D.C.I.T. (E) - 2(1), MUMBAI V. THE J. R. D. TATA TRUST, MUMBAI

ITA 7122/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4856 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 15-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA
• Keywords: Charitable institution; Tax effect
• Section: 143(3)

Judgement Text

DCIT(E) V. J RD TATA TRUST/ I.T.A. NO. 7122 / MUM /201 7 /A.Y. 11 - 1 2 PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI C.N. PRASAD , JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 7122 / MUM / 20 1 7 : ASSESSMENT YEAR : 20 11 - 1 2 DCIT (E) - 2(1), MUMBAI ROOM NO. 519, 5 TH FLOOR, PIRAMAL CHAMBER, LALBAUG, LOWER PAREL, MUMBAI - 400012. VS . THE J. R. D. TATA TRUST, 2 ND FLOOR, BOMBAY HOUSE, 24, HOMI MODY STREET, FORT, MUMBAI - 400001. PAN:AAATT0165F APPELLANT RESPONDENT ASSESSEE BY SHRI PERCY PARDIWALLA (AR)/ SUKHSAGARSYAL REVENUE BY SHRI RAJIV G UBG O TRA, SR. D.R. DATE OF HEARING 13 .02.2019 DATE OF PRONOUNCEMENT 13 . 02.20 19 ORDER PER O. P. MEENA, AM 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISS IONER OF INCOME - TAX (APPEALS) - 1 , MUMBAI (IN SHORT THE CIT ( A)) DATED 05 .09.2017WHICH IN TURN HAS ARISEN FROM THE UNDER SECTION 143(3) OF INCOME TAX ACT,1961 ( IN SHORT OF THE ACT) PASSED BY THE ADDL. DIT(E), RANGE - II, MUMBAI ) (IN SHORT THE AO). 2. THE REVENUE HAS RAISED T HE FOLLOWING GROUNDS: - 1.1 WHETHER, ON THE FACTS OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE CARRY FORWARD OF DEFICIT OF RS.9,76,12,251/ - , AND DIRECTING THE ASSESSING OFFICER TO ALLOW CARRY FORWARD OF DEFICIT ON ACCOUNT OF EXCESS EXPENDITURE WITHOUT APPRECIATING THE FACT THAT THIS WOULD HAVE THE EFFECT OF GRANTING DOUBLE BENEFIT TO THE ASSESSEE, FIRST AS 'ACCUM ULATION' OF INCOME U/S 11(1)(A) OR AS CORPUS DONATION U/S 1 1(1)(D) IN EAR LIER YEARS/CURRENT YEAR AND THEN AS DCIT(E) V. J RD TATA TRUST/ I.T.A. NO. 7122 / MUM /201 7 /A.Y. 11 - 1 2 PAGE 2 OF 10 'APPLICATION ' OF INCOME U/S 11(1 )(A) IN THE SUBSEQUENT YEARS WHICH WAS LEGALLY NOT PERMISSIBLE.? 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 ALLOW ING THE CLAIM OF THE ASSESSEE CARRY FORWARD OF THE SAID DEFICIT BY RELYING UPON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION, IGNORING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE SAID DECISION OF THE JURISDICTIONAL HIGH COURT ON MERIT OF THE CASE, BUT DUE TO SMALLNESS OF TAX EFFECT APPEAL WAS NOT FILED BEFO RE HO N 'BLE SUPREME COURT. HOWEVER, ON THIS ISSUE THE DEPARTMENT HAS FILED SLPS IN OTHER CASES BEFORE THE HON'BLE APEX COURT INCLUSIVE THE CASE OF MIDC(SLP (CIVIL) 9891 OF 201 4) IN WHICH LEAVE HAS BEEN GRANTED AND THE ISSUE IS PENDING FOR ADJUDICATION BEFORE THE HON'BLE SUPREME COURT AND THE CASE HAS NOT REACHED FINALITY. 1.3 WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR CARRY FORWARD OF THE SAID DEFICIT, IGNORING THE FACT THAT THERE WA S NO EXPRESS PROVISION IN THE I TACT, 1961 PERMITTING ALLOWANCE OF SUCH CLAIM. 