SARVAJANIK JAN KALYAN PARMARTHIK NYAS, V. THE ACIT 1 (1),

ITA 363/IND/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2768 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 01-08-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: H P VERMA; ASHISH GOEL S
• Keywords: Capital asset; Depreciation; Charitable institution
• Section: 11

Judgement Text

PAGE 1 OF 5 - I.T.A.NO. 363/IND/2008 SARVAJANIK JANKALYAN PARMARTHIK NYAS, BHOPAL. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : AACTS2301Q I.T.A.NO. 363/IND/2008 A.Y. : 2004-05 SARVAJANIK JANKALYAN PARMARTHIK NYAS, BHOPAL. ACIT, 1(1), BHOPAL. VS APPELLANT RESPONDENT APPELLANT BY : SHRI H.P.VERMA AND SHRI ASHISH GOEL, ADVOCATES RESPONDENT BY : SHRI P.K.MITRA, SR. DR DATE OF HEARING : 28.06.2010 O R D E R PER V.K. GUPTA, A.M. THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF ORD ER OF THE LD. CIT(A)-I, BHOPAL, DATED 06.06.2008, FOR THE ASSESSM ENT YEAR 2004-05. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. IN THIS APPEAL, THE ASSESSEE HAS RAISED FOLLOWING G ROUNDS :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF L OSS OF RS. PAGE 2 OF 5 - I.T.A.NO. 363/IND/2008 SARVAJANIK JANKALYAN PARMARTHIK NYAS, BHOPAL. 90,64,273/- AS RETURNED BY THE APPELLANT WITHOUT A CCEPTING THE EXPLANATION OFFERED BY THE APPELLANT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) ERRED IN NOT ALLOWING CARRY FORWARD OF LO SS OF RS. 90,64,273/-, AS RETURNED BY THE ASSESSEE, TO NEXT A SSESSMENT YEAR WITHOUT CONSIDERING THE FACT THAT THIS IS NOT ACTUAL LOSS IN ABSOLUTE TERMS BUT IS AN EXCESS OF EXPENDITURE OVER INCOME WHICH CAN BE SET OFF AGAINST SURPLUS IN COMING YEAR S. 4. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A TRU ST REGISTERED U/S 12A. THE ASSESSEE SHOWED A NET LOSS OF RS. 90,64,27 3/-. THE AO ASSESSED THE TOTAL INCOME AT NIL AND ALSO HELD THAT CARRY FO RWARD WAS NOT ALLOWABLE TO THE ASSESSEE AS CAPITAL EXPENSES HAD BEEN CLAIME D BY THE ASSESSEE SOCIETY U/S 11 /12 OF THE ACT. AGGRIEVED BY THIS, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHEREIN IT WAS MENTIO NED THAT THE AO DID NOT GIVE ANY REASON IN THE ASSESSMENT ORDER, WHILE MAKING THE ASSESSMENT AT NIL INCOME. THUS, THE AOS ACTION WAS NOT JUSTIF IED. THE LD.CIT(A), HOWEVER, HELD THAT THERE COULD NOT BE LOSS IN ABSOL UTE TERMS. HOWEVER, THERE COULD BE EXCESS APPLICATION OF INCOME/UTILIZA TION AND SINCE THE ASSESSEE WAS NOT ENGAGED IN THE BUSINESS ACTIVITIES , THERE COULD NOT BE ANY LOSS IN ABSOLUTE TERMS. PAGE 3 OF 5 - I.T.A.NO. 363/IND/2008 SARVAJANIK JANKALYAN PARMARTHIK NYAS, BHOPAL. 5. AS REGARD TO THE ISSUE OF CARRY FORWARD OF LOSS, TH E LD.CIT(A) HELD THAT SINCE THERE WAS NO LOSS IN ABSOLUTE TERMS , HENCE, THERE WAS NO QUESTION OF ALLOWING CARRY FORWARD, PARTICULARLY, W HEN THE BASIC OBJECTIVE OF CARRY FORWARD OF LOSS WAS THAT THE SAME COULD BE SET-OFF AGAINST THE TAXABLE INCOME IN FUTURE AND SINCE THERE COULD NOT BE ANY TAXABLE INCOME IN CASE OF TRUST/SOCIETY, THEREFORE, THERE COULD NO T BE ANY SET OFF ALSO. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 6. THE LD.COUNSEL FOR THE ASSESSEE NARRATED THE FACTS AND SUBMITTED THAT WHEN APPLICATION OF INCOME WAS MORE THAN ITS I NCOME, THEN THE ASSESSEE COULD AVAIL EXCESS AMOUNT SPENT/APPLIED FO R IN SUBSEQUENT YEAR AS SET OFF AGAINST INCOME OF THAT YEAR. FOR THIS PR OPOSITION, THE LD. COUNSEL RELIED ON FOLLOWING JUDICIAL DECISION :- (I) CIT VS. SRI PLOT SWETAMBAR MURTI PUJAK JAIN MANDAL, 211 ITR 293 (GUJ) (II) CIT VS. MAHARANA OF MEWAR CHARITABLE FOUNDATIN, 164 ITR 439 (RAJ) (III) CIT VS. MATRISEWA TRUST, 242 ITR 20 (MAD.) (IV) GONVINDU NAICKER ESTATE V. ASSISTANT DIRECTOR OF INCOME-TAX, 248 ITR 368 (MAD). PAGE 4 OF 5 - I.T.A.NO. 363/IND/2008 SARVAJANIK JANKALYAN PARMARTHIK NYAS, BHOPAL. (V) CIT VS. THE TRUSTEES OF SETH MERWANJEE FRAMJI PANDAY CHARITABLE FUND, TRUST, PANDAY SANITORIUM, BOMBAY (2003, 177 TAXATION 19 (BOM). (VI) VOLKART FOUNDATION, I.T.A.NO. 4209/BOM/73-74 & BALKAN-JI-BARI I.T.A.NO. 3078/BOM/77-78 (1979) 2TAXMAN 377 (BOM. TRIB). (VII) GEM & JEWELLERY EXPORT PROMOTION COUNCIL V. ITO, (1999) 68 ITD 95, 99 (MUM). 7. THE LD. SENIOR D.R.,ON THE OTHER HAND, PREFERRED TO RELY STRONGLY ON THE ORDER OF THE LD.CIT(A). 8. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 9. IT IS NOTED THAT IT IS A CASE OF DEFICIT ARISING OU T OF EXCESS OF EXPENDITURE OVER INCOME IN THE YEAR UNDER CONSIDERA TION. IN OUR VIEW, SUCH EXCESS OF EXPENDITURE HAS RESULTED IN VIEW OF DEPRECIATION AND APPLICATION OF INCOME IN CAPITAL ASSETS FOR THE PUR POSE OF OBJECTS OF THE ASSESSEE TRUST/SOCIETY. WE FURTHER FIND THAT INCURR ENCE OF SUCH EXPENDITURE FOR THE PURPOSES OF OBJECTS OF THE TRUST/SOCIETY IS NOT IN DISPUTE. HENCE, EXCESS EXPENDITURE INCURRED FOR CHARITABLE PURPOSES IN THE YEAR UNDER CONSIDERATION IS LIABLE TO BE ADJUSTED AGAINST THE INCOME OF SUCCEEDING YEAR WHILE COMPUTING THE TAXABLE INCOME OF THAT SUC CEEDING YEAR. THIS PAGE 5 OF 5 - I.T.A.NO. 363/IND/2008 SARVAJANIK JANKALYAN PARMARTHIK NYAS, BHOPAL. VIEW IS DULY SUPPORTED BY THE DECISION OF THE HON' BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. MAHARANA OF MEWAR CHAR ITABLE FOUNDATION (SUPRA) AND OTHER JUDICIAL DECISIONS CITED BY THE A SSESSEE. ACCORDINGLY, WE ACCEPT GROUND NO.2 OF THE ASSESSEE. THEREFORE, T HE ISSUE RAISED IN GROUND NO.1 BECOMES OF ACADEMIC, HENCE, NO NEED FO R ANY ADJUDICATION THEREOF. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STA NDS PARTLY ALLOWED IN TERMS INDICATED ABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH JUNE, 2010. CPU* 28296