ACIT, Meerut V. M/s City Educational and Social Welfare Society, Meerut

ITA 4119/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86994 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 05-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: SAMP ATH
• Keywords: Charitable institution; Capital expenditure
• Section: 143(3); 28; 11

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI N.K. SAINI , ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NO. 4119 /DEL/201 3 ASSESSMENT YEAR 200 8 - 09 A CIT, CIRCLE - 1, VS. M/S CITY EDUCATIONAL AND SOCIAL ME ERUT . WELFARE SOCIETY , 47/L - 4, JAWAHAR QUARTERS, BEGUM BRIDGE, MEERUT. (PAN AA A T C 0 960 H ) ( APPELLANT) (RESPONDENT) DATE OF HEARING : 1 7 .0 3 .2015 DATE OF PRONOUNCEMENT : 20 . 03 .2015 APPELLANT BY : SMT. PARWINDER KAUR, SR. D R. RESPONDENT BY : SRI SAMPATH , AND SRI RAJ KUMAR, ADVOCATES ORDER PER SHRI GEORGE GEORGE K , J M : 1. TH IS APPEAL , AT THE INSTANCE OF THE REVENUE IS DIRECTED AGAINST THE CIT(A) S ORDER DATED 29 .0 4 .201 3 . THE RELEVANT ASSESSMENT YEAR IS AY 200 8 - 0 9 . 2. BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS. THE ASSESSEE IS A SOCIETY , RUNNING SEVERAL EDUCATIONAL INSTITUTIONS. THE OBJECTS OF THE ASSESSEE S TRUST ARE PRIMARILY IN FIELD OF EDUCATION . THE RETURN OF INCOME FOR THE CURRENT YEAR WAS FILED ON 20.09 .2008 DISCLOSING A LOSS OF RS.48,00,215/ - . THE IT A NO. 4119 /DEL /201 3 2 ASSESSMENT WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED BY ORDER DATED 27.12.2010. THE ASSESSING OFFICER DENIED THE BENEFIT OF CARRY FORWARD OF LOSS CLAIMED . THE AO WAS OF THE V IEW, THE LOSS WAS ON ACCOUNT OF CAPITAL EXPENDITURE INCURRED AND CANNOT BE ALLOWED TO BE CARRIED FORWARD FOR SET OFF AGAINST FUTURE INCOME. 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER IN DENYING CARRIED FORWARD OF LOSS TO BE SET OFF AGAINST SUBSEQU ENT YEAR S SURPLUS, THE ASSESSEE PREFERRED AN APPEAL TO THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT FINDING OF THE CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE READS AS FOLLOWS: - (AT PAGE 7) 4 ...I HAVE CAREFULLY CONSIDERED TH E SUBMISSIONS FILED BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS AND I HAVE ALSO GONE THROUGH THE VARIOUS JUDGMENTS OF SUPERIOR AUTHORITIES AS CITED AND RELIED UPON BY THE APPELLANT IN SUPPORT OF ITS CLAIM FOR CARRY FORWARD AND SET OFF OF LO SSES AGAINST FUTURE YEAR'S SURPLUS. I HAVE ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD AND FIND THAT THE ISSUE IN QUESTION STANDS ALREADY RESOLVED IN FAVOUR OF THE ASSESSEE. THE ISSUE INVOLVED IN THE INSTANT APPEAL IS SQUARELY COVERED BY VARIOUS JUDGMENTS OF SUPERIOR AUTHORITIES AS CITED BY THE APPELLANT IN. ITS WRITTEN SUBMISSION AND I ALSO FIND THAT IN ABOVE JUDGMENTS VARIOUS HON'BLE COURTS HAVE HELD THAT IN THE CASES OF TRUST CLAIMING EXEMPTION U/S. 11 OF THE I.T.ACT,1961, THE LOSSES HAVE TO B E ALLOWED TO BE CARRIED FORWARD FOR SET OFF AGAINST THE SUBSEQUENT YEAR'S SURPLUS, IF ANY. IN VIEW OF ABOVE, RESPECTFULLY RELYING ON ABOVE RULINGS OF VARIOUS HON'BLE COURTS I HOLD THAT THE INCOME OF THE TRUST IS TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND IN CASE EXCESS EXPENDITURE OVER AND ABOVE THE INCOME RECEIVED BY THE SOCIETY HAS BEEN INCURRED IN EARLIER YEAR(S) ON CHARITABLE PURPOSE, SUCH EXCESS (LOSS) HAS TO BE CARRIED FORWARD AND SET OFF AGAINST THE SUBSEQUENT YEAR'S SURPLUS, IF ANY, AND SUCH ADJUST MENT OF LOSS/DEFICIT OF CURRENT YEAR AGAINST INCOME / SURPLUS OF SUBSEQUENT YEAR WOULD AMOUNT TO APPLICATION OF INCOME OF THE TRUST FOR CHARITABLE PURPOSE IN SUBSEQUENT YEAR WITHIN THE MEANING OF SECTION 11 (I) (A) OF THE I.T. ACT, 1961. 4. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. LD. DR STRONGLY RELIED ON THE ASSESSMENT ORDER. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE S SOCIETY SUBMITTED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE ORDER OF THE IT A NO. 4119 /DEL /201 3 3 TRIBUNAL IN ASSESSEE S OWN CA SE FOR AY 2005 - 06 IN ITA NO. 5627/DEL/2010 (ORDER DATED 26.08.2011) . 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLITARY ISSUE THAT ARISES FOR CONSIDERATION IS WHETHER THE CIT(A) IS JUSTIFIED IN ALLOWING CARRIED FORWARD AND SET OFF OF CURRENT YEAR S LOSSES AGAINST THE SUBSEQUENT YEAR S SURPLUS. THE ASSESSING OFFICER WAS OF THE VIEW THE LOSS SUFFERED DURING THE YEAR WAS ON ACCOUNT OF CAPITAL EXPENDITURE AND THEREFORE LOSS CANNOT ALLOWED TO BE CARRIED FORWARD. THIS ISSUE ACCORD ING TO US IS NO LONGER RES INTEGRA . T HE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE AY 2005 - 06 (SUPRA) BY FOLLOWING THE JUDGMENT OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING ( REPORTED IN 264 ITR 110 (BOM.) ) HAS DECIDED THE ISSU E IN FAVOUR OF THE ASSESSEE . THE RELEVANT FINDING OF THE COORDINATE BENCH ORDER READS AS FOLLOWS: - 4. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. LEARNED CIT(A) WHILE PERMITTING THE ASSESSEE TO CLAIM SET OFF AGAINST THE BROUGHT FORWARD LOSSES HAS PUT RELIANCE UPON THE FOLLOWING DECISIONS: - CIT VS. MATRI SEWA TRUST, 242 ITR 20 (MAD.); CIT VS. INSTITUTE OF BANKING, 264 ITR 110 (BOM.); CIT VS. MAHARANA OF MEWAR CHARITABLE FOUNDATION 164 ITR 439 & GOVINDU NAICKER ESTAT E VS. ADIY, 248 ITR 368 5. WE HAVE GONE THROUGH THE ORDER OF THE CIT(A) IN ASSESSMENT YEARS 2001 - 02, 2003 - 04 & 2004 - 05. IN THOSE YEARS, THE ASSESSEE HAS BEEN PERMITTED TO CARRY FORWARD THE LOSSES AND ALSO TO CLAIM SET OFF OF SUCH LOSSES AGAINST THE INCOME . THE CIT(A) HAS MADE A REFERENCE IN THOSE ASSESSMENT YEARS TO SECTION 11(4) OF THE INCOME - TAX ACT. IN THE CASE OF CIT VS. INSTITUTE OF BANKING REPORTED IN 264 ITR PAGE 110 AN ARGUMENT WAS RAISED BEFORE THE HON BLE MUMBAI HIGH COURT BY THE REVENUE THAT IN THE CASE OF A CHARITABLE TRUST, THEIR INCOME WAS ASSESSABLE UNDER SELF CONTAINED CODE MENTIONED IN SECTION 11 TO 13 OF INCOME - TAX ACT AND THAT THE INCOME OF THE CHARITABLE TRUST WAS NOT ASSESSABLE UNDER THE HEAD PROFIT AND GAINS OF BUSINESS U/S 28 IN WHI CH THE PROVISION FOR CARRY FORWARD OF LOSSES WAS RELEVANT. ACCORDING TO THE REVENUE, THERE WAS NO PROVISION FOR CARRY FORWARD OF THE EXCESS OF EXPENDITURE OF EARLIER YEARS TO BE ADJUSTED AGAINST THE INCOME OF SUBSEQUENT YEARS. IT A NO. 4119 /DEL /201 3 4 THIS ARGUMENT WAS REJECTED BY THE BOMBAY HIGH COURT AND IT HAS BEEN HELD THAT INCOME DERIVED FROM THE TRUST PROPERTY HAS ALSO GOT TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND IF COMMERCIAL PRINCIPLES ARE APPLIED THEN ADJUSTMENT OF EXPENSES INCURRED BY THE TRUST FOR CHARITABLE RELIGIOUS PURPOSE IN THE EARLIER YEARS AGAINST THE INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAVE TO BE REGARDED AS APPLICATION OF THE INCOME OF THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSE. THE LEARNED CIT(A) HAS FOLLOWED THIS DECISION APART FROM OT HERS REFERRED ABOVE. THE ORDER OF THE CIT(A) IN THREE ASSESSMENT YEARS HAVE BEEN ACCEPTED BY THE REVENUE. IN THIS YEAR, THE LEARNED CIT(A) HAS SIMPLY BASED HIS DECISION ON THE FINDING GIVEN IN EARLIER ASSESSMENT YEARS. KEEPING IN VIEW THE PRINCIPLE OF CONS ISTENCY, WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LEARNED CIT(A). IN VIEW OF THE ABOVE DISCUSSION, THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN VIEW OF ABOVE, COORDINATE BENCH ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE (SUPRA) WHICH IS IDENTICAL TO THE FACTS OF THE INSTANT CASE, WE HOLD THE CIT(A) IS JUSTIFIED IN ALLOWING CARRIED FORWARD OF CURRENT YEAR S LOSS TO BE SET OFF IN THE SUBSEQUENT YEARS. IT IS ORDERED ACCORDINGLY. 7 . IN TH E RESULT, THE APPEAL FILED BY REVENUE IS DISMISSED. TH E DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 0 TH MARCH , 201 5 . SD/ - SD/ - ( N.K. SAINI ) (GEORGE GEORGE K.) A CCOUNTANT MEMBER J UDICIAL MEMBER DATED: 2 0 TH MARCH , 201 5 . AKS/ - COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST . REGISTRAR, ITAT, NEW DELHI