2 THE APPELLANT PRAYS THAT THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - I, MUMBAI BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3 THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 6.1. BRIEFLY, STATED THE FACTS O F THE CASE ARE THAT THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE AND SUBMISSIONS MADE BY THE ASSESSEE ARE SUMMARIZED AS UNDER - 'GROUND 3: DISALLOWED CARRY FORWARD OF DEFICIT OF RS.9,76,12,251 FOR ADJUSTMENT IN SUBSEQUENT YEARSCOVERED BY JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V INSTITUTE OF BANKING PERSONNEL SELECTION (2003) 131 TAXMAN 386 (BOM) 2.1 THE APPELLANT HAS CLAIMED A DEFICIT OF RS.9,76,12,251/ - IN THE RETURN OF INCOME FILED ON 29 SEPTEMBER 2011 TO BE CARRIED FORWARD TO SUBS EQUENT YEARS BEING EXCESS OF EXPENDITURE OVER INCOME EARNED DURING THE YEAR UNDER CONSIDERATION. THE LEARNED AO HOWEVER DISALLOWED THIS EXCESS EXPENDITURE WHILE PASSING THE ASSESSMENT ORDER. 2.2 THE TRUST HAS CLAIMED THIS DEFICIT RELYING ON THE DECISION OF THE HON'BLE MUMBAI ITAT (ORDER NO 1721/MUM/2013) IN THE CASE OF SIR RATAN TATA TRUST FOR AY 2008 - 09 (COPY OF DCIT(E) V. J RD TATA TRUST/ I.T.A. NO. 7122 / MUM /201 7 /A.Y. 11 - 1 2 PAGE 3 OF 10 THE ORDER IS ENCLOSED AS ANNEXURE 5) WHEREIN THE TRIBUNAL RELYING ON THE DECISION OF CIT VS INSTITUTE OF BANKING PERSONNEL SERVICES (264 ITT? 110) DISMISSED THE APPEAL IN FAVOUR OF THE ASSESSEE (REPRODUCED AS UNDER): 'INCOME DERIVED FROM THE TRUST PROPERTY HAS ALSO GOT TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND IF COMMERCIAL PRINCIPLES ARE APPLIED THEN THE ADJUSTMENT OF EXPENSES INCURRED BY THE TRU ST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE EARLIER YEARS AGAINST THE INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAVE TO BE REGARDED AS APPLICATION OF INCOME OF THE TRUST 2.3 FURTHER, THE DEPARTMENT'S APPEAL AGAINST THE ABOVE, DECISION OF T HE TRIBUNAL HAS BEERL DISMISSED BY THE BOMBAY HIGH COURT (COPY OF THE ORDER IS ENCLOSED AS ANNEXURE 6). THUS, IT IS SETTLED THAT A TRUST EXEMPT UNDER SECTION 11 OF THE ACT IS PERMITTED TO CARRY FORWARD ITS DEFICIT OF ONE FINANCIAL YEAR IN THE SUBSEQUENT FI NANCIAL YEARS. 2.4 IN VIEW OF THE ABOVE, REQUEST YOUR GOOD - SELF TO KINDLY DIRECT THE LEARNED AO TO ALLOW THE CARRY FORWARD OF DEFICIT OF RS. 9,76,12,2511OR ADJUSTMENT IN SUBSEQUENT YEARS. WE WOULD BE GLAD TO CLARIFY THE ABOVE AND ADDRESS ANY FURTHER ASPECT S THAT YOU MAY REQUIRE.' THE LD. CIT (A) VIDE PARA 6.2.1. HAS GIVEN HIS FINDING AS UNDER: 6.2 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE ASSESSEE. I FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING AND PERSONNEL SELECTION (SUPRA). INTHE SAID DECISION THE QUESTION BEFORE THE HON'BLE COURT WAS '3. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRI BUNAL WAS JUSTIFIED IN JAW FORWARD THE DEFICIT OF EARLIER YEAR AND SET IT OFF AGAINST THE SURPLUS OF SUBSEQUENT YEARS WHEN THE SAME WAS NOT ALLOWABLE IN THE CASE OF ASSESSEE TRUST IN WHOSE CASE INCOME EXEMPTED UNDER SECTION 11 OF THE INCOME TAX ACT, 1961 6 .2.1 IN PARA 5 OF THEIR JUDGEMENT, THE HON. JURISDICTIONAL BOMBAY HIGH COURT HELD AS FOLLOWS - '5. NOW CORNING TO QUESTION NO. 3, THE POINT WHICH ARISES FOR CONSIDERATION IS : WHETHER EXCESS OF EXPENDITURE IN THE EARLIER YEARSCAN BE ADJUSTED AGAINST THE INCOME OF THE SUBSEQUENT YEAR AND WHETHER SUCH ADJUSTMENT SHOULD BE TREATED AS APPLICATION OF INC OME IN SUBSEQUENT YEAR FOR CHARITABLE PURPOSES? IT WAS ARGUED ON BEHALF OF THE DEPARTMENT THAT EXPENDITURE INCURRED IN THE EARLIER YEARS CANNOT BE MET OUT OF THE INCOME OF THE SUBSEQUENT YEAR AND THAT UTILIZATION OF SUCH INCOME FOR MEETING THE DCIT(E) V. J RD TATA TRUST/ I.T.A. NO. 7122 / MUM /201 7 /A.Y. 11 - 1 2 PAGE 4 OF 10 EXPENDITURE OF EARLIER YEARS WOULD NOT AMOUNT TO APPLICATION OF INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES. IN THE PRESENT CASE, THE ASSESSING OFFICER DID NOT ALLOW CARRY FORWARD OF THE EXCESS OF EXPENDITURE TO BE SET OFF AGAINST THE SURPLUS OF THE SUBSEQUENT YEARS O N THE GROUND THAT IN THE CASE OF A CHARITABLE TRUST, THEIR INCOME WAS ASSESSABLE UNDER SELF - CONTAINED CODE MENTIONED IN SECTION 11 TO SECTION 13 OF THE INCOME TAX ACT AND THAT THE INCOME OF THE CHARITABLE TRUST WAS NOT ASSESSABLE UNDER THE HEAD 'PROFITS AN D GAINS OF BUSINESS' UNDER SECTION 2$ IN WHICH THE PROVISION FOR CARRY FORWARD OF LOSSES WAS RELEVANT. THAT, IN THE CASE OF A CHARITABLE TRUST, THERE WAS NO PROVISION FOR CARRY FORWARD OF THE EXCESS OF EXPENDITURE OF EARLIER YEARS TO BE ADJUSTED AGAINST IN COME OF SUBSEQUENT YEARS. WE DO NOT FIND ANY MERIT IN THIS ARGUMENT OF THE DEPARTMENT. INCOME DERIVED FROM THE TRUST PROPERTY HAS ALSO GOT TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND IF COMMERCIAL PRINCIPLES ARE APPLIED THEN ADJUSTMENT OF EXPENSES INCURRED BY THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE EARLIER YEARS AGAINST THE INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAVE TO BE REGARDED AS APPLICATION OF INCOME OF THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE SUBSEQUENT YE AR IN WHICH ADJUSTMENT HAS BEEN MADE HAVING REGARD TO THE BENEVOLENT PROVISIONS CONTAINED IN SECTION 11 OF THE ACT AND THAT SUCH ADJUSTMENT WILL HAVE TO BE EXCLUDED FROM THE INCOME OF THE TRUST UNDER SECTION II( 1)(4) OF THE ACT. OUR VIEW IS ALSO SUPPORTED BY THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF AR V SHRI PLOT SWETAMBER MULTI PUJAK JAIN MANDAL (1995) 211 ITR 293 (GUJ). ACCORDINGLY, WE ANSWER QUESTION NO. 3 IN THE AFFIRMATIVE I.E., IN FAVOUR OF THE ASSESSE AND AGAINST THE DEPARTMENT.' 6.2.2 IN THE DIRECTOR OF INCOME - TAX (EXEMPTION) VS. MIS. GEM & JEWELLERY EXPORTS PROMOTION COUNCIL, INCOME TAX APPEAL (LOD) NO. 1113 OF 2010 DATED 15TH FEBRUARY 2011, ONE OF THE TWO QUESTIONS RAISED BY THE DEPARTMENT BEFORE THE HON. BOMBAY HIGH COURT WAS 'WHETHE R ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE TRIBUNAL WAS RIGHT IN DIRECTING THE A.O. TO SET OFF THE DEFICIT OF EARLIER YEARS TO THE SURPLUS OF THIS YEAR AND CONSIDER SUCH ADJUSTMENT AS APPLICATION OF INCOME FOR CHARITABLE PURPOSE'. THE HON. HIGH COURT HELD AS FOLLOWS: - '4. AS REGARDS SECOND QUESTION IS CONCERNED, COUNSEL ON BOTH SIDES AGREE THAT THE SAID QUESTION IS COVERED AGAINST THE REVENUE BY THE DECISION OF THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. INSTITUTE OF BANKING R EPORTED IN (2003] 264 1. TI? 110. IN THIS VIEW OF THE MATTER, WE SEE NO MERIT IN THE APPEAL AND THE SAME IS DISMISSED WITH NO ORDER AS TO COSTS.' 6.2.3 SIMILARLY, IN A RECENT DECISION OF THE HON. ITAT, MUMBAI BENCH 'J', MUMBAI IN ITA NO. 5143/MUM/2016 FOR THE A.Y. 2011 - 12 DATED 12.5.2017 IN THE DCIT(E) V. J RD TATA TRUST/ I.T.A. NO. 7122 / MUM /201 7 /A.Y. 11 - 1 2 PAGE 5 OF 10 CASE OF ITO(EXEMPTION) - 1(1) MUMBAI VS BOMBAY NATURAL HISTORY SOCIETY, THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER: 'I. WHETHER ON THE FACTS ON THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING THE CAR RY FORWARD OF DEFICIT OF PS. 52,98,1491 AND ALLOWING SET OFF AGAINST THE INCOME OF THE SUBSEQUENT YEARS. II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR CARRY FORWARD OF THE SAID DEFICIT, IGNORING THE FACT THAT THERE WAS NO EXPRESS PROVISION IN THE 1. T. ACT, 1961 PERMITTING ALLOWANCE OF SUCH CLAIM. III. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASES AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR CARRY FORWARD OF THE SAID DEFICIT BY RELYING UPON THE JUDGEMENT OF HON'BLE HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION, IGNORING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE SAID DECISION OF THE JURISDICTIONAL H IGH COURT ON MERIT OF THE CASE.' 6.2.4 THE HONBLE ITAT HELD THAT THE LD. CIT(A) HAS RIGHTLY FOLLOWED THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL AND DIRECTED THE AO TO ALLOW THE CARRY FORWARD AND SET OFF DE FICIT AFTER DUE VERIFICATION OF FACTS. THE HON. ITAT UPHELD THE ORDER OF LEARNED CIT(A). 6.2.5 THE CIT(A) IS BOUND TO FOLLOW THE ORDER OF THE HON. JURISDICTIONAL HIGH COURT AND HON. THE FIAT. THE HON'BLE HIGH COURT OF BOMBAY, IN THE CASE OF DIRECTOR OF INC OME TAX (EXEM. ) V/S. MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION [MIDC] [ITA NO. 2652 OF 2011] AFTER RELYING ON THE DECISION OF CIT V/S. INSTITUTE OF BANKING [264 ITR 110] [BOMBAY HIGH COURT], HAS DISMISSED THE APPEAL FILED BY THE DEPARTMENT ON THE ISSU E OF CARRY FORWARD DEFICIT. HOWEVER, IT APPEARS THAT THE DEPARTMENT HAS FILED SLP BEFORE THE APEX COURT (SLP (CIVIL) 9891 OF 2014) AND THE MATTER IS PENDING BEFORE THE HON'BLE SUPREME COURT. THEREFORE, AS THE MATTER STANDS AS OF NOW, THE ISSUE IS COVERED I N FAVOUR OF THE ASSESSEE BY THE HON. BOMBAY HIGH COURT. RESPECTFULLY FOLLOWING THE DECISIONS OF THE HON. BOMBAY HIGH COURT, I HOLD THAT THE DEFICIT OF THE CURRENT YEAR IS DCIT(E) V. J RD TATA TRUST/ I.T.A. NO. 7122 / MUM /201 7 /A.Y. 11 - 1 2 PAGE 6 OF 10 REQUIRED TO BE ALLOWED TO BE CARRIED FORWARD, IF CLAIMED BY THE ASSESSEE IN THE RETUR N OF INCOME. HOWEVER, F OR WORKING OUT THE DEFICIT FOR THE YEAR, BENEFIT OF ACCUMULATION OF 15% OF THE INCOME SHALL NOT BE ALLOWED TO TH E ASSESSEE , THE PRESENT CASE IS NOT A CASE WHERE THE WHOLE OF THE INCOME HAS NOT BEEN APPLIED FOR CHARITABLE PURPOSES. RA THER, THE PRESENT CASE BEFORE US IS A CASE WHERE MORE THAN THE INCOME DERIVED BY THE ASSESSEE HAS BEEN APPLIED FOR CHARITABLE PURPOSES. THE QUESTION OF ANY ACCUMULATION, THEREFORE, WOULD NOT ARISE. THIS IS BECAUSE IF THERE IS NO INCOME AVAILABLE, FROM WHER E WILL THE ASSESSEE ACCUMULATE THE INCOME? MY ABOVE DECISION IS SUPPORTED BY THE DECISION OF THE HON. ITAT 'G' BENCH MUMBAI IN THE CASE OF DAWAT INSTITUTE OF DAWOODI BOHRA COMMUNITY IN ITA NO. 4309/MUM /2005 FOR THE A.Y, 2001 - 02 DATED 30.4.2013, WHEREIN THE SAME ISSUE WAS INVOLVED. IT WAS HELD BY THE HON. ITAT AS FOLLOWS: '5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE RAISED IN THIS APPEAL IS WHETHER THE ASSESSEE CAN STILL BE ALLOWED STATUTORY ACCUMULATION OF 25% OF THE INCOME U/S 11 (1)(A) OF THE IT ACT EVEN IF THE ENTIRE INCOME HAS BEEN APPLIED FOR THE YEAR AND NO INCOME IS LEFT FOR ACCUMULATION. THE AUTHORITIES BELOW HAVE DISALLOWED THE CLAIM ON THE GROUND THAT THE ASSESSEE HAD INCURRED MORE EXPENDITURE TOWARDS THE APPLICATION OF INCOME THAN THE INCOME EARNED. THEREFORE, THE CL AIM OF ACCUMULATION CANNOT BE ALLOWED. THE LEARNED AR FOR THE ASSESSEE HAS HOWEVER ARGUED THAT THE ASSESSEE IS ENTITLED FOR STATUTORY ACCUMULATION OF 25% OF GROSS INCOME IRRESPECTIVE OF THE FACT WHETHER ANY INCOME IS LEFT FOR APPLICATION OR NOT. RELIANCE H AS BEEN PLACED ON THE JUDGMENTS OF THE JURISDICTIONAL HIGH AND THE SUPREME COURT AS WELL AS THE DECISION OF COORDINATE BENCH OF TRIBUNAL IN ASSESSEE'S OWN CASE. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENTS CITED. IN CASE OF CIT VS. PROGRAMME FOR COMMUNITY ORGANIZATION (SUPRA), THE ISSUE BEFORE THE HON'BLE SUPREME COURT WAS WHETHER ACCUMULATION U/S I 1(1)(A) HAS TO BE COMPUTED ON GROSS INCOME OR THE NET INCOME. IN THAT CASE INCOME RECEIVED BY THE TRUST WAS RS. 2,57,376/ - AGAINST WHICH A SUM OF RS. 170369/ - H AD BEEN APPLIED DURING THE YEAR LEAVING A BALANCE OF RS. 87,013/ - . THE ISSUE WAS WHETHER PERCENTAGE OF ACCUMULATION SHOULD BE COMPUTED WITH RESPECT TO THE GROSS INCOME OF RS. 2,57,376/ - OR THE NET INCOME OF RS. 87,016/ - . THE HONBLE SUPREME COURT HELD THAT ACCUMULATION HAD TO BE COMPUTED WITH RESPECT TO GROSS INCOME. THERE WAS NO ISSUE BEFORE THE HON'BLE SUPREME COURT AS TO WHETHER ACCUMULATION HAD TO BE ALLOWED DCIT(E) V. J RD TATA TRUST/ I.T.A. NO. 7122 / MUM /201 7 /A.Y. 11 - 1 2 PAGE 7 OF 10 OR NOT EVEN IF THE ENTIRE INCOME HAD BEEN APPLIED AND NOTHING HAD BEEN LEFT DURING THE YEAR. 5.1 THE LEARNED AR FOR THE ASSESSEE HAS ARGUED THAT ACCUMULATION U/S 11(1)(A) WAS ABSOLUTE AND UNFETTERED IRRESPECTIVE OF THE FACT WHETHER SOME INCOME WAS LEFT FOR APPLICATION OR NOT. RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN CASE O F ADDITIONAL CIT VS. ALN RAO CHARITABLE TRUST (SUPRA) AND ON THE JUDGMENT OF HON'BLE HIGH COURT OF BOMBAY IN CASE OF CIT VS. TRUSTEES OF BHAT FAMILY RESEARCH FOUNDATION (SUPRA). WE HAVE CAREFULLY PERUSED THE SAID JUDGMENTS BUT DO NOT FOUND ANY RULING TO TH E EFFECT THAT ACCUMULATION U/S 11 (1) (A) HAS TO BE ALLOWED EVEN IF THE ENTIRE INCOME HAS ALREADY BEEN APPLIED DURING THE YEAR. IN CASE OF ADDITIONAL CIT VS. ALN RAO CHARITABLE TRUST (SUPRA) THE ISSUE WAS WHETHER CONDITIONS PRESCRIBED U/S 11(2) HAVE TO BE FULFILLED EVEN IN RESPECT OF ACCUMULATION MENTIONED IN SECTION 11 (1) (A). HONBLE SUPREME COURT OBSERVED THAT IF THE ENTIRE INCOME WAS SPENT ON CHARITABLE PURPOSES, THEN IT WILL NEVER TAXABLE BUT IN CASE THERE WAS SAVING, 25% OR TEN THOUSAND WHICHEVER WAS MORE COULD NOT BE INCLUDED IN THE TOTAL INCOME. LION TIE SUPREME COURT ALSO OBSERVED THAT SECTION 11(2) FURTHER ENLARGED AND LIBERALIZED THE EXEMPTION. THE SECTION 11(2) WAS PRESSED INTO SERVICE IF THERE WAS STILL SOME ACCUMULATED INCOME LEFT TO BE DEALT WITH I.E. BEYOND 25% OR TEN THOUSAND WHICHEVER WAS MORE. THIS ADDITIONAL INCOME COULD BE ACCUMULATED U/S 11(2) SUBJECT TO THE FULFILLMENT OF CONDITIONS MENTIONED THERE IN. BUT IN RESPECT OF ACCUMULATION OF 25% OR 10 THOUSAND WHICHEVER IS MORE U/S 11(1)(A), THE CONDITIONS MENTIONED U/S 11(2) COULD NOT BE APPLIED. IN OTHER WORDS, HONBLE SUPREME COURT HELD THAT ACCUMULATION OF 25% OR 10 THOUSAND WHICHEVER WAS MORE WAS ABSOLUTE AND UNFETTERED WITHOUT ANY CONDITIONS. THUS OBSERVATIONS 'ABSOLUTE AND UNFETTERED E XEMPTION' WAS ONLY IN RELATION TO FULFILLMENT OF CONDITIONS MENTIONED IN SECTION 11(2). IT WAS NOT HELD BY THE HONBLE SUPREME COURT THAT SUCH ACCUMULATION HAD TO BE ALLOWED EVEN IF THERE WAS NO INCOME LEFT FOR APPLICATION. 5.2 SIMILAR WAS THE POSITION IN CASE OF C1T VS. TRUSTEES OF BHAT FAMILY RESEARCH FOUNDATION (SUPRA) IN WHICH THE FOUNDATION HAD EARNED INCOME OF RS. 41,513/ - AGAINST WHICH IT HAD APPLIED THE SUM OF RS. 8,150/ - LEAVING A BALANCE OF RS. 33,363/ - . THE ASSESSING OFFICER HELD THAT FOR ALLOWIN G EXEMPTION, THE ENTIRE BALANCE AMOUNT OF RS. 33363/ - HAS TO BE INVESTED IN GOVERNMENT SECURITIES AND BONDS AS PROVIDED IN SECTION 11(2). THE HIGH COURT HELD THAT THE CONDITIONS OF INVESTMENT IN GOVERNMENT SECURITIES AND BONDS WAS ONLY IN RELATION TO ANY A CCUMULATION BEYOND THE ACCUMULATION OF 25% OR 10 THOUSAND WHICHEVER WAS MORE AS PROVIDED IN SECTION 11(1)(A). IT WAS THUS HELD THAT IN SO FAR AS ACCUMULATION OF 25% OF INCOME I.E. RS. 10,378/ - WAS CONCERNED, CONDITIONS FOR INVESTMENT IN GOVERNMENT SECURITI ES WERE NOT REQUIRED TO BE FULFILLED AS THIS EXEMPTION WAS UNQUALIFIED AND UNCONDITIONAL. THE CONDITIONS WERE ONLY IN RESPECT OF FURTHER ACCUMULATION OF BALANCE AMOUNT I.E. THE SUM OF RS. 22,900/ - (33363 - 10378). THUS EVEN IN THIS CASE, THERE WAS NO RULING THAT ACCUMULATION U/S 11(1)(A) HAS TO BE ALLOWED TO THE ASSESSEE EVEN IF THERE WAS NO INCOME LEFT FOR ACCUMULATION AND ENTIRE INCOME HAD ALREADY BEEN APPLIED. 5.3 AS REGARDS, THE DECISIONS OF TRIBUNAL IN ASSESSES - OWN CASE, WE FIND, THAT IN ASSESSMENT YEAR 2005 - 06, THE TRIBUNAL IN ITA NO 1 588/MUM/2000 IN ASSESSEE'S OWN DCIT(E) V. J RD TATA TRUST/ I.T.A. NO. 7122 / MUM /201 7 /A.Y. 11 - 1 2 PAGE 8 OF 10 CASE ALLOWED THE CLAIM OF THE APPLICATION WITH RESPECT TO GROSS INCOME EVEN WHEN THERE WAS NO INCOME LEFT FOR APPLICATION, FOLLOWING THE DECISION OF SPECIAL BENCH OF TRIBUNAL IN CASE OF 8TH SONABALHIRJI TRUST VS. ITO (85 TILL 907). THE TRIBUNAL HAD NOT DISCUSSED THE ISSUE AS TO WHETHER ACCUMULATION CAN BE ALLOWED EVEN IF THERE IS NO INCOME LEFT. HO WEVER, ON PERUSAL OF DECISION OF SPECIAL BENCH OF TRIBUNAL (SUPRA) WE FIND, THAT THE ISSUE IN THE CASE WAS NOT WHETHER THE ACCUMULATION CAN BE ALLOWED EVEN IF THE ENTIRE INCOME HAS ALREADY BEEN APPLIED. THE ISSUE WAS WHETHER THE PERCENTAGE OF ACCUMULATION HAD TO BE COMPUTED WITH RESPECT TO THE GROSS INCOME OR NET INCOME. THUS THE TRIBUNAL IN THE ASSESSEE'S OWN CASE IN ASSESSMENT YEAR 2005 - 06 HAS ALLOWED THE CLAIM OF THE ASSESSEE WITHOUT ANY DISCUSSION ON THE ISSUE AND UNDER THE IMPRESSION THAT THE ISSUE HAD BEEN DECIDED BY THE SPECIAL BENCH OF TRIBUNAL (SUPRA). IN CASE OF BAI SONABAIHIRFI TRUST VS. ITO THE DECISION WAS THUS BASED ON INCORRECT ASSUMPT ION OF FACTS. SUCH SUBSISTENTIO ORDER OF THE TRIBUNAL CANNOT BE CONSIDERED AS BINDING PRECEDENT. THE SAID DECI SION OF TRIBUNAL WAS ALSO FOLLOWED BY ANOTHER BENCH OF TRIBUNAL IN THE ASSESSEE'S OWN CASE IN THE ASSESSMENT YEARS 97 - 98& 98 - 99 (SUPRA) IN WHICH THE TRIBUNAL ALSO REFERRED TO THE JUDGMENT OF HON'BLE SUPREME COURT IN CASE OF PROGRAMME FOR COMMUNITY ORGANIZA TION (SUPRA) BUT AS POINTED OUT EARLIER THE ISSUE DECIDED BY THE APEX COURT IN CASE OF PROGRAMME FOR COMMUNITY ORGANIZATION (SUPRA) WAS NOT WHETHER ACCUMULATION HAD TO BE ALLOWED EVEN IF THERE WAS NO INCOME LEFT FOR APPLICATION BUT THE ISSUE WAS WHETHER AC CUMULATION HAD TO BE COMPUTED WITH RESPECT TO GROSS INCOME OR NET INCOME. SIMILARLY, THE TRIBUNAL ALLOWED THE CLAIM OF THE ASSESSEE IN THE ASSESSMENT YEARS 2002 - 03 AND 2003 - 04 (SUPRA) IN THE SAME MANNER. THEREFORE, THE DECISION OF TRIBUNAL IN ASSESSEE'S OW N CASE IN EARLIER YEARS IN OUR, VIEW, CANNOT BE CONSIDERED AS BINDING PRECEDENT. AS REGARDS THE DECISION OF CIT (A) IN ASSESSMENT YEAR 2004 - 05 (SUPRA) NOTHING HAS BEEN PRODUCED ON RECORD TO SHOW THAT IT WAS A CONSCIOUS DECISION OF THE GOVERNMENT TO ACCEPT THE ORDER. MERE FAILURE OF AN OFFICIAL TO NOT FILE APPEAL IN ONE YEAR COULD NOT BE THE GROUND TO MAKE A CLAIM IN THE SUBSEQUENT YEAR. THE INCOME CAN BE ACCUMULATED U/S 11 (1)(A) IF SOMETHING REMAINED UNSPENT BUT IF THE ENTIRE INCOME HAS ALREADY BEEN SPENT, THE SAME IS FULLY EXEMPT FROM TAX AND THERE IS NOTHING LEFT TO BE ACCUMULATED. WE ARE THEREFORE, UNABLE TO ACCEPT THE ARGUMENTS ADVANCED ON BEHALF OF THE ASSESSEE THAT THE ACCUMULATION HAS TO BE ALLOWED EVEN IF THE ENTIRE INCOME HAS ALREADY BEEN SPENT BY THE ASSESSEE. WE ACCORDINGLY, CONFIRM THE ORDER OF CIT(A) DISALLOWING THE CLAIM OF THE ASSESSEE. 3. BEING, AGGRIEVED, THE REVENUE FILED AN APPEAL BEFORE THIS TRIBUNAL ON THE GROUND THAT THE LD. CIT(A) HAS RELIED IN ALLOWING THE CLAIM OF THE ASSESSEE IN CARRI ED FORWARD OF THE SAID DEFICIT BY RELYING UPON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION, IGNORING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE SAID DECISION OF THE DCIT(E) V. J RD TATA TRUST/ I.T.A. NO. 7122 / MUM /201 7 /A.Y. 11 - 1 2 PAGE 9 OF 10 JURISDICTIONAL HIGH COURT ON M ERIT OF THE CASE, BUT DUE TO SMALLNESS OF TAX EFFECT APPEAL WAS NOT FILED BEFORE THE HONBLE SUPREME COURT. HOWEVER, ON THIS ISSUE THE DEPARTMENT HAS FILED SLPS IN OTHER CASES BEFORE THE HONBLE APEX COURT INCLUSIVE THE CASE OF MIDC(SLP (CIVIL) 9891 OF 201 4 IN WHICH LEAVE HAS BEEN GRANTED AND THE ISSUE IS PENDING FOR ADJUDICATION BEFORE THE HONBLE SUPREME COURT. THE LD. COUNSEL SUBMITTED THAT THE APPEAL FILED BY THE REVENUE IN THE MAHARASHTRA INDUSTRIAL DEV. CORP. DATED 13.10.2014 HAS BEEN DISMISSED BY THE HON`BLE SUPREME COURT, THEREFORE, THE APPEAL FILED BY THE ASSESSEE BY PLACING RELIANCE UPON THE DECISION OF MIDC WAS NOT ACCEPTED DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF STANDS DECIDE BY SUPREME COURT, THEREFORE, THE CIT(A) HAS RIGHTLY FOLLOWE D THE DECISION IN THE CASE OF INSTITUTION BANKING PERSONNEL AS WELL MIDC, THEREFORE, THE ISSUES COVERED AGAINST THE REVENUE BY JURISDICTIONAL OF BOMBAY HIGH COURT. 4. PER CONTRA, LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE REVENUE HAS FILED THIS APPEAL CONTENDING THAT A SLP HAS BEEN FILED AGAINST THE ORDER OF JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION, AND MIDC , WHICH HAS BEEN RELIED ON BY THE LD. CIT (A) . SINCE THE SLP FILED BY THE REVENUE STANDS DISMISSED BY THE HON`BLE SUPREME COURT . THEREFORE, THE ORDER PA SSED BY THE DCIT(E) V. J RD TATA TRUST/ I.T.A. NO. 7122 / MUM /201 7 /A.Y. 11 - 1 2 PAGE 10 OF 10 LD. CIT (A) IS AS PER LAW.WE FIND THAT THE REVENUE HAS ALSO MENTIONED THIS FACTS OF SLP IN THE GROUNDS OF APPEAL SO TAKEN AS ENUMERATED ABOVE. IN VIEW OF THIS MATTER, THE ISSUE IN APPEAL ARE COVERED BY THE DECISION OF HON`BLE SUPREME COURT IN APPEAL IN THE CASE OF MIDC(SLP (CIVIL) 9891 OF 2014 DATED AND IN CIVIL APPEAL NO. 7186 OF 2014 DATED DECEMBER 13,2017 IN THE CASE OF CIT - III PUNE V. RAJASTHAN AND GUJARAT CHARITABLE FOUNDATION POONA AND OTHERS VARIOUS ASSESSEE`S INCLUDING MIDC (COPY OF OR DER FILED) . THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT SIMILAR VI EW WAS TAKEN IN THE CASE OF CIT V. SUBROS EDUCATION SOCIETY [2018] 7 SUPREME COURT CASES 548 . THEREFORE, FOLLOWING THE RATIO OF ABOVE DECISION, WE HELD THE LD. CIT (A) HAS RIGHTL Y ALL OWED THE APPEAL OF THE ASSESSEE, THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT (A), ACCORDINGLY, SAME IS UPHELD. ACCORDINGLY, THE APPEAL OF THE REVENUE ON ALL THE ABOVE GROUNDS OF APPEAL ARE THEREFORE, DISMISSED . 6. IN THE RE SULT, THE APPEAL OF THE REVENUE STANDS DISMISSED . 7. THE ORDER PRONOUNCED IN THE OPEN COURT ON 13 .0 2.2019 SD/ - SD/ - (C.N. PRASAD) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: DATED: 13, FEBRUARY, 2019/OPM COPY OF ORDER SENT TO - ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER ASSISTANT REGISTRAR, MUMBAI