MAHARASHTRA EDUCATION SOCIETY (MES),,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, (EXEMPTION),, PUNE

ORDER PER INTURI RAMA RAO, AM: These are the cross appeals filed by the assessee as well as by the Revenue directed against the order of ld. Commissioner of Income Tax (Appeals)- 10, Pune [‘the CIT(A)’] dated 16.07.2019 for the assessment year 2015-16.

ITA No.1577/PUN/2019 – By Assessee : 2. During course of hearing, the ld. AR did not press grounds of appeal

. Therefore, we dismiss the appeal of the assessee as not pressed.

3. In the result, the appeal of the assessee stands dismissed. ITA No.1577/PUN/2019 – By Revenue :

4. Briefly, the facts of the case are that the respondent-assessee is a society registered under the Bombay Public Trust Act, 1950 and also registered under the Society Registration Act. It is formed for the purpose of running educational services. 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 (‘the Assessing Officer’) vide order dated 22.12.2017 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) allowing excess amount spent over income rending in deficit of Rs.7,46,73,290/-. While doing so, the Assessing Officer had not allowed the advance written off in the books of account of Rs.9,75,509/- as application of income.

5. Being aggrieved by the above action of the Assessing Officer, an appeal was filed before the ld. CIT(A) contenting that the ITA No.1577/PUN/2019 Assessing Officer ought to have allowed 15% of the gross receipts as deduction while computing the deficit for the year under consideration placing reliance on the decision of the Hon’ble Supreme Court in the case of CIT vs. Programme for Community Organisation 248 ITR 1 (SC). It is also contended before the ld. CIT(A) that the Assessing Officer ought to have allowed advance written off of Rs.9,75,509/- as application of income. The ld. CIT(A) while dismissing the claim of the advance written off of Rs.9,75,509/- as application of income, however, directed the Assessing Officer to allow 15% of the gross receipts as standard deduction while determining amount of deficit i.e. excess of expenditure over income.

6. Being aggrieved by the above decision of the ld. CIT(A), the Revenue is in appeal before us in the present appeal.

7. It is contended that in the absence of surplus money, the question of accumulation for future use does not arise and, therefore, the ld. CIT(A) fell in serious error in holding that the respondent-assessee is entitled to carry forward 15% of gross receipts for future application.

8. On the other hand, ld. AR submits that even in the absence of any excess of income or expenditure for the year under