DCIT, Chandigarh V. M/s The Tribune Trust, Chandigarh

ITA 440/CHANDI/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5128 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 24-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANU MALIK
• Keywords: Capital asset; Charitable institution
• Section: 10B; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.440/CHD/2014 (ASSESSMENT YEAR : 2008-09) THE D.C.I.T., VS. M/S THE TRIBUNE TRUST, CIRCLE 4(1), SECTOR 29-C, CHANDIGARH. CHANDIGARH. PAN: AAATT2141D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANU MALIK, CIT DR RESPONDENT BY : SHRI TEJ MOHAN SINGH, ADV. DATE OF HEARING : 19.03.2018 DATE OF PRONOUNCEMENT : 23.03 .2018 ORDER PER ANNAPURNA GUPTA, A.M. : THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S), CHANDIGARH (HEREINAFTER REFERRED TO AS (LD.CIT(APP EALS)) DATED 19.2.2014 RELATING TO ASSESSMENT YEAR 2008-09 . 2. THE SOLE ISSUE IN THE PRESENT APPEAL RELATES TO ALLOWANCE OF CLAIM OF CARRY FORWARD OF LOSSES WHERE THE ASSESSEE IS CLAIMING ITS INCOME AS EXEMPT UNDER THE PROVISION OF SECTION 10(23C)(IV) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 3. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT THE A SSESSEE IS A TRUST DERIVING INCOME FROM PRINTING AND PUBLIC ATION OF NEWSPAPER, INTEREST INCOME AND MISCELLANEOUS INCOME . RETURN FOR THE IMPUGNED ASSESSMENT YEAR WAS FILED B Y THE 2 ASSESSEE CLAIMING EXEMPTION U/S 10(23C (IV) OF THE ACT AND FURTHER DECLARING LOSS OF RS.9,70,90,059/-. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE TRUST HAD ACTUALLY SHOWN SURPLUS INCOM E OF RS.24,40,19,449/- BUT HAD STILL CLAIMED LOSS TO BE CARRIED FORWARD AMOUNTING TO RS.9,70,90,059/- BY CLAIMING EXEMPTION OF RS. RS.158,85,13,605/- AS AGAINST THE TOTAL INCOME OF RS.149,14,23,546/-. THE ASSESSING OFFICER HELD THAT THE EXEMPTION U/S 10(23C)(IV) OF THE ACT COULD NOT BE MORE THAN THE INCOME EARNED BY THE ASSESSEE AND, THEREFORE, RESTRICTED THE SAME TO THE SURPLUS EARNE D BY THE ASSESSEE AS PER ITS INCOME & EXPENDITURE ACCOUNT AMOUNTING TO RS.24,40,19,449/- AND DENIED THE LOSS CLAIMED BY THE ASSESSEE AT RS.9,70,90,059/-. 4. AGGRIEVED BY THE SAME, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(APPEALS), WHO ALLOWED ASSESSEES APPEAL HOLDING THAT THE ASSESSEE IS ELIG IBLE FOR CARRY FORWARD OF LOSSES IN VIEW OF THE JUDGMENT OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF MAHARAN A OF MEWAR CHARITABLE FOUNDATION, 164 ITR 439 AND HON'BL E GUJARAT HIGH COURT IN THE CASE OF SHRI PLOT SWETAMB ER MURTI PUJAK JAIN MANAL, 211 ITR 293. 5. AGGRIEVED BY THE SAME, THE REVENUE HAS COME UP I N APPEAL BEFORE US, RAISING FOLLOWING EFFECTIVE GROUN DS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN ACCEPTING THE C LAIM OF EXEMPTION AT RS.158,85,13,605/- WHEREAS ACTUAL INCOME OVER EXPENDITURE FOR ASSESSMENT YEAR 2008- 09 IS ONLY RS.12,66,23,473/- AFTER TOTAL APPLICATION OF 3 INCOME OF RS.136,48,00,773/-FROMOUTOF GROSS RECEIPT O F RS.1,49,14,23,546/- AS PER ANNEXURE A TO FORM NO. 10B FOR THE ASSESSMENT YEAR 2008-09. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) HAS ERRED IN ACCEPTING THE CLAIM OF ASSESSEE OF LOSSES DURING THE YEAR COMPUTED AT RS.9,70,90,059/- WHEREAS ASSESSEE ACTUALLY HAS INCOME OVER EXPENDITURE OF RS.12,66,23,473/- FOR T HE CURRENT ASSESSMENT YEAR 2008-09. 6. AS IS EVIDENT FROM THE GROUNDS RAISED BEFORE US THE ONLY CONTENTION OF THE REVENUE AGAINST THE ALLOWANC E OF CLAIM OF CARRY FORWARD OF LOSSES IS THAT THERE WERE NO ACTUAL LOSSES INCURRED BY THE ASSESSEE. IN THIS REGARD LD. DR DREW OUR ATTENTION TO THE COMPUTATION OF INCOME OF THE A SSESSEE FILED ALONGWITH RETURN OF INCOME FOR THE IMPUGNED Y EAR PLACED AT PAPER BOOK PAGE NO.2 FILED BY THE ASSESSE E BEFORE US AND WHICH IS AS UNDER: THE TRIBUNE TRUST SECTOR-29C, CHANDIGARH ASSESSMENT YEAR :- 2008-09 PAN:- AAATT 2141D STATUS :- TRUST D.O.F :- 2 FEB, 1881 COMPUTATION OF TAXABLE INCOME GROSS RECEIPTS AS PER P & L A/C 1,491.423.546.00 LESS :PERMISSIBLE ACCUMULATION @ 15% 223,7 13,532.00 1,267,710,014.00 LESS : AMOUNT APPLIED ON REVENUE A/C 1,247,404,097.00 CAPITAL ASSETS 117,395,976.00 1,364,800,073 .00 DEFICIENCY TO BE CARRIED OVER : (97,090,059.00) TAX PAYABLE NIL LESS : TDS 1,035,650.00 REFUNDABLE (1,035,650.00) 7. THE LD. DR POINTED OUT THEREFROM THAT AGAINST TH E GROSS RECEIPTS AS PER THE PROFIT & LOSS A/C OF TH E ASSESSEE AMOUNTING TO RS.149.14 CRORES THE TOTAL EXPENDITURE INCURRED BY THE ASSESSEE BOTH REVENUE A ND 4 CAPITAL AMOUNTED TO RS.136.48 CRORES RESULTING IN S URPLUS OF RS.12.66 CRORES AND THAT THE LOSSES RETURNED ARE ON ACCOUNT OF CLAIMING DEDUCTION OF PERMISSIBLE ACCUM ULATION @ 15%. THE LD. DR POINTED OUT THAT THE SAME IS NOT STATUTORILY ALLOWABLE TO THE ASSESSEE. THE LD. DR DREW OUR ATTENTION TO THE PROVISIONS OF SECTION 10(23C)(IV) OF THE ACT AND THE THIRD PROVISO THERETO WHICH ARE REPRODUCED AS UNDER: S.10(23C)(IV) ANY OTHER FUND OR INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES [WHICH MAY BE APPROVED BY THE P RESCRIBED AUTHORITY] HAVING REGARD TO THE OBJECTS OF THE FUND OR INSTITUTION AND ITS IMPORTANCE THROUGHOUT INDIA OR THROUGHOUT A NY STATE OR STATES; .. . . . PROVIDED ALSO THAT THE FUND OR TRUST OR INSTITUTION [OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HO SPITAL OR OTHER MEDICAL INSTITUTION] REFERRED TO IN SUB-CLAUSE (IV) OR SUB- CLAUSE (V) [OR SUB- CLAUSE (VI) OR SUB-CLAUSE (VIA)] [(A) APPLIES ITS INCOME, OR ACCUMULATES IT FOR APPLIC ATION, WHOLLY AND EXCLUSIVELY TO THE OBJECTS FOR WHICH IT IS ESTABL ISHED AND IN A CASE WHERE MORE THAN FIFTEEN PER CENT OF ITS INCO ME IS ACCUMULATED ON OR AFTER THE 1ST DAY OF APRIL, 2002, THE PE RIOD OF THE ACCUMULATION OF THE AMOUNT EXCEEDING FIFTEEN PER CENT OF ITS INCOME SHALL IN NO CASE EXCEED FIVE YEARS;] 8. THE LD. DR STATED THAT AS PER THE SECTION EXEMPT ION IS AVAILABLE ONLY IF THE ENTIRE INCOME IS APPLIED/UTIL IZED FOR THE STATED PURPOSE AND IN CASE IT IS NOT SO UTILIZE D BUT ACCUMULATED, THE SAME IS TO THE EXTENT OF 15% OF