ITO (EXEMPRION)-1(1) MUMBAI, MUMBAI V. BOMBAY NATURAL HISTORY SOCIETY, MUMBAI

ITA 5143/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0669 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 12-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 12-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANJU GORADIA
• Keywords: Charitable institution
• Section: 143(3); 12A; 10B; 28; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5143/MUM/2016 ASSESSMENT YEAR: 2011-12 ITO (EXEMPTION)-1(1) VS. M/S. BOMBAY NATURAL HISTO RY SOCIETY R. NO. 508, 5 TH FLOOR, PIRAMAL HORNBILL HOUSE OPP. LION GATE, CHAMBER, PAREL LALBAUG SBS ROAD MUMBAI 400012 MUMBAI - 400023 PAN NO. AAATB1708Q (APPELLANT) (RESPONDENT) REVENUE BY : MS. ANJU GORADIA, DR ASSESSEE BY: NONE DATE OF HEARING : 12/04 /2017 DATE OF PRONOUNCEMENT: 12/05/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2011-12. THE APPEAL IS DIRECTED AGAINST THE ORDER AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 1, MUMBAI AND ARISES OUT OF ORDER U/S 143(3) OF THE INCOME TAX AC T, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER: I. WHETHER ON THE FACTS ON THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING THE CARRY FORWARD OF DEFICIT OF RS. 52,98, 149/- AND ALLOWING SET OFF AGAINST THE INCOME OF THE SUBSEQUENT YEARS. II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF THE A SSESSEE FOR CARRY ITA NO. 5143/MUM/2016 2 FORWARD OF THE SAID DEFICIT, IGNORING THE FACT THAT THERE WAS NO EXPRESS PROVISION IN THE I.T. ACT, 1961 PERMITTING ALLOWANC E OF SUCH CLAIM. III. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASES AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF THE A SSESSEE FOR CARRY FORWARD OF THE SAID DEFICIT BY RELYING UPON THE JUD GEMENT OF HON'BLE HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERS ONNEL SELECTION, IGNORING THE FACT THAT THE DEPARTMENT HAS NOT ACCEP TED THE SAID DECISION OF THE JURISDICTIONAL HIGH COURT ON MERIT OF THE CASE. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST REGISTERED U/S 12A OF THE ACT. IT FILED ITS R ETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 30.09.2011 ALONG WI TH FORM 10B DECLARING TOTAL INCOME AT RS. NIL. THE ASSESSING OF FICER (A.O.) COMPLETED THE ASSESSMENT U/S 143(3) ON 10.02.2014 A SSESSING THE INCOME AT RS. NIL, DENYING CARRY FORWARD OF DEFICIT . 4. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(A). WE FIND THAT THE LEARNED CIT(A) HAS FOLLOWED THE JUDGEMENT OF THE HON'BLE BOMBAY HIGH C OURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION 264 ITR 110 AND DIRECTED THE A.O. TO ALLOW THE CARRY FORWARD AND SE T OFF OF DEFICIT AFTER DUE VERIFICATION OF FACTS. 5. BEFORE US, THE LEARNED DR RELIED ON THE ORDER OF THE A.O. NONE APPEARED ON BEHALF OF THE ASSESSEE. 6. WE HAVE HEARD THE LEARNED DR AND PERUSED THE REL EVANT MATERIAL ON RECORD. THE HON'BLE BOMBAY HIGH COURT I N INSTITUTE OF BANKING PERSONNEL (SUPRA) HELD AS UNDER: 5. NOW COMING TO QUESTION NO. 3, THE POINT WHICH ARIS ES FOR CONSIDERATION IS : WHETHER EXCESS OF EXPENDITURE IN THE EARLIER YEARS CAN BE ADJUSTED AGAINST THE INCOME OF THE SUBSEQUENT YE AR AND WHETHER SUCH ADJUSTMENT SHOULD BE TREATED AS APPLICATION OF INCOME IN SUBSEQUENT YEAR FOR CHARITABLE PURPOSES? IT WAS ARG UED ON BEHALF OF THE DEPARTMENT THAT EXPENDITURE INCURRED IN THE EARLIER YEARS CANNOT BE ITA NO. 5143/MUM/2016 3 MET OUT OF THE INCOME OF THE SUBSEQUENT YEAR AND TH AT UTILIZATION OF SUCH INCOME FOR MEETING THE EXPENDITURE OF EARLIER YEARS WOULD NOT AMOUNT TO APPLICATION OF INCOME FOR CHARITABLE OR R ELIGIOUS PURPOSES. IN THE PRESENT CASE, THE ASSESSING OFFICER DID NOT ALL OW CARRY FORWARD OF THE EXCESS OF EXPENDITURE TO BE SET OFF AGAINST THE SURPLUS OF THE SUBSEQUENT YEARS ON THE GROUND THAT IN THE CASE OF A CHARITABLE TRUST, THEIR INCOME WAS ASSESSABLE UNDER SELF-CONTAINED CO DE MENTIONED IN SECTION 11 TO SECTION 13 OF THE INCOME-TAX ACT AND THAT THE INCOME OF THE CHARITABLE TRUST WAS NOT ASSESSABLE UNDER THE H EAD 'PROFITS AND GAINS OF BUSINESS' UNDER SECTION 28 IN WHICH THE PR OVISION FOR CARRY FORWARD OF LOSSES WAS RELEVANT. THAT, IN THE CASE O F A CHARITABLE TRUST, THERE WAS NO PROVISION FOR CARRY FORWARD OF THE EXC ESS OF EXPENDITURE OF EARLIER YEARS TO BE ADJUSTED AGAINST INCOME OF SUBS EQUENT YEARS. WE DO NOT FIND ANY MERIT IN THIS ARGUMENT OF THE DEPARTME NT. 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 AND R ELIGIOUS PURPOSES IN THE EARLIER YEARS AGAINST THE INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAVE TO BE REGARDED AS APPLICA TION OF INCOME OF THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE SUBSEQUENT YEAR IN WHICH ADJUSTMENT HAS BEEN MADE HAVING REGARD TO THE BENEVOLENT PROVISIONS CONTAINED IN SECTION 11 OF THE ACT AND T HAT SUCH ADJUSTMENT WILL HAVE TO BE EXCLUDED FROM THE INCOME OF THE TRU ST UNDER SECTION 11(1)( A ) OF THE ACT. OUR VIEW IS ALSO SUPPORTED BY THE JUD GMENT OF THE GUJARAT HIGH COURT IN THE CASE OF CIT V. SHRI PLOT SWETAMBER MURTI PUJAK JAIN MANDAL [1995] 211 ITR 293 . ACCORDINGLY, WE ANSWER QUESTIO N NO. 3 IN THE AFFIRMA-TIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. 6. WE FIND THAT THE LEARNED CIT(A) HAS RIGHTLY FOLL OWED THE ABOVE JUDGEMENT OF THE HON'BLE BOMBAY HIGH COURT A ND DIRECTED THE A.O. TO ALLOW THE CARRY FORWARD AND SET OFF OF DEFICIT AFTER DUE VERIFICATION OF FACTS. WE UPHOLD THE ORDER OF LEARN ED CIT(A). 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/05/2017 SD/- SD/- (C.N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBE R ITA NO. 5143/MUM/2016 4 MUMBAI; DATED: 12/05/2017 BISWAJIT, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI