MJ Charitable Trust, Meerut V. Addl. CIT, Meerut

ITA 5549/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6695 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 13-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEODAN SINGH BHADDORIA
• Keywords: Charitable institution
• Section: 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH MEERUT CAMP, NEW DELHI BEFORE SHRI I.C.SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER ITA NO. 5549/DE L./2014 ASSESSMENT Y EAR : 2009-10 MJ CHARITABLE TRUST VS. ADDL. CIT 28, RANGE-1 BAGHPAT ROAD MEERUT MEERUT PAN : AACTM0207F ASSESSEE BY : SHRI RAJEEV SINGH AL , ADV. , RAMIT KAKKAR, ADV. REVENUE BY : SHRI SHEODAN SINGH BHADDORIA, SR. DR DATE OF HEARING : 15/12/2015 DATE OF PRONOUNCEMENT : 29 .02.2016 ORDER PER I.C.SUDHIR, J.M. THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST ORDER OF CIT(A)- MEERUT DATED 18.07.2014 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE HAS QUESTIONED FIRST APPELLATE OR DER ON THE FOLLOWING GROUNDS : 1. THE LD. CIT(A) HAS FAILED TO APPRECIATE THE CON TENT AND TENOR OF VARIOUS HIGH COURT AND TRIBUNAL JUDGMENTS CITED BEF ORE HIM WHICH ITA NO.5549/DEL/2014 M/S. M.J.CHARITABLE TRUST 2 ARE A DIRECT AUTHORITY ON THE ISSUE AT HAND AND HAS THEREBY VIOLATED THE PRINCIPLES OF JUDICIAL DISCIPLINE. 2. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE TH AT INCOME HAS TO BE COMPUTED COMMERCIALLY EVEN IN CASES COVERED U/S 11- 13 OF THE INCOME TAX ACT, 1961 AND RESULTANT LOSS, IF ANY, ARISING D UE TO SURPLUS APPLICATION OF INCOME, HAS TO BE COMPUTED AND CARRI ED FORWARD TO NEXT YEAR TO BE SET OFF THEREIN ACCORDINGLY. 3. THE LD. CIT(A) HAS ALSO FAILED TO APPRECIATE TH AT NEITHER SECTION 11 NOR SECTION 72 OF THE INCOME TAX ACT, 1961 HAVE A M UTUAL RIDER FOR COMPUTATION OF INCOME OR FOR ITS CARRY FORWARD AND SET OFF AND HENCE THE IMPUGNED ORDER DESERVES TO BE QUASHED. 3. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW, MATERIAL AV AILABLE ON RECORD AND THE DECISIONS RELIED UPON. 4. THE ISSUE INVOLVED IN THE PRESENT CASE IS AS T O WHETHER THE ASSESSEE IS ENTITLED TO CARRY FORWARD OF LOSSES TO THE NEXT ASS ESSMENT YEAR? 5. THE ASSESSEE IS ENGAGED IN THE PROFESSION OF IMP ARTING HIGHER PROFESSIONAL EDUCATION AND IT IS RUNNING AN EDUCATI ONAL INSTITUTE NAMELY MEERUT INTERNATIONAL INSTITUTE OF TECHNOLOGY AT MEERUT. IT HAS BEEN GRANTED REGISTRATION U/S 12A OF THE ACT VIDE ORDER DATED 19.05.2008 OF T HE LD. CIT AND IS THUS, ELIGIBLE FOR EXEMPTION U/S 11 OF THE IT ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE IN ITS COMPUTATION OF INCOME HAD CLAIMED THE EXCESS APPLICATION MADE DURING THE YEAR AND EXCESS APPLICATION OF INCOME OF EARLIER YEAR WAS REQUESTED TO BE CARRIED FORWARD AND TO BE SET OFF AGAINST THE FUTURE INCOME/ RECEIPT. THE AO DID NOT AGREE WITH THE SUBMISSION OF THE ASSESSEE AND HELD THAT NO SUCH CARRY FORWARD OF EXCESS APPLICATION IS ITA NO.5549/DEL/2014 M/S. M.J.CHARITABLE TRUST 3 ALLOWABLE. THE SAME HAS BEEN UPHELD BY THE LD. CIT( A), AGAINST WHICH THE ASSESSEE IS IN APPEAL. 6. IN SUPPORT OF THE GROUND, THE LD. AR SUBMITTED THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS FULLY COVERED BY SEVERAL DECI SIONS OF DELHI BENCH OF THE TRIBUNAL AND A LIST OF THOSE DECISIONS HAS BEEN FUR NISHED. SOME OF THESE DECISIONS ARE IN THE CASES OF FATEH CHAND CHARITABL E TRUST VS. ACIT, ITA NO. 1665/DEL/2012 (AY 2006-07) ORDER DATED 21.06.2012 A ND ACIT VS. M/S. SUBHARTI K.K.B. CHARITABLE TRUST, ITA NO. 1553/DEL/ 2011 (AY 2006-07) ORDER DATED 11.05.2012. 7. THE LD. SR. DR ON THE OTHER HAND PLACED RELIAN CE ON THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE ABOVE CITE D DECISIONS HAVING DISTINGUISHABLE FACTS ARE NOT HELPFUL TO THE ASSESS EE. HE ALSO SUBMITTED THAT THERE WAS NO PROVISION TO CARRY FORWARD OF EXCESS OF EXPENDITURE OF EARLIER YEARS. 