Deputy Commissioner of Income-Tax, Exemption Circle, Pune V. Lata Mangeshkar Medical Foundation , Pune

ITA 653/PUN/2020

AI Insights

The case involves the Lata Mangeshkar Medical Foundation, a trust registered under the Bombay Public Trust Act, 1950, and engaged in providing medical services. The trust, registered under sections 12A and 80G of the Income Tax Act, 1961, filed a return declaring nil income for the assessment year 2015-16. The Assessing Officer completed the assessment determining a deficit income and rejected the claim for carry forward 15% of gross receipts. The CIT(A) directed the Assessing Officer to allow the set off of the deficit for future application, which was contested by the Revenue in the present appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137076 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-02-2023
• Assessment Year: misc
• Appeal Filed On: 22-12-2020
• Other Referred Cases: Maharashtra Education Society (MES) vs. DCIT (Exemption) vice versa
• Laws Referred To: Income Tax Act, 1961, Bombay Public Trust Act, 1950
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAVINDRA P. JOSHI
• Section: 143(3); 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं. / ITA No.653/PUN/2020 िनधाᭅरण वषᭅ / Assessment Year : 2015-16 DCIT, Exemption Circle, Pune. Vs. Lata Mangeshkar Medial Foundation, C/o Dinanath Mangeshkar Hospital & Research Centre, Erandawana, Near Mhatre Bridge, Pune- 411004. PAN : AAATL1944N Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the Revenue directed against the order of ld. Commissioner of Income Tax (Appeals)-10, Pune [‘the CIT(A)’] dated 14.02.2020 for the assessment year 2015-16. 2. Briefly, the facts of the case are that the respondent-assessee is a trust registered under the Bombay Public Trust Act, 1950. It is engaged in the business of providing medical services to general public and running a medical hospital under the name and style of “Deenanath Mangeshkar Hospital”. The respondent-assessee also Revenue by : Shri Mirtyunjoy Barnwal Assessee by : Shri Ravindra P. Joshi Date of hearing : 13.02.2023 Date of pronouncement : 14.02.2023 ITA No.653/PUN/2020 2 registered u/s 12A of the Income Tax Act, 1961 (‘the Act’) vide order dated 27.12.1988. The respondent-assessee trust was also got recognition u/s 80G of the Act. The Return of Income for the assessment year 2015-16 was filed on 29.09.2015 declaring Rs.Nil income. Against the said return of income, the assessment was completed by the Dy. Commissioner of Income Tax (Exemptions) Circle, Pune vide order dated 18.12.2017 passed u/s 143(3) of the Act determining deficit income of Rs.23,63,82,565/-. During the course of assessment proceedings, the Assessing Officer rejected the claim for carry forward 15% of the gross receipts by holding that in the absence of any surplus of receipts over the expenditure, the claim cannot be allowed. 3. Being aggrieve by the above order of assessment, an appeal was filed before the ld. CIT(A) contending that the Assessing Officer had failed to appreciate that the respondent-assessee trust was not entitled for set off of 15% of income during the year under consideration, because it had incurred expenses over the income earned during the year. The ld. CIT(A) directed the Assessing Officer to allow the set off of the deficit of the earlier year to carry forward for future application following certain judicial precedents. 4. Being aggrieved by the decision of the ld. CIT(A), the Revenue is in appeal before us in the present appeal. ITA No.653/PUN/2020 3 5. We heard the rival submissions and perused the material on record. The issue in the present appeal is covered by the decision of this Co-ordinate Bench of the Tribunal in the case of Maharashtra Education Society (MES) vs. DCIT (Exemption) vice versa vide ITA No.1408/PUN/2019 and ITA No.1577/PUN/2019 for A.Y. 2015-16 dated 05.12.2022, wherein, the Tribunal decided the issue against the assessee and in favour of the Department by observing as under :- “9. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to whether or not the assessee trust enjoying exemption u/s 12AA of the Act can accumulate 15% of gross receipts for future as irrespective of fact that the respondent-assessee trust had applied entire income for charitable purposes. On mere perusal of the assessment order, it would reveal that the respondent-assessee had spent the excess of income or applied the excess of income for charitable purposes over its receipts which mean there remain no unspent amount. The provisions of section 11(1)(a) allow 15% of income for future application for charitable purposes, in other words, if the trust spent 85% or more of its income in the year for its objects, the whole of its income will be exempt. It pre-supposes existence of unspent gross receipts or income. In the absence of any unspent amount, the question of accumulation does not arise and the provisions of section 11(1)(a) does not provide for 15% of gross receipts as standards deduction. The decision of the Hon’ble Supreme Court in the case of Programme for Community Organisation (supra) is not authority for the proposition that even in the absence of unspent amount, 15% of gross receipts is to be allowed as standard deduction. Thus, the ld. CIT(A) had fell in serious error in allowing the benefit of 15% of gross receipts to be accumulated for future application of income. Therefore, the order of the ld. CIT(A) is reversed and we restore the order of the Assessing Officer.” 6. Respectfully following the above decision of the Tribunal in the case of Maharashtra Education Society (MES) (supra), the order ITA No.653/PUN/2020 4 of the ld. CIT(A) is reversed and we restore the assessment order. Thus, the grounds of appeal filed by the Revenue stand allowed. 7. In the result, the appeal filed by the Revenue stands allowed. Order pronounced on this 14 th day of February, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 14 th February, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-10, Pune. 4. The CIT (Exemptions), Pune. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.