ADDL DIT (E) RG -II, MUMBAI V. LAKSHMI AND USHA MITTAL ( FORMERLY KNOWN AS THE LNM FOUNDATIN), MUMBAI

ITA 5383/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8448 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 19-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K K VED
• Keywords: Charitable institution; Revised return
• Section: 143(3); 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI . . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND , SHRI RAJENDRA, ACCOUNTANT MEMBER I.TA. NO. 5383/MUM/2011 ASSESSMENT YEAR 2005-06 ITO(E)-II(1), R. NO. 509, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI 12. VS. LAKSHMI AND USHA MITTAL (FORMERLY KNOWN AS THE LNM FOUNDATION) 81, MAKER CHAMBERS-III, 223, NARIMAN POINT, MUMBAI 400 021. PAN: AAATT 3462 B ( / APPELLANT ) ( ! / RESPONDENT ) REVENUE BY : SHRI MANOJ KUMAR ASSESSEE BY : SHRI K.K. VED ' # $% / DATE OF HEARING : 04-10-2012 &'( # $% / DATE OF PRONOUNCEMENT : 23-10-2012 ) / O R D E R PER RAJENDRA, AM THE PRESENT APPEAL IS DIRECTED AGAINST THE ORDER DT .16-03-2011 PASSED BY THE CIT(A)-1, MUMBAI. FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED BY THE ASSESSING OFFICER (AO): 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD.CIT(A), MUMBAI ERRED IN NOT CONSIDERING THE FACT THAT THE ASSESSEE HAS ITSELF COMPUTED A TOTAL INCOME OF RS. NIL IN ITS COMPUTATION OF INCOME FILED ALONG WITH T HE RETURN OF INCOME AND NOT DEFICIT WHATSOEVER WAS CLAIMED BY THE ASSESSEE IN ITS RETUR N OF INCOME. 2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD.CIT(A), MUMBAI ERRED IN IGNORING THE DECISION OF THE HONBLE SUPRE ME COURT HELD IN THE CASE OF GOETZE INDIA LTD. VS. CIT (2006) 24 ITR 323 WHEREIN THE AO HAS NO POWER TO ENTERTAIN THE CLAIM OF THE ASSESSEE MADE OTHERWISE. IN CASE ASSESSEE HAS T O MAKE A CLAIM, ONLY OPTION IS TO FILE REVISED RETURN. I.TA. NO. 5383/MUM/2011 LAKSHMI AND USHA MITTAL (FORMERLY KNOWN AS THE LNM FOUNDATION) 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD.CIT(A), MUMBAI ERRED IN DIRECTING THE AO TO CARRY FORWARD THE DEFI CIT OF RS. 2,78,81,409/- TO THE SUBSEQUENT YEAR IGNORING THAT THE DEFICIT SO CLAIMED HAS ARISE N DUE TO EXCESS EXPENDITURE INCURRED BY THE ASSESSEE TRUST. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD.CIT(A), MUMBAI ERRED IN NOT APPRECIATING THAT THERE IS NO PROVISIO N IN THE ACT TO CARRY FORWARD THE DEFICIT WHERE THE EXPENDITURE WHICH CASES THE DEFICIT EXCEE DS THE INCOME. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD.CIT(A), MUMBAI ERRED IN APPRECIATING THE FACT THAT THE PROVISIONS OF SEC. 11 CONTEMPLATE SUCH INCOME TO BE FROM THE CURRENT YEAR WHICH IS TO BE APPLIED ON THE OBJECTS OF THE TRUST AND THE EARLIER YEARS ACCUMULATION OR OTHERWISE CANNOT BE EXPANDED ON THE OBJECTS OF THE TRUST RESULTING INTO DEFICIT. SUCH DEFICIT CANNOT BE ALLOWED TO BE CARR IED FORWARD TO THE SUBSEQUENT YEARS AS THE SAME BEING AGAINST THE PRINCIPLE AND LAW LAID DOWN UNDER THE ACT. 6. THE APPELLANT PRAYS THAT THE ORDER OF THE COMMIS SIONER OF INCOME-TAX (APPEALS)-XXX, MUMBAI BE SET-ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 7. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. ASSESSEE-TRUST, FILED ITS RETURN OF INCOME RS. NIL ON 30-10-2005. AS PER THE CRITERIA OF CDBT CIRCULAR, THE CASE WAS SELECTED FO R SCRUTINY AND WAS FINALISED U/S. 143(3) OF THE INCOME-TAX ACT, 1961(ACT) BY THE ASSE SSING OFFICER (AO). DURING THE YEAR UNDER CONSIDERATION, ASSESSEE-TRUST HAD RECEIV ED GROSS-RECEIPTS AMOUNTING TO RS. 10.35 CRORES AND HAD INCURRED A SUM OF RS. 11.58 CR ORES FOR THE PURPOSES OF THE TRUST. AS PER THE CLAIM MADE BY THE ASSESSEE, IT WAS PERMI TTED TO ACCUMULATE/SET-ASIDE 15% OF THE GROSS-RECEIPTS FOR APPLICATION FOR THE PURPO SES OF THE TRUST. ACCORDINGLY, A CLAIM AMOUNTING TO RS. 1.55 CRORES (I.E.,15% OF THE GROSS RECEIPTS) WAS MADE U/S. 11(1)(A) OF THE ACT. AS PER THE ASSESSEE, AFTER CO NSIDERING THE ACCUMULATE/SET ASIDE SUM AND THE ADDITIONAL SUM SPENT BY IT OVER ACCUMUL ATION, IT WAS ENTITLED TO CARRY FORWARD THE DEFICIT OF RS. 2.78 CRORES FOR SETTING OFF AGAINST FUTURE RECEIPTS OF SUBSEQUENT YEARS. AO REJECTED THE CLAIM MADE BY TH E TRUST FOR CARRY FORWARDING OF THE SAID DEFICIT I.E. OF RS. 2.78 CRORES. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE ASSESSMENT ORDER, FAA HELD THAT THE ISSUE RAISED BY THE ASSESSEE-TRUST WA S COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION DELIVERED BY THE JURISDICTIONAL HIG H COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL (264 ITR 110). HE FURTHER MENTION ED THAT IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2002-03, TRIBUNAL HAD DECIDED THE MATER IN FAVOUR OF THE ASSESSEE. APPEAL FILED BY THE ASSESSEE-TRUST W AS ALLOWED BY THE FAA. 4. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) RELIED UPON THE ORDERS OF THE AO. AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE-TRUST BY JURISDICTIONAL HIGH COURT THA T TRIBUNAL HAD ALSO DECIDED THE ISSUE OF CARRY FORWARD OF DEFICIT IN FAVOUR OF THE ASSESS EE. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED MATERIAL PLACED BEFORE US. WE FIND THAT A BENCH OF ITAT, MUMBAI VIDE ITS ORDER DTD.13-05-2009 (ITA NO. 170/M/08 AY 2003-04) HAS DECIDED THE SAME ISSUE VIDE PARA NO.3 OF ITS ORDER AS UNDER: I.TA. NO. 5383/MUM/2011 LAKSHMI AND USHA MITTAL (FORMERLY KNOWN AS THE LNM FOUNDATION) 3 WE HAVE HEARD BOTH THE PARTIES, PERUSE THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE ISSUE WHETHER DEFICIT IN THE INCOME AND EXPENDITURE IN CASE OF CHARITABLE INSTITUTIONS CAN BE CARRIED FORWARD TO S UBSEQUENT YEAR AND ADJUSTED TOWARDS APPLICATION OF INCOME HAS BEEN DECIDED BY T HE JURISDICTIONAL HIGH COURT IN THE CASE OF INSTITUTE OF BANKING (SUPRA), IN WHICH IT HAS BEEN HELD THAT EXCESS EXPENDITURE IN EARLIER YEAR CAN BE ADJUSTED AGAINST INCOME IN THE SUBSEQUENT YEAR AND SUCH ADJUSTMENT HAS TO BE TREATED AS APPLICATIO N OF INCOME IN THE SUBSEQUENT YEAR. THUS THE ASSESSEE WOULD BE ENTITLED FOR CARR YING FORWARD OF DEFICIT TO SUBSEQUENT YEAR, WHICH WOULD BE TREATED AS APPLICAT ION OF INCOME IN THAT YEAR. HOWEVER, IN COMPUTING THE DEFICIT, ADDITION @ 15% O F THE GROSS RECEIPT CANNOT BE ALLOWED AS SUCH ACCUMULATION IS PERMISSIBLE ONLY WH EN THE EXPENDITURE IS LESS THAN THE INCOME WHICH IS NOT SO IN THIS CASE. THEREFORE , THE DEFICIT AVAILABLE FOR CARRY FORWARD TO THE SUBSEQUENT YEAR WILL BE ONLY RS. 75, 58,503/-. THIS VIEW IS ALSO SUPPORTED BY THE DECISION OF THE TRIBUNAL IN THE CA SE OF THE L.N.M. FOUNDATION IN ITA NO. 4422/M/05 IT IS, THEREFORE HELD THAT THE ASSESS EE WOULD BE ENTITLED FOR CARRY FORWARD OF DEFICIT OF RS.75,58,503/- WHICH WOULD BE TREATED AS APPLICATION OF INCOME IN THE SUBSEQUENT YEAR. WE HOLD, ACCORDINGLY. 5. AS FAR AS CARRY FORWARD OF DEFICIT IS CONCERNED, AS SESSEE IS ENTITLED TO CARRY FORWARD THE SAME, AS PER THE ORDERS OF JURISDICTION AL HIGH COURT IN LIGHT OF THE DECISION OF THE INSTITUTION OF BANKING PERSONNEL ( SUPRA). BUT, FROM THE DETAILS FILED BY THE ASSESSEE-TRUST, IT IS FOUND THAT THERE APPEA RS TO BE CALCULATION ERROR. AR ALSO ADMITTED THAT OUT OF RS. 2.78 CRORES DEFICIT, THE A SSESSEE-TRUST WAS ENTITLED TO CARRY FORWARD DEFICIT OF RS. 1.23 CRORES ONLY. WE HAVE GO NE THROUGH THE INCOME AND EXPENDITURE A/C AS WELL AS THE COMPUTATION OF DEFIC IT FILED BY THE ASSESSEE. IN OUR OPINION, IN THE INTEREST OF JUSTICE, MATTER SHOULD BE RESTORED TO THE FILE OF THE AO FOR THE LIMITED PURPOSE OF DETERMINING THE CORRECT AMOU NT OF CARRY-FORWARD OF DEFICIT. ASSESSEE-TRUST IS DIRECTED TO FURNISH THE REQUIRED DETAILS IN THIS REGARD TO THE AO. APPEAL FILED BY THE AO STANDS PARTLY ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD OCTOBER, 2012. SD/- SD/- ( . . / I.P. BANSAL ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI, *' DATE: 23 RD OCTOBER, 2012 TNMM I.TA. NO. 5383/MUM/2011 LAKSHMI AND USHA MITTAL (FORMERLY KNOWN AS THE LNM FOUNDATION) 4 ) ) ) ) # ## # $+ $+ $+ $+ ,+($ ,+($ ,+($ ,+($ / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR A BENCH, ITAT, MUMBAI 6. GUARD FILE !+$ $ //TRUE COPY// )' )' )' )' / BY ORDER, - -- - / . . . . DY./ASSTT. REGISTRAR , / ITAT, MUMBAI