T HE RECEIPTS. LD.DR FURTHER POINTED OUT THAT IN CASE OF ACCUMULATION BEYOND 15% THE ELIGIBILITY FOR EXEMPT ION EXISTS ONLY IF THE EXCESS IS INVESTED IN MODES SPEC IFIED IN THE SECTION AND UTILIZED FOR THE STATED PURPOSE IN THE SUCCEEDING FIVE YEARS. THE LD. DR CONTENDED THAT WH AT WAS 5 TO BE SEEN, THEREFORE, WAS THE EXTENT OF PROFITS AC TUALLY ACCUMULATED BY THE ASSESSEE.LD.DR CONTENDED THAT TH E SECTION NOWHERE REFERS TO ANY DEDUCTION TO BE ALLOW ED ON ACCOUNT OF PERMISSIBLE ACCUMULATION EVEN IN THE ABS ENCE OF THE SAME. THE LD. DR POINTED OUT THAT IN THE PRESEN T CASE, AS PER THE DATA SUBMITTED BY THE ASSESSEE ITSELF, T HE SURPLUS GENERATED BY THE ASSESSEE/ THE ACCUMULATION BY THE ASSESSEE WAS TO THE EXTENT OF RS.12.66 CRORES WHIC H BEING WITHIN THE PRESCRIBED LIMIT OF 15% OF THE GROSS REC EIPTS, WAS ALLOWABLE TO THE ASSESSEE ,THUS EXEMPTING THE ENTIR E INCOME OF THE ASSESSEE.LD.DR POINTED OUT THAT THE ASSESSEE HAD CLAIMED PERMISSIBLE ACCUMULATION TO THE EXTENT OF R S. 22.37 CRORES WHICH EXCEEDED THE ACTUAL ACCUMULATION MADE BY THE ASSESSEE AND WAS NOT ALLOWABLE AS PER LAW. THE RESU LTANT LOSS CLAIMED BY THE ASSESSEE TO THE EXTENT OF RS.9. 7 CRORES ALSO, NOT BEING ACTUAL ,WAS THEREFORE NOT ALLOWABLE TO BE CLAIMED TO BE CARRIED FORWARD BY THE ASSESSEE. LD.D R POINTED OUT THAT THE CIT(A) HAD OVERLOOKED THIS FAC T AND ALLOWED THE ASSESSEES APPEAL FOLLOWING DECISIONS OF THE HIGH COURTS WHICH HAD ALLOWED CARRY FORWARD OF ACTUAL LO SSES TO ASSESSEES CLAIMING INCOMES AS EXEMPT U/S 11 OF THE ACT. 9. THE LD. AR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE LD.CIT(APPEALS) AND THE DECISION OF THE HON'BLE APEX CURT IN THE CASE OF ADDL.CIT VS. ALN RAO CHARITABL E TRUST (1995) 216 ITR 697. 6 10. WE HAVE HEARD RIVAL CONTENTIONS. THE ISSUE BEF ORE US RELATES TO ALLOWANCE OF CLAIM OF CARRY FORWARD OF L OSSES WHERE INCOME IS EXEMPT UNDER THE ACT. 11. THE UNDISPUTED FACT IS THAT THE ASSESSEE HAD CLAIMED EXEMPTION AND WAS ALSO OTHERWISE ELIGIBLE FOR THE S AME U/S 10(23C)(IV) OF THE ACT, BEING AN INSTITUTION ESTABL ISHED FOR CHARITABLE PURPOSE.THE FACT THAT THE UNUTILIZED /ACCUMULATED INCOME OF THE ASSESSEE FOR THE IMPUGNE D YEAR AMOUNTED TO RS.12.66 CRORES IS ALSO NOT DISPUTED. I T IS AN UNDISPUTED FACT ALSO THAT THE LOSS CLAIMED TO BE CA RRIED FORWARD BY THE ASSESSEE, AMOUNTING TO RS.9.7 CRORES , HAS ARISEN ON ACCOUNT OF THE CLAIM OF ASSESSEE TOWARDS ACCUMULATION OF INCOME IN EXCESS OF THAT ACTUALLY E ARNED BY IT. 12. THE SOLE ISSUE TO BE ADDRESSED BY US THEREFORE IS WHETHER THE ASSESSEE CAN CLAIM DEDUCTION ON ACCOUNT OF ACCUMULATION OF INCOME TO THE EXTENT SPECIFIED UNDE R THE ACT, EVEN IN THE ABSENCE OF ANY ACTUAL ACCUMULATION TO THE SAID EXTENT. 13. IN THIS REGARD WE ARE IN COMPLETE AGREEMENT WIT H THE LD.DR THAT THE SECTION ALLOWS EXEMPTION OF THE ENT IRE INCOME EVEN IF THE SAME REMAINS UNUTILIZED OR IS ACCUMULATED, TO THE EXTENT OF 15% OF THE INCOME OF THE ASSESSEE. THE SECTION IS CLEAR, SIMPLE AND UNAMBIGU OUS LEAVING NO SCOPE FOR ANY OTHER INTERPRETATION. THUS IT IS THE ACTUAL ACCUMULATION MADE BY THE ASSESSEE WHICH TO B E SEEN WHILE DETERMINING ITS ELIGIBILITY FOR CLAIMING EXEM PTION AND 7 THERE IS NO PROVISION FOR ALLOWING DEDUCTION ON ACC OUNT OF ACCUMULATION EXCEEDING THE ACTUAL ACCUMULATION MADE BY THE ASSESSEE. WE DRAW SUPPORT FROM THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF A L N RAO CHARITA BLE TRUST(SUPRA),WHICH WE FIND THE LD.AR HAS WRONGLY RELIED UPON IN SUPPORT OF ITS ARGUMENTS, WHEREIN WHILE DEA LING WITH IDENTICALLY WORDED PROVISIONS OF SECTION 11(1) (A)/(2) RELATING TO EXEMPTION OF INCOME OF CHARITABLE TRUST S, IT WAS EXPLAINED THAT TWO TYPES OF INCOMES ARE GRANTED EXE MPTION FROM INCOME TAX :(I)THAT PART OF THE INCOME WHICH I S ACTUALLY SPENT FOR CHARITABLE PURPOSES AND (II)OUT OF THE UN SPENT ACCUMULATED INCOME TO THE EXTENT SPECIFIED UNDER TH E SECTION TO BE SO ACCUMULATED. THE RELEVANT FINDINGS OF THE HONBLE APEX COURT ARE AS UNDER: 'SECTION 11, SUB-SECTION (L)(A) OPERATES ON ITS OWN . BY ITS OPERATION TWO TYPES OF INCOME EARNED BY THE TRUST DURING THE PREVIOUS YEAR FROM ITS PROPERTIES ARE GIVEN EXEMPTION FROM INCOME-TAX : (,I) THAT PAR T OF THE INCOME OF THE PREVIOUS YEAR WHICH IS ACTUALLY SPENT FOR CHARITABLE OR RELIGIOUS PURPOSES IN THAT YEAR; AND (II) OUT OF THE UNSPENT ACCUMULATED INCOME OF THE PREVIOUS YEAR 25 PERCENT OF SUCH TOTAL PROPERTY INCOME OR RS.10,000, WHICHEVER IS HIGHER, AN BE PERMITTED TO BE ACCUMULATED BY THE TRUST, EARMARKED FOR SUCH CHARITABLE OR RELIGIOUS PURPOSES. SUCH 25 PER CENT OF THE INCOME OR RS.L 0,000, WHICHEVER IS HIGHER, WILL ALSO GET EXEMPTED FROM INCOME-TAX. THAT EXHAUSTS THE OPERATION OF SECTION LL(L)(A).' 14. THUS IT IS CLEAR THAT THE PERMISSIBLE ACCUMULAT ION AS PER THE SECTION REFERS ONLY TO THE ACTUAL ACCUMULAT ION. SINCE AS PER THE FACTS OF THE PRESENT CASE THE AS SESSEE HAS CLAIMED DEDUCTION OF ACCUMULATION IN EXCESS OF THE ACTUAL AMOUNT,THE SAME WE HOLD IS NOT ALLOWABLE TO THE ASS ESSEE .THE LOSS CLAIMED TO BE CARRIED FORWARD BY THE ASSE SSEE ON 8 ACCOUNT OF THE SAME IS THEREFORE ALSO DISALLOWED. T HE DECISION RELIED UPON BY THE LD.CIT(APPEALS) IN THE CASE OF MAHARANA OF MEWAR CHARITABLE FOUNDATION (SUPRA), TH E DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF SHRI PLOT SWETAMBER MURTI PUJAK JAIN MANAL (SUPRA) ARE OF NO ASSISTANCE TO THE ASSESSEE SINCE THE SAME WE FIN D ARE DISTINGUISHABLE ON FACTS AS IN ALL THE SAID CASE, T HE LOSS INCURRED BY THE ASSESSEE WAS ACTUAL WITH THE EXPEND ITURE EXCEEDING THE GROSS RECEIPT OF THE ASSESSEE AND IT WAS IN THOSE CIRCUMSTANCES THAT THE COURTS HELD THAT THE A SSESSEE WAS ENTITLED TO CARRY FORWARD THE LOSS TO BE SET OF F AGAINST THE INCOME OF THE SUCCEEDING YEARS. 15. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM CARRY FORWARD OF LOSS TO THE EXTE NT OF RS.9,70,90,059/- AND SET ASIDE THE ORDER OF THE CIT (A). 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD MARCH, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH 9