Addl. CIT, Meerut V. M/s City Educational & Social Welfare Society, Meerut

ITA 5627/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52613 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 10-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Rule of consistency
• Section: 12A; 28; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T.A. NO.5627/DEL/2010 ASSESSMENT YEAR: 2005-06 ADDL. C.I.T., VS. M/S CITY EDUCATIONAL & SOCIAL RANGE-1, MEERUT WELFARE SOCIETY, 47/L-4, JAWAHAR QUARTERS, BEGUM BRIDGE, MEERUT PAN NO.AAATC 0960 H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ROHIT GARG, SR. DR RESPONDENT BY : SHRI K. SAMPATH, ADVOCATE ORDER PER RAJPAL YADAV, JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LEARNED CIT(A) DATED 21 ST SEPTEMBER, 2010 PASSED FOR ASSESSMENT YEAR 2005-06. IN THE SOLITARY GROUND OF APPEAL, REVENUE HAS PLEADED THAT LEARNED CIT(A) HAS ERRED I N LAW AND ON FACTS IN ALLOWING THE CARRY FORWARD LOSSES O F THE PREVIOUS YEARS IGNORING THE PROVISIONS OF SECTION 1 1 WHICH STIPULATES THAT INCOME DERIVED FROM PROPERTY HELD U NDER TRUST SHALL NOT BE INCLUDED IN THE TOTAL INCOME. 2. LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITTED THAT ASSESSEE IS RUNNING EDUCATIONAL SCHO OLS. IT IS 2 REGISTERED U/S 12A OF THE INCOME-TAX ACT. IT HAS F ILED ITS RETURN OF INCOME ON 31.20.2005 DECLARING A TOTAL LO SS OF `3,141/-. IT HAS BROUGHT FORWARD LOSSES OF `47,29, 666/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSE SSMENT AND BROUGHT FORWARD LOSSES CLAIMED BY THE ASSESSEE TO BE CARRIED FORWARD WAS NOT ALLOWED TO BE ADJUSTED WITH THE INCOME OF THE PRESENT YEAR AND NOT PERMITTED TO BE CARRIED FORWARD. ITS INCOME HAS BEEN ASSESSED AT NIL. HE FURTHER POINTED OUT THAT SIMILAR ISSUE WAS ARISEN IN ASSESS MENT YEARS 2003-04 AND 2004-05 AND THE LEARNED CIT(A) HA S PERMITTED TO ADJUST THE CURRENT YEAR INCOME AGAINST THE BROUGHT FORWARD LOSSES AND ALSO PERMITTED TO CARRY FORWARD THE LOSS. THE REVENUE HAS NOT CHALLENGED ORDERS OF THE CIT(A) IN ASSESSMENT YEARS 2003-04 AND 2004-05 WHIC H WERE DECIDED BY THE LEARNED CIT(A) VIDE ORDER DATED 31 ST AUGUST, 2006. THE ASSESSEE SOUGHT AN INFORMATION TO THIS E FFECT UNDER RIGHT TO INFORMATION ACT FROM THE ASSESSING O FFICER. HE PLACED ON RECORD COPY OF THE LETTER DATED 21 ST JUNE, 2011 WHEREIN INCOME TAX OFFICER HAS REPLIED THAT DEPARTM ENT HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF CIT(A) IN ASSESSMENT YEARS 2003-04 AND 2004-05. IN THE PRESE NT ASSESSMENT YEAR, LEARNED CIT(A) HAS JUST FOLLOWED T HE ORDER OF HIS PREDECESSOR IN THOSE YEARS. HE HAS NOT MADE ANY INDEPENDENT DISCUSSION. THUS, ACCORDING TO THE LEA RNED COUNSEL FOR THE ASSESSEE THE ISSUE IS SQUARELY COVE RED IN FAVOUR OF THE ASSESSEE. THE DEPARTMENT HAS ACCEPTE D THE 3 ORDER OF THE CIT(A) WHEREBY LOSSES WERE ALLOWED TO BE CARRY FORWARDED. IN THIS AY, THE DEPARTMENT CANNOT CHALL ENGE THE ORDER OF THE LEARNED CIT(A) BASED ON THE FINDING OF THE CIT(A) FOR ASSESSMENT YEARS 2003-04 AND 2004-05, WHICH HAS BEEN ACCEPTED. 3. LEARNED DR WAS UNABLE TO CONTROVERT THE CONTENTI ON OF THE LEARNED COUNSEL FOR THE ASSESSEE. 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 TH E 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 ESTATE 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 TH OSE YEARS, THE ASSESSEE HAS BEEN PERMITTED TO CARRY FOR WARD THE LOSSES AND ALSO TO CLAIM SET OFF OF SUCH LOSSES AGA INST THE INCOME. THE CIT(A) HAS MADE A REFERENCE IN THOSE ASSESSMENT YEARS TO SECTION 11(4) OF THE INCOME-TAX ACT. IN 4 THE CASE OF CIT VS. INSTITUTE OF BANKING REPORTED I N 264 ITR PAGE 110 AN ARGUMENT WAS RAISED BEFORE THE HONBLE MUMBAI HIGH COURT BY THE REVENUE THAT IN THE CASE O F A CHARITABLE TRUST, THEIR INCOME WAS ASSESSABLE UNDER SELF CONTAINED CODE MENTIONED IN SECTION 11 TO 13 OF INC OME-TAX ACT AND THAT THE INCOME OF THE CHARITABLE TRUST WAS NOT ASSESSABLE UNDER THE HEAD PROFIT AND GAINS OF BUSI NESS U/S 28 IN WHICH THE PROVISION FOR CARRY FORWARD OF LOSS ES WAS RELEVANT. ACCORDING TO THE REVENUE, THERE WAS NO P ROVISION FOR CARRY FORWARD OF THE EXCESS OF EXPENDITURE OF E ARLIER YEARS TO BE ADJUSTED AGAINST THE INCOME OF SUBSEQUE NT YEARS. THIS ARGUMENT WAS REJECTED BY THE BOMBAY HI GH COURT AND IT HAS BEEN HELD THAT INCOME DERIVED FROM THE TRUST PROPERTY HAS ALSO GOT TO BE COMPUTED ON COMME RCIAL PRINCIPLES AND IF COMMERCIAL PRINCIPLES ARE APPLIED THEN ADJUSTMENT OF EXPENSES INCURRED BY THE TRUST FOR CH ARITABLE RELIGIOUS PURPOSE IN THE EARLIER YEARS 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 CHARITABLE AND RELIGIOUS PURPOSE. THE LEARNED CIT( A) HAS FOLLOWED THIS DECISION APART FROM OTHERS REFERRED A BOVE. 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 CONSISTENCY, WE DO NOT SEE ANY REASON TO INTERFERE IN THE 5 ORDER OF LEARNED CIT(A). IN VIEW OF THE ABOVE DISC USSION, THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 26.08.2011. SD/- SD/- ( B.C. MEENA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 26.08.2011. NS COPY FORWARDED TO:- 1. ADDL. C.I.T., RANGE-1, MEERUT. 2. M/S CITY EDUCATIONAL & SOCIAL WELFARE SOCIETY, 4 7/L-4, JAWAHAR QUARTERS, BEGUM BRIDGE, MEERUT (UP). 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 18.08.2011 DATE OF DICTATION 24.08.2011 DATE OF ORDER SIGNED BY THE HON'BLE MEMBER. 26.08.2011 DATE OF ORDER SENT TO THE CONCERNED BENCH 29.08.2011