Assistant Commissioner of Income Tax, (Exemptions), Circle-1, Mangaluru V. M/s. Academy Of General Education, Udupi

ITA 779/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7687 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 13-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH
• Keywords: Charitable institution; Capital expenditure
• Section: 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 779 /BANG/201 8 ASSESSMENT YEAR : 20 1 4 - 1 5 THE ASSISTANT COMMISSIONER OF INCOME TAX (EXEMPTIONS), CIRCLE - 1, MANGALURU. VS. M/S. ACADEMY OF GENERAL EDUCATION, ACADEMY HOUSE, MANIPAL, UDUPI 576 119. PAN : A AATA 2976 P APPELLANT RESPONDENT REVENUE BY : SHRI. B. R. RAMESH, JCIT ASSESSEE BY : MS. SHEETAL, ADVOCATE DATE OF HEARING : 25 . 0 6 .201 8 DATE OF PRONOUNCEMENT : 13 . 0 7 .201 8 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), INTER ALIA , ON FOLLOWING GROUNDS: I. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) IS RIGHT IN NOT APPRECIATING THE FACT THAT THE NORMAL COMPUTATION OF INCOME UNDER RESPECTIVE HEADS AS ENVISAGED U/S 15 TO 59 ARE NOT APPLICABLE TO THE COMPUTATION OF INCOME IN RESPECT OF CHARITABLE TRUST/INSTITUTION FOR THE PURPOSE OF CLAIMING EXEMPTION UNDER SECTION 11, 12 AND 13 AND, THEREFORE, THE PROVISIONS RELATING TO SET-OFF OF LOSS FROM ONE SOURCE AGAINST THE INCOME FROM ANOTHER SOURCE, SET-OFF OF LOSS FROM ONE HEAD AGAINST INCOME FROM ANOTHER HEAD AND CARRY FORWARD AND SETOFF OF LOSS AGAINST THE INCOME OF ITA NO. 779/BANG/2018 PAGE 2 OF 3 SUBSEQUENT YEARS AS ENVISAGED U/S70 TO 79 ARE ALSO NOT APPLICABLE TO THE CHARITABLE TRUSTS/INSTITUTIONS. II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) IS RIGHT IN NOT APPRECIATING THE FACT THAT THE ISSUE OF APPLICATION OF INCOME MORE THAN THE INCOME COMPUTED DOES NOT ARISE EXCEPT IN A CASE WHERE THE ASSESSEE HAS INCURRED HUGE AMOUNT OF CAPITAL EXPENDITURE SOURCED OUT OF BORROWED OR CORPUS DONATIONS OR 15% OF INCOME SET APART OVER A PERIOD OF TIME? (EXPENDITURE INCURRED OUT OF THE ABOVE SOURCES HOWEVER CANNOT BE TERMED ASS APPLICATION OF FUNDS OUT OF THE INCOME EARNED IN A PARTICULAR ASSESSMENT YEAR INASMUCH AS LOAN BORROWED DOES NOT FALL UNDER THE CATEGORY OF INCOME EARNED BY THE ASSESSEE, CORPUS FUND DONATION DOES NOT COME UNDER INCOME BY VIRTUE OF SECTION 11(1)(D) AND 15% OF INCOME SET APART IN EARLIER ASSESSMENT YEAR CANNOT BE CONSTRUED AS INCOME OF THE CURRENT YEAR AND 15% SET APART OUT OF THE CURRENT YEAR INCOME IS ALSO EXCLUDED FROM INCOME AVAILABLE FOR APPLICATION. AS SUCH, THE CONCEPT OF APPLICATION IS ONLY TO SHOW THAT THE INCOME IS FULLY UTILIZED RATHER THAN CLAIMING EXCESS EXPENDITURE EITHER REVENUE OR CAPITAL OVER AND ABOVE THE INCOME SO AS TO CLAIM EXCESS APPLICATION OR DEFICIT/LOSS TO BE CARRIED FORWARD TO SUBSEQUENT ASSESSMENT YEARS. EVEN IN THE CASE OF EXCESS APPLICATION BY VIRTUE OF BORROWED FUNDS/CORPUS FUND DONATIONS/15% SET APART OF EARLIER YEARS, THE INCOME OF THE ASSESSEE CANNOT BE CONVERTED TO LOSS BUT AT BEST IT CAN BE MADE NIL. HENCE, THE CARRY FORWARD OF EXCESS APPLICATION OF INCOME AS CLAIMED BY THE ASSESSEE CANNOT BE ALLOWED)? 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION THAT IMPUGNED ISSUES INVOLVED ARE SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT VS. CITY HOSPITAL CHARITABLE TRUST IN ITA NO.676/2014. COPY OF THE ORDER OF THE TRIBUNAL IS PLACED ON RECORD. THESE FACTS WERE NOT DISPUTED BY THE REVENUE. 3. HAVING CAREFULLY EXAMINED THE ORDER OF THE CIT(A) IN THE LIGHT OF ORDER OF THE TRIBUNAL, WE FIND THAT CIT(A) HAD DISPOSED THE ISSUE FOLLOWING THE ORDER OF THE TRIBUNAL. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, ITA NO. 779/BANG/2018 PAGE 3 OF 3 WE CONFIRM THE SAME. 4. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 13 TH JULY, 2018. SD/- SD/- BANGALORE. DATED: 13 TH JULY, 2018. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE. ( A. K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER