR SUBMITTED THA T THE ISSUE RAISED IN THE PRESENT APPEAL IS FULLY COVERED BY SEVERA L DECISIONS 4 OF DELHI BENCH OF THE TRIBUNAL AND A LIST OF THOSE DECI SIONS HAS BEEN FURNISHED. SOME OF THESE DECISIONS ARE IN THE CASES O F FATEH CHAND CHARITABLE TRUST VS. ACIT, ITA NO. 1665/D EL/20L2 (AY 2006-07) ORDER DATED 21.06.2012 AND ACIT VS. M/S. SUBHARTI K.K.B. CHARITABLE TRUST, ITA NO. 15531DE1L2 011 (AY 2006-07) ORDER DATED 11.05.2012. 7. THE LD. SR. DR ON THE OTHER HAND PLACED RELIANCE O N THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE ABOVE CITED DECISIONS HAVING DISTINGUISHABLE FACTS ARE NOT HELPFUL TO THE ASSESSEE. HE ALSO SUBMITTED THAT THERE WAS NO PROVISION TO CA RRY FORWARD OF EXCESS OF EXPENDITURE OF EARLIER YEARS. 8. HAVING GONE THROUGH THE ABOVE CITED DECISIONS, WE FI ND THAT THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF FATEH C HAND CHARITABLE TRUST VS. ACIT(SUPRA) HAS DECIDED AN IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. IN THAT CASE, ASSESSEE WAS RUNNING AN CHARITABLE TRUST AND MEDICAL COLLEGE AS WELL AS HOSPITAL . DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS IT WAS GATHERE D BY THE AO THAT THE ASSESSEE HAD FILED A REVISED RETURN WHE REIN LOSS OF RS. 5.83,85,975/- WAS TO BE CARRIED FORWARD TO THE ASSESSMENT YEAR 2007-08. THE AO DID NOT ALLOW THE CLAIM OF LOSS AND LOSS FOR CARRY FORWARD. THE LD. CIT(A) ALLOWED THE SAME. THE 5 REVENUE WENT IN APPEAL BEFORE THE TRIBUNAL, WHEREIN VIDE ORDER DATED 17.11.2009, THE MATTER WAS SET ASIDE TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH ACCORDING TO THE LAW AFTER EXA MINING THE CASE LAWS CITED BY THE ASSESSEE. THE AO HELD THAT THE ASSESSEE FAILED TO JUSTIFY, HOW, THE EXCESS EXPENSES OR EXCESS APPLICATION OF INCOME COULD MERIT ALLOWANCE OF LOSS TO TH E ASSESSEE. THE ASSESSEE AGAIN WENT IN FIRST APPEAL AND THE LD . CIT(A) REJECTED THE CLAIM OF ASSESSEE. THEREAFTER THE ASSE SSEE CAME TO THE TRIBUNAL AND PLACED RELIANCE ON NUMBER OF DECISIONS INCLUDING THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING 264 ITR 110 (BOMB.). THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF MIS CITY EDUCATIONAL AND SO CIAL WELFARE SOCIETY ORDER DATED 26.8.2011. DISCUSSING THESE DECISIONS AND THE RECENT DECISION OF HON'BLE DELHI HIGH C OURT IN THE CASE OF DIT VS. BISWA JAGIRITI MISSION, ITA NO. 140 /2012 DATED 29.03.2012 AS THE CLAIM OF THE ASSESSEE, THE TRIBUN AL HAS HELD THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE HON'BLE DELHI HIGH COURT-IN THE CASE OF DIT VS. BISWA JAGIRITI M ISSION (SUPRA) WHEREIN DECISION OF HON'BLE (BOM.) HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING (2003) 264 ITR 11 0 (BORN.) HAS BEEN FOLLOWED. IT HAS BEEN HELD BY THE HON'BLE HIG H COURT 6 THAT THE JUDGMENT OF HON'BLE SUPREME COURT IN THE C ASE OF ESCORTS LTD. ARID ORS. V S. UOI, 119 ITR 43 (SC) IS NOT A PPLICABLE TO THE CASE. 9. IN THE CASE OF MIS. CITY EDUCATIONAL AND SOCIAL WEL FARE SOCIETY (SUPRA) BEFORE THE DELHI BENCH OF THE TRIBUNAL , THE REVENUE HAD DENIED SIMILAR CLAIM ON THE BASIS THAT THER E WAS NO PROVISION FOR CARRY FORWARD OF THE EXCESS EXPENDITURE O F EARLIER YEAR TO BE ADJUSTED AGAINST THE INCOME OF SUBSEQUENT YEA RS. THE TRIBUNAL HAS NOTED THAT SUCH ARGUMENT WAS REJECTED BY TH E HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTIT UTE OF BANKING (SUPRA) AND IT WAS HELD BY THE HON'BLE HIGH COU RT THAT INCOME DERIVED FROM THE TRUST PROPERTY HAS ALSO GOT TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND IF COMMERCIAL PRINCI PLES ARE APPLIED THEN ADJUSTMENT OF EXPENSES INCURRED BY TH E TRUST FOR CHARITABLE RELIGIOUS PURPOSE IN THE EARLIER YEAR A GAINST THE INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAVE TO BE REGARDED AS APPLICATION OF THE INCOME OF THE TRUST F OR CHARITABLE AND RELIGIOUS PURPOSE. WE, THUS, RESPECTFULL Y FOLLOWING THE ABOVE CITED DECISIONS BY THE LD. AR DECIDE THE ISSUE I N FAVOUR OF THE ASSESSEE WITH DIRECTION TO THE AO TO ALLOW THE CL AIMED CARRY FORWARD OF LOSSES TO NEXT ASSESSMENT YEARS. THE GROUND S INVOLVING THE ISSUE ARE THUS, ALLOWED. 7 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. 8.1 AFTER PERUSING THE AFORESAID ORDER OF THE TRIBUNA L DATED 29.2.2016, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUES INVOLVED IN T HE INSTANT ASSESSMENT YEAR I.E. 2010-11 ARE EXACTLY SIMILAR AND I DENTICAL TO THE ASSESSMENT YEAR 2009-10 IN ASSESSEES OWN CASE WHEREIN THE TRI BUNAL HAS ALLOWED THE APPEAL OF THE ASSESSEE, AS AFORESAID. THEREFO RE, RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISION DATED 29.2.201 6, AS AFORESAID, THE PRESENT APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAN DS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/12/2016. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 16/12/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY OR DER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 8