ASSTT CIT (E) -I(1), MUMBAI V. K.J.SOMAIYA TRUST, MUMBAI

ITA 3774/MUM/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4491 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 18-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K DHONDIAL J
• Keywords: Depreciation; Charitable institution; Earning of tax free income
• Section: 11

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI , ! ' , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, ITA NO.3774/MUM/2015 ASSESSMENT YEAR: 2008-09 ASST. CIT(EXEMPTION)I-1, ROOM NO.506, 5 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400012 / VS. K.J. SOMAIYA TRUST, 4 TH FLOOR, FAZALBHOY BUILDING, 45-47, M.G. ROAD, FORT, MUMBAI-400023 / REVENUE / ASSESSEE P.A. NO. AAATK0474C ITA NO.3788/MUM/2015 ASSESSMENT YEAR: 2008-09 K.J. SOMAIYA TRUST, 4 TH FLOOR, FAZALBHOY BUILDING, 45-47, M.G. ROAD, FORT, MUMBAI-400023 / VS. ASST. CIT(EXEMPTION)II-1, ROOM NO.616, 6 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400012 / ASSESSEE / REVENUE P.A. NO.AAATK0474C $ % & / REVENUE BY SHRI A.K.DHONDIAL JCIT-DR $ % & / ASSESSEE BY MS. ARATI VISSANJI / DATE OF HEARING 05/01/2016 & / DATE OF ORDER: 06/01/2016 ITA NO.3774 & 3788/MUM/2015 K. J. SOMAIYA TRUST 2 & / O R D E R THE REVENUE AS WELL AS THE ASSESSEE ARE IN CROSS A PPEAL AGAINST THE IMPUGNED ORDER DATED 18/03/2015 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. IN THE APPEAL OF THE ASSESSEE (ITA NO.3788/MUM/2015), THE ONLY GROUND PE RTAINS TO DEPRECIATION OF RS.89,54,208/-. 2. THE CRUX OF ARGUMENT ADVANCED BY MS. ARATI VISANJI, LD. COUNSEL FOR THE ASSESSEE IS THAT THE W RITTEN SUBMISSIONS, FILED BY THE ASSESSEE, WERE NOT CONSI DERED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND IT SHOULD HAVE BEEN TREATED AS ADDITIONAL GROUND. RELIANCE W AS PLACED UPON THE DECISION IN THE CASE OF CIT VS INSTITUTE O F BANKING (264 ITR 110)(BOM.), CIT VS MAHARANA OF MEBAR CHARI TABLE FOUNDATON (164 ITR 439) (RAJ.), CIT VS PLOT SWETAMB ER MURTIPUJAK JAIN MANDAL (211 ITR 293)(GUJ.) AND CIT VS SHIMLA CHANDIGARH DIOCESE SOCIETY (318 ITR 96) (P & H). MY ATTENTION WAS ALSO INVITED TO THE WRITTEN SUBMISSIO N FILED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND PARA-6, PAGE -11 OF THE IMPUGNED ORDER. ON THE OTH ER HAND, THE LD. DR, DEFENDED THE CONCLUSION ARRIVED AT IN T HE IMPUGNED ORDER BY CONTENDING THAT NO FORMAL GROUND WAS RAISED BY THE ASSESSEE, THEREFORE, THE LD. COMMISSI ONER OF INCOME TAX (APPEALS) WAS RIGHT IN HIS CONCLUSION. 2.1. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WITHOUT G OING INTO ITA NO.3774 & 3788/MUM/2015 K. J. SOMAIYA TRUST 3 MUCH DELIBERATION, UNDISPUTEDLY, THE ASSESSEE FILED WRITTEN SUBMISSIONS FOR CLAIM OF DEPRECIATION AND SAME HAS BEEN REPRODUCED IN PARA 5 ONWARDS OF THE IMPUGNED ORDER AND VARIOUS CASE LAWS HAVE BEEN RELIED UPON THEREIN. H OWEVER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONCLU DED THAT NO SPECIFIC GROUND HAS BEEN RAISED, HENCE, NO DECIS ION WAS GIVEN BY REJECTING THE SUBMISSION OF THE ASSESSEE. IN VIEW OF THIS FACT, I AM OF THE VIEW THAT AS PER ARTICLE -26 5 OF CONSTITUTION OF INDIA, THE AUTHORITIES ARE TO LEVY AND COLLECT DUE TAXES, THEREFORE, SINCE, NO GRIEVANCE IS CAUSED TO EITHER SIDE, I REMAND THIS GROUND TO THE FILE OF THE LD. C OMMISSIONER OF INCOME TAX (APPEALS) TO CONSIDER THE SUBMISSIONS OF THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO RAISE A SPECIFIC GROUND SO THAT THE SAME CAN BE DISPOSED OF IN ACCOR DANCE WITH LAW IN THE LIGHT OF THE CASE LAWS CITED BY THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTIC AL PURPOSES ONLY. 3. SO FAR AS, THE APPEAL OF THE REVENUE (ITA NO.3774/MUM/2015) IS CONCERNED, THE GROUND RAISED PERTAINS TO ALLOWING THE CARRY FORWARD OF DEFICIT O F RS.47,57,38,232/- AND ALLOWING SET OFF AGAINST INCO ME OF SUBSEQUENT YEARS IS CONCERNED, THE CRUX OF ARGUMENT ON BEHALF OF THE REVENUE IS IDENTICAL TO THE GROUND RA ISED BY SUBMITTING THAT IT AMOUNTS TO DOUBLE DEDUCTION ON A CCOUNT OF EXPENDITURE OUT OF EXEMPT INCOME. ON THE OTHER H AND, THE LD. COUNSEL FOR THE ASSESSEE, RELIED UPON THE DECIS ION FROM ITA NO.3774 & 3788/MUM/2015 K. J. SOMAIYA TRUST 4 HONBLE JURISDICTIONAL HIGH COURT IN CIT VS INSTITU TE OF BANKING (264 ITR 110) (BOM.), DIT(E) VS SHRI VILLE PARELE KELAVANI MANDAL 232 TAXMAN 499 (BOM.)(2015), CIT VS LEELAWATI MEHATA MEDICAL TRUST (2015) 229 TAXMAN 27 6 (BOM), DIT (E) VS FRAMJEE CAVASJEE INSTITUTE (2014) 227 TAXMAN 266 (MAG.), DIT(E) VS INDRAPRASHTHA CANCER S OCIETY (2014) 112 DTR 345 (DEL.), CIT VS SILIGURHI REGULAT ED MAREKT COMMITTEE 366 ITR 51 (CAL.) AND CIT VS DEVI SHANKUN TLA THARAL CHARITABLE FOUNDATION 358 ITR 452 (MP). 3.1. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SECTION 11(6) WAS INSERTED BY THE FINANCE (NO.2) ACT, 2014. IN THIS SECTION, WHERE ANY INCOME IS REQUIRED TO BE APPLIED OR ACCUM ULATIVE OR SET APART FOR APPLICATION, THEN FOR SUCH PURPOSE S, THE INCOME SHALL BE DETERMINED WITHOUT ANY DEDUCTION OR ALLOWANCE BY WAY OF DEPRECIATION OR OTHERWISE IN RE SPECT OF ANY ASSET, ACQUISITION OF WHICH HAS BEEN CLAIMED AS AN APPLICATION OF INCOME UNDER THIS SECTION IN THE SAM E OR ANY OTHER PREVIOUS YEAR. SO FAR AS, THE WORD APPLIED, IN THIS CONTEXT, MEANS THAT THE INCOME IS ACTUALLY APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES. THE WORD APPLIED NEED NOT NECESSARILY IMPLY (SPENT). EVEN AN AMOUNT IS IRRETR IEVABLY YEAR MARKED AND ALLOCATED FOR CHARITABLE OR RELIGIO US PURPOSES, IT MAY BE SAID TO HAVE BEEN APPLIED TO TH E PURPOSES. OUR VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN FOLLOWING CASES:- ITA NO.3774 & 3788/MUM/2015 K. J. SOMAIYA TRUST 5 I. CIT VS RADHASWAMY SATSANG SABHA (1954) 25 ITR 472 (ALL.) II. CIT VS HEH THE NIZAM CHARITABLE TRUST (1981) 131 IT R 497(AP) III. NACHI MUTHU INDUSTRIAL ASSOCIATION VS CIT (1999) 23 5 ITR 190 (SC), IV. CIT VS THANTHI TRUST (1982) 137 ITR 735 (MAD.), V. CIT VS THANTHI TRUST (1999) 239 ITR 502 (SC) 3.2. UNDER SECTION 11(1)(A) INCOME DERIVED FROM PRO PERTY HELD UNDER TRUST FOR CHARITY, TO THE EXTENT SUCH IN COME IS APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES WILL B E EXEMPT FROM INCOME TAX (TIRUPATI TRUST VS CIT) (230 ITR 63 6, 640 (SC), THUS, IT IS CLEAR THAT THE PRE-REQUISITE COND ITIONS FOR APPLICATION OF INCOME U/S 11(1)(A), EARLIER PART, A RE THAT THE INCOME MUST BE DERIVED FROM PROPERTY HELD UNDER THE TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES AND THE EXCLUSION OF THE INCOME IS LIMITED TO THE EXTENT TO WHICH SUC H INCOME IS APPLIED TO SUCH PURPOSES FOR WHICH THE PROPERTY ARE HELD BY THE TRUST. 3.3. THERE IS NO WORD OF LIMITATION IN SECTION 11(1 )(A) PROVIDING THAT THE INCOME SHOULD HAVE BEEN APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES ONLY IN THE YEAR I N WHICH THE INCOME HAD ARISEN. THE WORD APPLIED MEANS TO PU T TO USE OR TO TURN TO USE OR TO MAKE USE OR TO PUT TO PRACTICAL ITA NO.3774 & 3788/MUM/2015 K. J. SOMAIYA TRUST 6 USE. HAVING REGARD TO THE PROVISIONS OF SECTION 1 1, IT IS CLEAR THAT THE WHEN THE INCOME OF THE TRUST IS USED OR PU T TO USE TO MEET THE EXPENSES INCURRED FOR CHARITABLE PURPOSES, IT IS CONSIDERED TO BE APPLIED FOR THE PURPOSES. THE SAID APPLICATION OF THE INCOME FOR THE PURPOSES TAKES PL ACE IN THE YEAR IN WHICH THE INCOME IS ADJUSTED TO MEET THE EX PENSES. IN OTHER WORDS, EVEN IF EXPENSES FOR CHARITABLE AND RE LIGIOUS PURPOSES HAVE BEEN INCURRED FOR EARLIER YEAR AND TH E SAID EXPENSES ARE ADJUSTED AGAINST THE INCOME OF THE SUB SEQUENT YEARS. 3.4. NOW, I SHALL EXAMINE THE FACTS OF THE PRESENT APPEAL, IN THE LIGHT OF THE AFORESAID DISCUSSIONS/J UDICIAL PRONOUNCEMENTS. THE FACTS, IN BRIEF, ARE THAT THE A SSESSING OFFICER DENIED CARRIED FORWARD OF DEFICIT OF RS.47, 57,38,232/- OF EARLIER YEARS BEING EXCESS OF APPLICATION OF INC OME OVER THE INCOME OF THE TRUST. THE ASSESSEE IN VIEW OF THE AF ORESAID DECISIONS, CLAIMED THAT CARRIED FORWARD TO BE ALLOW ED TO BE SET OFF. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEALS), THE ASSESSING OFFICER WAS DIRECTED TO AL LOW THE BROUGHT FORWARD DEFICIT OF EARLIER YEARS AND ALSO T O ALLOW CARRY FORWARD OF AGGREGATE DEFICIT TO SUCCEEDING YEAR AFT ER VERIFICATION. THE REVENUE IS AGGRIEVED AND IS IN AP PEAL BEFORE THIS TRIBUNAL. UNDER THE FACTS NARRATED HEREINABOVE , THE HONBLE JURISIDICTIONAL HIGH COURT IN CASES DISCUSS ED HEREINABOVE, AND ALSO BY OTHER HONBLE HIGH COURTS HELD THAT CARRY FORWARD OF DEFICIT OF EARLIER YEARS HAS TO BE SET OFF ITA NO.3774 & 3788/MUM/2015 K. J. SOMAIYA TRUST 7 AGAINST THE SURPLUS OF SUBSEQUENT YEARS. LIKEWISE, HONBLE DELHI HIGH COURT BY PLACING RELIANCE UPON THE DECIS ION OF THE HIGH COURT IN 211 ITR 293 (GUJ.), 164 ITR 439 (RAJ. ), 264 ITR 110 (BOM.) 242 ITR 20 (MAD.) HELD THAT EXCESS OF EX PENDITURE OVER INCOME IN ONE YEAR CAN BE SET OFF IN SUBSEQUEN T YEAR AGAINST THE INCOME U/S 11 AS AND BY WAY OF APPLICAT ION OF INCOME. RESPECTFULLY FOLLOWING THE AFOREMENTIONED H ONBLE HIGH COURTS AND SPECIFICALLY HONBLE JURISDICTIONAL HIGH COURT, I FIND NO INFIRMITY IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND AFFIRMED T HE SAME. FINALLY THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN T HE PRESENCE OF LD. REPRESENTATIVE OF BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 05/01/2016. SD/- (JOGINDER SINGH) ! ' / JUDICIAL MEMBER MUMBAI; DATED : 06/01/2016 F{X~{T? P.S / ! & $ )!*+ ,&+-* / COPY OF THE ORDER FORWARDED TO : 1. '#$%& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ) ) * ( '#$ ) / THE CIT, MUMBAI. 4. ) ) * / CIT(A)- , MUMBAI ITA NO.3774 & 3788/MUM/2015 K. J. SOMAIYA TRUST 8 5. -./ ' , ) '#$ ' 1 , / DR, ITAT, MUMBAI 6. /2 3$ / GUARD FILE. & / BY ORDER, (-# ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI