I.T.O. - (EXEMPTIONS) - 1(1), MUMBAI V. EMPIRE FOUNDATION, MUMBAI

ITA 6858/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2312 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 03-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAURYA PRATAPLD
• Keywords: Charitable institution; Question of law; Set aside
• Section: 143(3); 12A; 264; 11

Judgement Text

ITA NO.6858/MUM/2018 EMPIRE FOUNDATION ASSESSMENT YEAR :2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.6858/MUM/2018 ( / ASSESSMENT YEAR: 2014-15) D CIT (EXEMPTION) - 1(1) ROOM NO.506, 5 TH FLOOR PIRAMAL CHAMBERS, LALBAUG MUMBAI-400 012. / VS. EMPIRE FOUND ATION C/O. VIBGYOR HIGH MOTILAL NAGAR-1 SRIRANG SABDE MARG GOREGAON (W), MUMBAI-400 104. ! ./ ./PAN/GIR NO. AAATE-3549-C ( !# /APPELLANT ) : ( $!# / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI MAURYA PRATAP LD. DR / DATE OF HEARING : 05/12/2019 / DATE OF PRONOUNCEMENT : 05/12/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2014-15 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME- TAX (APPEALS)-3, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-3/IT-10600/2017-18 DATED 22/06/2018 ON FOLLO WING GROUNDS OF APPEAL: - ITA NO.6858/MUM/2018 EMPIRE FOUNDATION ASSESSMENT YEAR :2014-15 2 1.1 WHETHER, ON THE FACTS OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF ACCUMULATION OR SETTING APART OF RS.2,47,99,652/ - U/S11(1)(A) OF THE IT. ACT, 1961 BEING 15% OF THE TOTAL INCOME OF RS.16,53,31,012/- OF THE ASSESSES TRUST IGNORING THE FACT THAT AFTER APPLICATION OF INCOME OF RS.16,12,57,930/- TO WARDS OBJECTS OF THE TRUST, ONLY INCOME OF RS.40,73,082/- WAS LEFT UNSPENT FOR ACCUMULATION? 1.2 WHETHER, ON THE FACTS OF THE CASE AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE DECISION OF THE HON'BLE ITAT, MUMBAI IN THE CASE OF LALJI VELJI CHARITABLE TRUST VS. ITO(E)-II(1), MUMBAI IN ITA NO.5322/MUM/2016 FOR A.Y,2010-11 AND TTA NO.5323/MUM/2016 FOR A.Y.2011-12 DATED 28.0 2.2018 WHEREIN THE ORDER OF THE LD.CIT(A) CONFIRMING THE DISALLOWANCE OF ACCUMULATI ON OF 15% OF THE TOTAL INCOME MADE BY AO WAS SET ASIDE AND ALLOWED THE APPEAL OF THE ASSE SSEE IGNORING THE FACT THAT ON THE SAME ISSUE OF ACCUMULATION OF 15% OF TOTAL INCOME, THE HON'BLE ITAT BENCH 'G' ,MUMBAI IN THE CASE OF DAWAT INSTITUTE OF DAWOODI BOHRA COMMUN ITY [2008] 22 SOT 359 (MUMBAI) FOR A.Y.2001-02 HAS HELD IN A DETAILED JUDGMENT BASED O N FINDINGS ON JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKI NG PERSONNEL SELECTION (2003) 264 ITR 110 (BORN.) THAT THE INCOME CAN BE ACCUMULATED U/S. 11(1)(A) IF SOMETHING REMAINED UNSPENT BUT IF THE ENTIRE INCOME HAS ALREADY BEEN S PENT , THE SAME IS FULLY EXEMPT FROM TAX AND THERE IS NOTHING LEFT TO BE ACCUMULATED? 2 THE APPELLANT PRAYS THAT THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS)-I, MUMBAI BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 2. NONE APPEARED FOR ASSESSEE AND NO VALID ADJOURNM ENT APPLICATION HAS BEEN PLACED IN RECORD. KEEPING IN VIEW THE GROU NDS OF APPEAL, THE MATTER WAS PROCEEDED WITH EX-PARTE QUA THE ASSESSEE. 3.1 BRIEF FACTS ARE THAT THE ASSESSEE BEING REGISTE RED TRUST U/S 12A WAS ASSESSED FOR YEAR UNDER CONSIDERATION U/S 143(3) ON 23/11/2016 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS. NIL AS AGAINST DEFICIT OF RS.207.26 LACS CLAMED BY THE ASSESSEE IN ITS RET URN OF INCOME FILED ON 22/09/2014. 3.2 THE ASSESSEE CLAIMED CARRY FORWARD OF DEFICIT / LOSS OF RS.207.26 LACS WHICH WAS DENIED, INTER-ALIA, ON THE REASONING THAT THERE WAS NO PROVISION WHICH ALLOW SUCH CARRY FORWARD AND FURTHE R, THERE SHALL BE NO DEFICIT IN CASE OF TRUSTS SINCE IT WAS SUPPOSED TO INCUR EXPENDITURE LIMITED ITA NO.6858/MUM/2018 EMPIRE FOUNDATION ASSESSMENT YEAR :2014-15 3 TO ITS RECEIPTS SINCE THE TRUSTS ARE NOT RUNNING ON EXPECTATION OF FUTURE PROFITS / INCOME. 4. THE LEARNED FIRST APPELLATE AUTHORITY, RELYING U PON THE DECISION OF JURISDICTIONAL BOMBAY HIGH COURT RENDERED IN CIT VS. INSTITUTE OF BANKING PERSONNEL [264 ITR 110], OPINED THAT DEFICIT COULD BE CARRY FORWARD FOR SETTING OFF AGAINST INCOME OF SUBSEQUEN T YEARS. HENCE, LD. AO WAS DIRECTED TO ALLOW THE CARRY FORWARD OF THE D EFICIT. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 5. UPON DUE CONSIDERATION, WE FIND THAT LEARNED FIR ST APPELLATE AUTHORITY HAS MERELY FOLLOWED THE RATIO OF STATED D ECISION RENDERED BY HONBLE BOMBAY HIGH COURT. NOT ONLY THIS, THE ISSUE IS ALSO COVERED BY THE RECENT DECISIONS OF HONBLE SUPREME COURT RENDE RED IN CIT VS. RAJASTHAN & GUJARAT CHARITABLE FOUNDATION & OTHERS [402 ITR 441] AND ANOTHER DECISION RENDERED BY HONBLE SUPREME CO URT, IN REVENUES MISCELLANEOUS APPLICATION TITLED AS CIT (E) VS. SUBROS EDUCATIONAL SOCIETY 166 DTR (SC) 257, OBSERVING AS UNDER: - 1. IN THIS APPLICATION FILED BY THE INCOME TAX DEPA RTMENT IT IS STATED THAT CIVIL APPEAL NO. 5171 OF 2016 ARISES OUT OF SPECIAL LEAVE PETITION (C)... CC NO. 8982/2016 WAS TAGGED WITH OTHER APPEALS AND THE BAT CH MATTERS WERE DECIDED BY THIS COURT ON 13.12.2017. HOWEVER, THE F OLLOWING QUESTION WAS ALSO RAISED IN THE INSTANT APPEAL WHICH WAS NOT THE SUBJECT MATTER OF THOSE APPEALS: (A) WHETHER ANY EXCESS EXPENDITURE INCURRED BY THE TRUST/CHARITABLE INSTITUTION IN EARLIER ASSESSMENT YEAR COULD BE ALL OWED TO BE SET OFF AGAINST INCOME OF SUBSEQUENT YEARS BY INVOKING SECTION 11 O F THE INCOME TAX ACT, 1961? 2. TO THIS EXTENT, MR. K. RADHAKRISHNAN, LEARNED SE NIOR COUNSEL APPEARING ON BEHALF OF THE APPLICANT/APPELLANT IS CORRECT. THERE FORE, WE HAVE HEARD HIM ON THE AFORESAID QUESTION OF LAW AS WELL BUT DID NOT F IND ANY MERIT THEREIN. 3. THE MISCELLANEOUS APPLICATION IS DISMISSED. THEREFORE, FINDING NO INFIRMITY IN THE IMPUGNED ORD ER, WE DISMISS THE APPEAL. ITA NO.6858/MUM/2018 EMPIRE FOUNDATION ASSESSMENT YEAR :2014-15 4 6. THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH DECEMBER, 2019. SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 05/12/2019 SR.PS, JAISY VARGHESE 23456736 / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $!# / THE RESPONDENT 3. - ( ) / THE CIT(A) 4. - / CIT CONCERNED 5. ./ ' 0 , 0 , / DR, ITAT, MUMBAI 6. /123 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.