8. HAVING GONE THROUGH THE ABOVE CITED DECISIONS, WE FIND THAT THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF FATEH CH AND CHARITABLE TRUST VS. ACIT(SUPRA) HAS DECIDED AN IDENTICAL ISSUE IN FAVOU R OF THE ASSESSEE. IN THAT CASE, ASSESSEE WAS RUNNING AN CHARITABLE TRUST AN D MEDICAL COLLEGE AS WELL AS HOSPITAL. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS IT WAS GATHERED BY THE AO THAT THE ASSESSEE HAD FILED A REVISED RET URN WHEREIN LOSS OF RS. 5,83,85,975/- WAS TO BE CARRIED FORWARD TO THE ASSE SSMENT YEAR 2007-08. THE AO DID NOT ALLOW THE CLAIM OF LOSS AND LOSS FOR CAR RY FORWARD. THE LD. CIT(A) ALLOWED THE SAME. THE REVENUE WENT IN APPEAL BEFORE THE TRIBUNAL, WHEREIN VIDE ORDER DATED 17.11.2009, THE MATTER WAS SET AS IDE TO THE FILE OF THE AO TO ITA NO.5549/DEL/2014 M/S. M.J.CHARITABLE TRUST 4 DECIDE THE SAME AFRESH ACCORDING TO THE LAW AFTER E XAMINING THE CASE LAWS CITED BY THE ASSESSEE. THE AO HELD THAT THE ASSESSEE FAIL ED TO JUSTIFY, HOW, THE EXCESS EXPENSES OR EXCESS APPLICATION OF INCOME COULD MERI T ALLOWANCE OF LOSS TO THE ASSESSEE. THE ASSESSEE AGAIN WENT IN FIRST APPEAL A ND THE LD. CIT(A) REJECTED THE CLAIM OF ASSESSEE. THEREAFTER THE ASSESSEE CAME TO THE TRIBUNAL AND PLACED RELIANCE ON NUMBER OF DECISIONS INCLUDING THE DECIS ION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANK ING 264 ITR 110 (BOMB.). THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION O F DELHI BENCH OF THE TRIBUNAL IN THE CASE OF M/S CITY EDUCATIONAL AND SO CIAL WELFARE SOCIETY ORDER DATED 26.8.2011. DISCUSSING THESE DECISIONS AND TH E RECENT DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. BISWA JAGIR ITI MISSION, ITA NO. 140/2012 DATED 29.03.2012 AS THE CLAIM OF THE ASSES SEE, THE TRIBUNAL HAS HELD THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. BISWA JAGIRITI MISSION (SUPRA) WHEREIN DECISION OF HONBLE (BOM.) HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING (2003) 264 ITR 110 (BOM.) HAS BEEN FOLLOWED. IT HAS BEEN HELD BY T HE HONBLE HIGH COURT THAT THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE O F ESCORTS LTD. AND ORS. VS. UOI, 119 ITR 43 (SC) IS NOT APPLICABLE TO THE C ASE. 9. IN THE CASE OF M/S. CITY EDUCATIONAL AND SOCI AL WELFARE SOCIETY (SUPRA) BEFORE THE DELHI BENCH OF THE TRIBUNAL, THE REVENUE HAD DENIED SIMILAR CLAIM ON THE BASIS THAT THERE WAS NO PROVISION FOR CARRY FORWARD OF THE EXCESS EXPENDITURE OF EARLIER YEAR TO BE ADJUSTED AGAINST THE INCOME OF SUBSEQUENT YEARS. THE TRIBUNAL HAS NOTED THAT SUCH ARGUMENT WA S REJECTED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING (SUPRA) AND IT WAS HELD BY THE HONBLE HIGH COURT THAT INCOME DERI VED FROM THE TRUST PROPERTY HAS ALSO GOT TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND IF ITA NO.5549/DEL/2014 M/S. M.J.CHARITABLE TRUST 5 COMMERCIAL PRINCIPLES ARE APPLIED THEN ADJUSTMENT O F EXPENSES INCURRED BY THE TRUST FOR CHARITABLE RELIGIOUS PURPOSE IN THE EARLI ER YEAR AGAINST THE INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAV E TO BE REGARDED AS APPLICATION OF THE INCOME OF THE TRUST FOR CHARITAB LE AND RELIGIOUS PURPOSE. WE, THUS, RESPECTFULLY FOLLOWING THE ABOVE CITED DECISI ONS BY THE LD. AR DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE WITH DIRECTION TO T HE AO TO ALLOW THE CLAIMED CARRY FORWARD OF LOSSES TO NEXT ASSESSMENT YEARS. T HE GROUNDS INVOLVING THE ISSUE ARE THUS, ALLOWED. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . (ORDER PRONOUNCED IN THE COURT ON 29/02/201 6). SD/- SD/- (PRASHANT MAHARISHI) (I.C.SUDHIR) ACCOUNTANT MEMEBR JUDICIAL MEM BER DATED:29/ 02/2016 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO.5549/DEL/2014 M/S. M.J.CHARITABLE TRUST 6 DATE INITIAL 1. DRAFT DICTATED ON 24.02.2016 2. DRAFT PLACED BEFORE AUTHOR 24.02.2016 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.