M/s The Augustinian Society, Bangalore V. Asst.DIT, Bangalore

ITA 973/BANG/2015

• Counselvise Citation: 97321114 RSA 2015
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 17-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Keywords: Charitable institution; Benefit of exemption
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.973/BANG/2015 ASSESSMENT YEAR : 2007-08 THE AUGUSTINIAN SOCIETY, # 126, 2 ND CROSS, 6 TH BLOCK, KORAMANGALA EXTENSION, BANGALORE 560 095. PAN: AAATA 1891K VS. THE ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTION), CIRCLE 17(2), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI SURESH MUTHUKRISHNAN, CA RESPONDENT BY : DR. P.K. SRIHARI, ADDL. CIT(DR) DATE OF HEARING : 04.11.2015 DATE OF PRONOUNCEMENT : 30.11.2015 O R D E R PER ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 29.04.2015 OF THE CIT(APPEALS)-14, LTU, BANGALORE R ELATING TO ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE, A CHARITABLE TRUST, IS ENGAGED IN THE ACTIVITIES OF RUNNING EDUCATIONAL INSTITUTION, MEDICAL FACILITY F OR THE POOR AND SOCIAL CENTRES FOR WOMEN AND CHILDREN. IT FILED ITS RETUR N OF INCOME FOR THE AY ITA NO.973/BANG/2015 PAGE 2 OF 11 2007-08 ON 06.10.2007 DECLARING NIL TAXABLE INCOME, AFTER CLAIMING ACCUMULATION OF AMOUNT U/S. 11(2) IN FORM 10. DURI NG THE YEAR, THE ASSESSEE HAD VOLUNTARY CONTRIBUTION AMOUNTING TO RS .1,63,59,419. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143( 2) WAS ISSUED ON THE ASSESSEE ON 10.06.2008. 3. DURING THE YEAR, THE ASSESSEE CLAIMED AN AMOUNT OF RS.30,58,591 AS INCOME EXEMPT U/S. 10(23C)(IIIAD). IT WAS SUBMI TTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT SINCE THE INCOME WAS RECEIVED FROM SCHOOL ACTIVITIES WHICH IS LESS THAN RS.1 CRORE, TH E CLAIM MADE BY THE ASSESSEE HAS TO BE ACCEPTED. THE AO HELD THAT THE GROSS RECEIPT OF THE ASSESSEE AS A TRUST EXCEEDS RS.1 CRORE AND HENCE TH E ASSESSEES CLAIM WAS NOT ACCEPTABLE. THE AO HELD THAT APPROVAL OF C CIT HAS TO BE OBTAINED BY THE ASSESSEE AS PER SECTION 10(23C)(IIIAD) AND E VEN OTHERWISE, THE PROVISO ALLOWS THE EXEMPTION ONLY TO THE ASSESSEE W HOSE OBJECTIVES ARE SOLELY FOR EDUCATIONAL PURPOSE. THE AO OBSERVED TH AT THE OBJECTIVES FROM (A) TO (R) OF THE MEMORANDUM OF ASSOCIATION, THE OB JECTS VIZ., (E), (F), (G), (H), (I) AND (K) ETC. INDICATED THAT THE ASSESSEE I S NOT EXISTING SOLELY OR EXCLUSIVELY FOR THE OBJECTIVES OF EDUCATION ONLY, H ENCE THE ASSESSEES CLAIM FOR EXEMPTION OF RS.30,58,581 U/S. 10(23C)(IIIAD) W AS DISALLOWED. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(APPEALS). 5. BEFORE THE CIT(APPEALS), THE LD. AR CONTENDED TH AT THE AO OUGHT TO HAVE APPRECIATED THAT AN ASSESSABLE ENTITY OR A P ERSON LIKE A TRUST OR A ITA NO.973/BANG/2015 PAGE 3 OF 11 SOCIETY IS QUITE DISTINCT AND SEPARATE FROM THE EDU CATIONAL INSTITUTION OR A SCHOOL RUN OR OPERATED BY IT AND THE SAID ENTITY OR A PERSON MAY HAVE MULTI-VARIED OBJECTIVES OR INCOME FROM DIFFERENT SO URCES; BUT IF A PARTICULAR INCOME IS FROM AN EDUCATIONAL INSTITUTION WHICH EXI STS SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT, THEN THE I NCOME WOULD BE ENTITLED TO EXEMPTION PROVIDED THAT SUCH INCOME IS DIRECTLY RELATABLE TO THE EDUCATIONAL ACTIVITY. IT WAS ARGUED THAT THE AO OUG HT TO HAVE APPRECIATED THAT THE GROSS RECEIPTS FROM THE EDUCATIONAL INSTIT UTION VIZ., SCHOOL DOES NOT EXCEED RS. 1 CRORE AND CONSEQUENTLY THE ORDER FROM THE CHIEF COMMISSIONER OF INCOME TAX EXEMPTING THE CLAIM MADE U/S. 10(23C)(IIIAD) WOULD NOT BE REQUIRED HAVING REGARD TO THE PROVISIONS OF SECTION 10(23C)(IIIAD) OF THE ACT. 6. THE CIT(APPEALS) HELD THAT SECTION 10(23C) IS A LATER AVATAR OF SECTION 10(22) WHICH PREVAILED UP TO 31.03.1999. IN BOTH THE ERSTWHILE SECTION 10(22) AND IN THE NEW SECTION 10(23C)(IIIA D)/(VI) THE ELIGIBILITY CONDITION IS THAT THE INSTITUTION SHOULD HAVE BEEN EXISTING SOLELY FOR EDUCATION AND NOT FOR PROFIT. THE JUDICIAL DECISION GIVEN IN THE CONTEXT OF SECTION 10(22) REGARDING EXCLUSIVE EXISTENCE FOR ED UCATIONAL PURPOSES, THEREFORE, CAN BE RELIED UPON EVEN IN THE CONTEXT O F SECTION 10(23C)(IIIAD)/(VI). THE HONBLE ANDHRA PRADESH HI GH COURT IN THE CASE OF CIT VS GURUKUL GHATKESWAR TRUST 332 ITR 611 AND THE HONBLE ORISSA HIGH COURT IN THE CASE OF XAVIER INSTITUTE OF MANAGEMENT VS STATE OF ORISSA A ND ORS.66 DTR 169 HELD THAT FOR CLAIMING EXEMPTION U/S 10(22) THE IN STITUTION ITA NO.973/BANG/2015 PAGE 4 OF 11 MUST EXIST SOLELY FOR PURPOSES OF EDUCATION. IT WAS HELD THAT IF THE TRUST HAD OTHER OBJECTS APART FROM THE OBJECT OF RUNNING EDUC ATIONAL INSTITUTIONS, IT WAS NOT ENTITLED FOR EXEMPTION U/S 10(22). RESPECTF ULLY FOLLOWING THESE DECISIONS, THE CIT(A) REJECTED THE DIFFERENTIATION SOUGHT TO BE MADE BY THE ASSESSEE BETWEEN THE SCHOOL AS AN INSTITUTION AND THE ASSESSEE SOCIETY AS A SEPARATE ENTITY. THE CIT(A) WAS OF THE VIEW T HAT THE ASSESSEE IS TO BE VIEWED IN TOTALITY AS THE INSTITUTION EXISTS FOR ED UCATIONAL PURPOSES. THUS, THE ASSESSEES CLAIM WAS REJECTED. 7. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. WE FIND THAT THE ASSESSEE IS ENGAGED IN THE ACTIVITIES OF RUNNING ED UCATIONAL INSTITUTION, MEDICAL FACILITIES FOR THE POOR AND SOCIAL CENTRE F OR WOMEN AND CHILDREN. THE SHORT POINT FOR CONSIDERATION IS, WHETHER THE A SSESSEE IS ENTITLED TO EXEMPTION OF RS.30,58,581 U/S. 10(23C)(IIIAD) OF TH E ACT IN RESPECT OF RECEIPTS ON ACCOUNT OF INCOME FROM SCHOOL RUN BY TH E ASSESSEE, AS THE GROSS RECEIPTS FROM THE SCHOOL DID NOT EXCEED RS.1 CRORE. 8. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT AN EN TITY LIKE A SOCIETY OR TRUST MAY HAVE MULTIPLE OBJECTS OR INCOME FROM DIFF ERENT SOURCES, BUT PARTICULAR INCOME IS FROM EDUCATIONAL INSTITUTION W HICH EXISTS SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROF IT, THEN THE INCOME WOULD BE ENTITLED TO EXEMPTION PROVIDED THAT SUCH I NCOME IS DIRECTLY RELATABLE TO THE EDUCATIONAL ACTIVITY. HE RELIED O N THE DECISION IN THE CASE OF ITA NO.973/BANG/2015 PAGE 5 OF 11 EDUCATIONAL INSTITUTE OF AMERICAN HOTEL & MOTEL ASS OCIATION V. CIT, 229 ITR 113, 187 (AAR). 9. THE LD. AR FOR THE ASSESSEE FURTHER SUBMITTED TH AT IF THE EDUCATIONAL INSTITUTION EXISTS SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT, THE FACT THAT THE RECIPIENT OR THE OWNER OF THE INCOME IS A PERSON OTHER THAN THE EDUCATIONAL INSTITUTION WOULD NOT AF FECT THE POSITION. NOR WOULD THE FACT THAT THE PERSON HAS OR CAN HAVE INCO ME FROM SOURCES NOT FALLING UNDER SECTION 10(22) WOULD BE RELEVANT FOR DECIDING WHETHER THE INCOME OF SUCH PERSON FROM AN EDUCATIONAL INSTITUTI ON WOULD OR WOULD NOT BE EXEMPT. RELIANCE WAS PLACED ON THE FOLLOWING DE CISIONS:- - CIT VS ST. XAVIERS (1990) 184 ITR 284 (PATNA); - CIT VS SINDHU VIDHYA MARIDAL TRUST (1983) 142 IT R 633 (GUJ); - CIT VS RANCHI LORETO EDUCATIONAL SOCIETY (1992)1 96 ITR 567; - BRAHMIN EDUCATIONAL SOCIETY VS ACIT (1997) 222 I TR 317 (KERALA); - CIT VS ARUNACHALAM EDUCATION SOCIETY (AMM) (2000 ) 243 ITR 229 (MAD); - SHANTHIDEVI PROGRESSIVE EDUCATIONAL SOCIETY VS D IT (E) (1999) 236 ITR (AT) 40 (DELHI). 10. IT WAS SUBMITTED THAT THE EXEMPTION U/S 10(22A) IS ALSO AVAILABLE FOR TRUSTS OR SOCIETIES RUNNING A HOSPITAL. BOTH SECTIO NS 10(22) AND 10(22A) ARE ANALOGOUS AS POINTED OUT BY THE LORDSHIPS OF THE KE RALA HIGH COURT IN CIT VS SREE NARAYANA CHANDRIKA TRUST (1995) 212 ITR 456 (KERALA) AS UNDER:- ITA NO.973/BANG/2015 PAGE 6 OF 11 WE HAVE ALREADY POINTED OUT THAT THIS SECTION IS A NALOGOUS TO SECTION 10(22) WHICH RELATES TO EDUCATIONAL INSTITU TIONS AND, THEREFORE, THE DECISIONS THEREUNDER AND THE ANALOGY OF TRUSTS OR SOCIETIES RUNNING EDUCATIONAL INSTITUTIONS COULD US EFULLY BE REFERRED TO FOR DECIDING THE POINT IN ISSUE. 11. THE LD. AR FURTHER SUBMITTED THAT THE FACT THAT AN INSTITUTION MAY NOT ITSELF BE A HOSPITAL, BUT WAS ONLY RUNNING A HOSPIT AL WOULD NOT LOSE THE BENEFIT OF EXEMPTION U/S 10(22A) AS HELD IN DIT (E) VS AMM MEDICAL FOUNDATION (2002) 257 ITR 292 (MAD), FOLLOWING THE RATIONALE OF THE DECISION IN CIT VS AMM ARUNACHALAM EDUCATIONAL SOCIETY (2000) 2 43 ITR 229 (MAD) AND ADITANAR EDUCATIONAL INSTITUTION VS CIT (ADDI) (199 7) 224 ITR 310 (SC). IT WAS CONTENDED THAT THE DECISION IN THE CASE OF DIT(E) VS AMM HOSPITALS AND MEDICAL BENEFIT SOCIETY (2003)- 2 62 ITR 241 (MAD) ALSO SUPPORTS THE CASE OF THE ASSESSEE. 12. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT AS THE PROVISIONS OF SECTION 10 (23C) (IIIAE) AND SECTION 10(23C)(IIIAD) ARE ANALOGOUS OR SIMILAR TO THE PROVISIONS OF SECTIONS 10(22) AND I0(22A), T HE CASE LAWS ENUNCIATED AS ABOVE CONSTITUTE THE SETTLED LAW ON THIS ISSUE A ND THE ASSESSEE IS WELL ENTITLED TO THE EXEMPTION UNDER SECTION 10(23C)(III AD) OF THE ACT. 13. THE LD. DR, ON THE OTHER HAND, ARGUED THAT THE ASSESSEE IS NOT SOLELY AN EDUCATIONAL INSTITUTION AND THE OBJECTS O F THE ASSESSEE AS SEEN FROM THE MEMORANDUM OF ASSOCIATION IS ALSO FOR PROV IDING MEDICAL RELIEF AND SOCIAL ACTIVITIES FOR THE UPLIFTMENT OF WOMEN A ND CHILDREN, HENCE THE ITA NO.973/BANG/2015 PAGE 7 OF 11 ASSESSEE HAS TO BE VIEWED IN TOTALITY AS AN INSTITU TION WHICH DOES NOT EXIST SOLELY FOR EDUCATIONAL PURPOSES. THEREFORE, EXEMPT ION OF INCOME FROM RUNNING THE SCHOOL BEING NOT LESS THAN 1 CRORE CANN OT BE AVAILED BY THE ASSESSEE. 14. WE HAVE HEARD BOTH THE PARTIES. IN THE CASE OF CIT V. CHILDRENS EDUCATION SOCIETY, 358 ITR 373 (KARN) , THE HONBLE JURISDICTIONAL HIGH COURT DEALT WITH TWO SUBSTANTIAL QUESTIONS OF LAW W HICH ARE AS FOLLOWS:- 2. WHETHER, ON THE FACTS OF THE CASE, THE TRIBUNA L IS CORRECT IN HOLDING THAT THE EXEMPTION IN TERMS OF PROVISIONS O F SECTION 10(23C)(IIIAD) OF INCOME-TAX ACT, 1961, IS AVAILABL E TO THE RESPONDENT-ASSESSEE AS ANNUAL RECEIPTS OF EACH OF T HE INSTITUTIONS OF THE RESPONDENT-SOCIETY IS LESS THAN THE PRESCRIB ED LIMIT UNDER THE SAID PROVISION ? 3. WHETHER THE TRIBUNAL IS CORRECT IN HOLDING THAT THE EXEMPTION IN TERMS OF SECTION 10(23C)(IIIAD) OF INCOME-TAX AC T, 1961, IS ALLOWABLE ? 15. THEIR LORDSHIPS OF THE HONBLE HIGH COURT OF KA RNATAKA HAVE HELD AS FOLLOWS:- 23. NO DOUBT, EDUCATION HAS BECOME A BUSINESS, A VERY PROFITABLE BUSINESS ALSO. BUT IT REQUIRES HUGE INVE STMENT. IT IS THE DUTY OF THE GOVERNMENT TO PROVIDE EDUCATION TO ALL ITS CITIZENS, AS THE GOVERNMENT IS NOT ABLE TO SHOULDER THE RESPONSI BILITY COMPLETELY. THEREFORE, THE FIELD OF EDUCATION IS NO W THROWN OPEN TO PRIVATE ORGANIZATIONS. BUT FOR THROWING OPEN THE FIELD TO THE PRIVATE OPERATORS, PROBABLY, THE COUNTRY WOULD NOT HAVE ACHIEVED IN THE FIELD OF EDUCATION WHAT IT HAS ACHIEVED. THE REFORE, LOT OF FUNDS ARE INVESTED IN RUNNING THESE EDUCATIONAL INS TITUTIONS, EITHER BY CREATING A SOCIETY OR A TRUST. IN COURSE OF TIME , THEY HAVE EXPANDED THEIR ACTIVITY PROVIDING COURSE IN VARIOUS SUBJECTS AT ITA NO.973/BANG/2015 PAGE 8 OF 11 VARIOUS LEVELS AND FOR THAT PURPOSE THEY HAVE ESTAB LISHED MORE THAN ONE EDUCATIONAL INSTITUTION. EACH EDUCATIONAL INSTITUTION IS A SEPARATE ENTITY CONTROLLED UNDER VARIOUS STATUTES F OR VARIOUS PURPOSES. MAY BE THE MANAGEMENT OF THESE EDUCATIONA L INSTITUTIONS WOULD BE IN THE HANDS OF THE SOCIETIES OR THE TRUST, BUT FOR ALL OTHER PURPOSES THEY ARE DIFFERENT, INDEPEND ENT ENTITIES. THAT IS THE REASON WHY SECTION 10(23C) IS WORDED AS UNDER : 'ANY INCOME RECEIVED BY ANY PERSON ON BEHALF OF . . .' 24. HERE 'ANY PERSON' REFERS TO THE ASSESSEE AND ' ON BEHALF OF' REFERS TO SUCH INSTITUTIONS. IT MAY BE AN UNIVERSIT Y, IT MAY BE AN EDUCATIONAL INSTITUTION, IT MAY BE A HOSPITAL OR OT HER INSTITUTIONS OF SIMILAR NATURE. AS ALL SUCH INSTITUTIONS ARE INDEPE NDENT ENTITIES AND THEY GENERATE INCOME AND WHEN THAT INCOME IS RE CEIVED BY THE ASSESSEE, IT BECOMES THE INCOME IN THE HANDS OF THE ASSESSEE AND IT IS SUCH INCOME WHICH IS SOUGHT TO BE EXCLUDE D WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE UNDER SE CTION 10. THE TEST PRESCRIBED UNDER THE AFORESAID PROVISION IS NO T THE INCOME OF THE EDUCATIONAL INSTITUTION. IT IS THE AGGREGATE AN NUAL RECEIPTS OF SUCH EDUCATIONAL INSTITUTION THAT IS PRESCRIBED AT RS. 1 CRORE. THEREFORE, IRRESPECTIVE OF THE EXPENDITURE INCURRED BY THOSE INSTITUTIONS, THE EXEMPTION IS BASED ON THE TOTAL R ECEIPTS. EVEN IF THE WORD 'AGGREGATE' HAS TO BE UNDERSTOOD AS SUGGES TED BY THE REVENUE AS THE ANNUAL RECEIPTS OF SUCH EDUCATIONAL INSTITUTIONS PUT TOGETHER, PROBABLY, THE SAID PROVISION REGARDIN G EXEMPTION WOULD BE OF NO USE AT ALL. ESPECIALLY, IF THE SOCIE TY IS RUNNING A MEDIAL COLLEGE OR ANY ENGINEERING COLLEGE OR OTHER PROFESSIONAL COURSES, THEN THE ANNUAL RECEIPT OF EACH INSTITUTIO N WOULD RUN TO A FEW CRORES AND, THEREFORE, THE VERY OBJECT OF GRANT ING EXEMPTION TO SUCH GENUINE INSTITUTION WOULD BE LOST. THEREFOR E, THE WORDS 'AGGREGATE ANNUAL RECEIPT' HAS TO BE UNDERSTOOD WIT H THE CONTEXT IN WHICH IT IS USED AND THE PURPOSE FOR WHICH THE S AID PROVISION WAS INSERTED, KEEPING IN MIND, THE SCHEME OF THE AC T. THEREFORE, IF AN ASSESSEE IS RUNNING SEVERAL EDUCATIONAL INSTI TUTIONS, IF ANY OF THEM IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOV ERNMENT, THEN THE INCOME FROM SUCH EDUCATIONAL INSTITUTION RECEIV ED BY THE ASSESSEE IS NOT INCLUDED WHILE COMPUTING HIS TOTAL INCOME. SIMILARLY, INCOME FROM EACH EDUCATIONAL INSTITUTION IF THEY ARE NOT RECEIVING ANY AID FROM THE GOVERNMENT WHOLLY OR SUBSTANTIALLY IN RESPECT OF WHICH THE AGGREGATE ANN UAL RECEIPT DO NOT EXCEED RS. 1 CRORE RECEIVED BY THE ASSESSEE, IS ALSO NOT INCLUDED WHILE COMPUTING ANNUAL TOTAL INCOME OF THE ASSESSEE. ITA NO.973/BANG/2015 PAGE 9 OF 11 16. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT V. CHILDRENS EDUCATION SOCIETY (SUPRA) DEALT WITH A CASE WHERE THE INSTITUTION WAS SOLELY FOR EDUCATIONAL PURPOSES AND THE SOCIETY/INSTITUTIO N WAS RUNNING VARIOUS SCHOOLS AND COLLEGES. HOWEVER, IN THE PRESENT CASE BEFORE US, THE FACTS ARE SLIGHTLY DIFFERENT INASMUCH AS THE SOCIETY IS E NGAGED IN THE ACTIVITIES INVOLVING EDUCATION, MEDICAL AND SOCIAL RELIEF TO T HE UNDER-PRIVILEGED, I.E., IT IS NOT ENGAGED SOLELY IN EDUCATIONAL ACTIVITIES. T HE FACT IS THAT THE SOCIETY RUNS THE SCHOOL FOR WHICH THE GROSS INCOME IS LESS THAN RS.1 CRORE. APPLYING THE RATIO OF THE DECISION IN THE CASE OF CIT V. CHILDRENS EDUCATION SOCIETY (SUPRA) TO THE FACTS OF THE PRESENT CASE, WE ARE OF THE OP INION THAT ON A STAND ALONE BASIS, THE EDUCATIONAL INSTITUTION WHICH IS RUN UNDER THE SOCIETY IS ENTITLED TO THE BENEFIT U/S. 10(23C)(III AD). HOWEVER, IT IS IMPERATIVE ON THE PART OF THE SOCIETY TO MAINTAIN SEPARATE ACC OUNTS SO THAT THE EDUCATIONAL INSTITUTION IS IDENTIFIED AS ONE OF THE OBJECTS FOR WHICH THE SOCIETY IS FORMED. IN SHORT, THE IDENTITY OF EDUC ATIONAL INSTITUTION BEING ESTABLISHED SEPARATELY AND THE ACCOUNTS OF THE INST ITUTION BEING MAINTAINED REGULARLY, IT WOULD BE SUFFICIENT FOR THE ASSESSEE TO CLAIM EXEMPTION U/S. 10(23C)(IIIAD) OF THE ACT IN CASE THE GROSS RECEIPT IS LESS THAN RS.1 CRORE AND THE APPROVAL OF CCIT IS NOT NECESSARY FOR THE S AME. THEREFORE, WE HOLD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S . 10(23C)(IIIAD) OF THE ACT WITH RESPECT TO INCOME DERIVED FROM EDUCATIONAL INS TITUTION. ITA NO.973/BANG/2015 PAGE 10 OF 11 17. THE NEXT ISSUE IS WITH RESPECT TO DENIAL OF CAR RY FORWARD OF THE DEFICIT BEING THE EXCESS APPLICATION OF INCOME TO BE SET-OF F AGAINST INCOME FROM PROPERTY HELD UNDER TRUST IN THE FUTURE. 18. THE CIT(APPEALS) RELYING ON THE DECISION IN THE CASE OF CIT V. INDIAN NATIONAL THEATRE TRUST (2008) 305 ITR 149 AND ITO V. TRUSTEES OF SRI SATYA SAI TRUST (33 ITD 320) HELD THAT DEFICIT CANNOT BE ALLOWED TO BE CARRIED FORWARD FOR SET OFF IN FUTURE YEARS WHEN SU RPLUS INCOME IS AVAILABLE. 19. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 20. THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CA SE OF JYOTHY SEVA SOCIETY OF BANGALORE IN ITA NO.312/BANG/2015 BY ORDER DATED 24.09.2015 ON AN IDENTICAL ISSUE HAS HELD AS FOLLOWS:- 5.3.4 IN THE CASE OF INDIAN NATIONAL THEATER (SU PRA) RELIED ON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. THE HON'BLE HIGH COURT OF DELHI HAS HELD THAT TO SATISFY THE RE QUIREMENTS OF SECTION 11(2)(B) OF THE ACT, THE INVESTMENT MUST NE CESSARILY COME OUT OF CURRENT YEARS INCOME AND THE INVESTMENT MAD E IN THE PAST OBVIOUSLY CANNOT SATISFY THE REQUIREMENTS FOR THE C URRENT YEAR. THE ABOVE DECISION OF THE HON'BLE DELHI HIGH COURT HAS CONSIDERED THE PROVISIONS OF SECTION 11(2) OF THE A CT AND HAS TAKEN THE VIEW THAT THE ACCUMULATION UNDER SECTION 11(2) OF THE ACT CAN BE ONLY OUT OF CURRENT INCOME. WE, HOWEVER, FIND THAT THE CO-ORDINATE BENCHES OF THE BANGALORE TRIBUNAL HAVE CONSISTENTLY FOLLOWED THE VIEW OF THE HON'BLE BOMBAY HIGH COURT (SUPRA) IN WHICH THE APPLICATION HAS BEEN REGARDED AS ADJUSTAB LE AGAINST THE INCOME OF THE FUTURE YEARS. WE ARE, THEREFORE, INCL INED TO FOLLOW THE VIEW TAKEN BY THE CO-ORDINATE BENCHES OF THIS T RIBUNAL, INTER ALIA, IN THE CASE OF BALDWIN METHODIST EDUCATIONAL SOCIETY (SUPRA), BASED ON THE VIEW/DECISIONS OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING (SUPRA) A ND THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V SHRI PLOT S WETAMBER ITA NO.973/BANG/2015 PAGE 11 OF 11 MURTI PUJAK JAIN MANDAL REPORTED IN 211 ITR 293. IN THIS VIEW OF THE MATTER, THE ASSESSING OFFICER IS DIRECTED TO AL LOW CARRY FORWARD OF THE EXCESS APPLICATION OF RS.7,44,328 FO R THE YEAR TO BE ADJUSTED FROM INCOME FROM PROPERTY HELD UNDER TR UST OF THE SUBSEQUENT YEARS. IT IS ORDERED ACCORDINGLY. CONSEQ UENTLY, GROUNDS 2 AND 3 OF ASSESSEE'S APPEAL ARE ALLOWED. 21. RESPECTFULLY FOLLOWING THE COORDINATE BENCH DEC ISION IN THE CASE OF JYOTHY SEVA SOCIETY OF BANGALORE (SUPRA) , WE HOLD THAT CARRY FORWARD OF DEFICIT TO BE SET OFF AGAINST INCOME FROM PROPERTY HELD UNDER TRUST IN SUBSEQUENT YEARS IS ALLOWABLE. 22. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOVEMBER, 2015. SD/- SD/- ( JASON P. BOAZ ) (ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL M EMBER BANGALORE, DATED, THE 30 TH NOVEMBER, 2015. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.