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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEYAND SHRI N.K. PRADHAN
Date of Hearing – 09.07.2019 Date of Order – 19.07.2019 2 Dorabji Tata Trust O R D E R PER BENCH
Captioned appeals by the Revenue in respect of two different assessees arise out of five separate orders, all dated 23rd February 2018, passed by the learned Commissioner of Income Tax(Appeals)–1, Mumbai, for the assessment year 2011–12.
Since all these appeals involve common issues arising out of identical set of facts and circumstances, therefore, as a matter of convenience, these appeals were heard together and are being disposed of by way of this consolidated order. Since, facts relating to the disputed issue are common in all the appeals, ITA no.3167/Mum./2018 is taken up as the lead appeal and for the sake of brevity we will discuss the facts relating to this appeal. The grounds raised, which are identical in all the appeals except the figures, are reproduced below:–
“1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was erred to allow carry forward of deficit of Rs.60,62,30,535/-, 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 'accumulation' of income u/s. 11(1)(a) or as corpus donation u/s 11(1)(d) in earlier years/current year and then as 'application' of income u/s 11(1)(a) in the subsequent years which was legally not permissible.? 2. Whether, on the facts and in the circumstances of the 3 Dorabji Tata Trust case and in law, the Ld. CIT(A) was erred in allowing the claim of the assessee for 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 before Hon'ble Supreme Court. However, on this issue the department has filed SLP before the Apex Court in the case of MIDC (SLP (Civil) 9891 of 2014) in which leave has been granted by the Hon'ble Apex Court and the case has not reached finality.
3. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right 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 I.T. Act, 1961, permitting allowance of such claim.
4. The appellant prays that the order of the learned Commissioner (Appeals)–I, Mumbai, be set aside and that of the Assessing Officer be restored.
5. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary.”
As could be seen from the grounds raised, the only issue on which the aforesaid appeal has been filed is against the decision of the learned Commissioner (Appeals) in allowing carry forward of deficit arising out of excess expenditure/application of fund in the current year.
Brief facts are, the assessee is a Charitable Trust registered with the Charitable Commissioner, Mumbai. Further, the assessee was also granted registration under section 12A of the Income Tax Act, 1961 (for short "the Act") by the Director of Income Tax (Exemption),
4 Dorabji Tata Trust Mumbai. For the assessment year under consideration, the assessee filed its return of income on 29th September 2011, declaring nil income after claiming exemption under section 11 of the Act. In the course of assessment proceedings, the Assessing Officer on verifying the accounts of the assessee as well as the other details available on record found that in the year under consideration, the assessee has applied more than 85% of its income towards charitable purpose resulting in shortfall/deficit in accumulation of funds as per section 11(1)(a) of the Act which has been carried forward to the subsequent year for set–off against income of the subsequent year. When the Assessing Officer called upon the assessee to justify its claim, the assessee relied upon the decision of the Hon'ble Jurisdictional High Court in CIT v/s Institution of Banking Personnel Selection Services, [2003] 264 ITR 110 (Bom.). The Assessing Officer, however, was not convinced with the explanation of the assessee. He observed, unlike section 72 of the Act providing for carry forward and set–off of business loss, there is no provision under sections 11, 12 and 13 of the Act providing for carry forward and set–off of deficit/excess application of fund of a particular year against the income of subsequent years. As regards the decision of the Hon'ble Jurisdictional High Court in Institute of Banking Personnel Selection Services (supra), the Assessing Officer observed, due to low tax effect, the 5 Dorabji Tata Trust Department could not challenge the aforesaid decision of the Hon'ble Jurisdictional High Court before the Hon'ble Supreme Court. He observed, since the amount claimed as loss/deficit has already been allowed towards application of fund, carry forward and set–off of the deficit in the subsequent year would amount to double deduction. Accordingly, he rejected assessee’s claim of carry forward and set–off of excess application/deficit of fund/income. Being aggrieved with the aforesaid decision of the Assessing Officer, the assessee preferred appeal before the first appellate authority.
The learned Commissioner (Appeals) after considering the submissions of the assessee and relying upon the decision of the Hon'ble Jurisdictional High Court in Institution of Banking Personnel Selection Services (supra) as well as other decisions, accepted assessee’s claim and allowed loss/deficit of the current year to be carried forward for set–off against the income of the subsequent year.
Smt. S. Padmaja, the learned Departmental Representative relied upon the observations of the Assessing Officer and the grounds raised.
Shri Sukhsagar Syal, the learned Authorised Representative submitted, identical issue has been decided in favour of the assessee in its own case for the assessment year 2008–09, vide ITA no.172/Mum./2013, dated 20th March 2014 by following the decisions
6 Dorabji Tata Trust of the Hon'ble Jurisdictional High Court in Institution of Banking Personnel Selection Services (supra) and DIT(E) v/s Gem and Jewellery Exports Promotion Council, ITA(LOD) no.113 of 2010, dated 15th February 2011. He submitted, the aforesaid decision of the Tribunal was challenged by the Revenue before the Hon'ble Jurisdictional High Court in an appeal filed under section 260A of the Act. However, he submitted, the Hon'ble Jurisdictional High Court in order dated 6th March 2017, in of 2014, has dismissed the appeal of the Revenue by observing that no substantial question of law arises, as the issue is covered by the decision of the Hon'ble Jurisdictional High Court in the cases relied upon by the Tribunal.
Referring to ground no.2, raised by the Revenue, the learned Authorised Representative submitted, the contention of the Revenue that the SLP filed in case of Maharashtra Industrial Development Corporation (MIDC) is pending before the Hon'ble Supreme Court is also factually incorrect as the said SLP has been tagged with other appeals filed on identical issue and disposed of by the Hon'ble Supreme Court by upholding the decision of the Hon'ble Jurisdictional High Court in allowing assessee’s claim of carry forward of deficit. In support of such contention, the learned Authorised Representative submitted before the Bench the orders of the Hon'ble Supreme Court
7 Dorabji Tata Trust on the disputed issue. Thus, he submitted, the issue stands concluded in favour of the assessee.
We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. Undisputedly, during the year under consideration the assessee has applied more than 85% of its income/funds towards charitable purpose. As a result of which there was a deficit in the allowable surplus/accumulation of fund as provided under section 11(1)(a) of the Act. The aforesaid deficit of fund was carried forward by the assessee to the subsequent assessment year for set–off against the income of the subsequent year. The issue before us is, whether the aforesaid claim of the assessee is permissible. As could be seen, this issue was initially decided by the Hon'ble Jurisdictional High Court in Institution of Banking Personnel Selection Services (supra). Subsequently, identical view was also expressed by the Hon'ble Jurisdictional High Court in Gem and Jewellery Exports Promotion Council (supra). Following the aforesaid decision of the Hon'ble Jurisdictional High Court, different Benches of the Tribunal, including Mumbai Bench, have decided the issue in favour of the assessee. In fact, in assessee’s own case for the assessment year 2008–09, in ITA no. 172/Mum./ 2013, dated 20th March 2014, the Tribunal following the aforesaid decisions of the Hon'ble Jurisdictional High Court has decided the issue
8 Dorabji Tata Trust in favour of the assessee. Pertinently, while deciding the appeal filed by the Revenue against the aforesaid decision of the Tribunal, the Hon'ble Jurisdictional High Court in of 2014, dated 6th March 2017, has upheld the decision by dismissing the appeal of the Revenue. As regards the contention of the Revenue that in case of MIDC, the SLP by the Revenue on identical issue is pending before the Hon'ble Supreme Court, we must observe, while deciding the SLP filed by the MIDC along with a bunch of similar appeals, the Hon'ble Supreme Court in CIT v/s Rajasthan and Gujarati Charitable Foundation Poona &Ors., have approved the decision of the Hon'ble Jurisdictional High Court in Institution of Banking Personnel Selection Services (supra) and various decisions of the Hon’ble High Courts expressing similar view. In fact, the issue was set at rest by the Hon'ble Supreme Court while deciding the misc. application filed by the Revenue in Subros Educational Society, vide M.A. no.941 of 2018, in Civil Appeal no.5171 of 2016, in order dated 16th April 2018, observing as under:–
“In this application filed by the Income Tax Department 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 batch matters were decided by this Court on 13.12.2017. However, the following question was also raised in this instant appeal which was not the subject matter of these appeals. “(a) whether any excess expenditure incurred by the trust / charitable institution in earlier assessment year
9 Dorabji Tata Trust could be allowed to be set off against income of subsequent years by invoking section 11 of the Income–tax Act, 1961.” To this extent, Mr. K. Radhakrishnan, learned senior counsel appearing on behalf of the applicant/appellant is correct. Therefore, we have heard him on the aforesaid question of law as well but did not find any merit therein. The miscellaneous application is dismissed.”
In view of the aforesaid, since the issue in dispute stands concluded in favour of the assessee, we do not find any merit in the grounds raised by the Revenue. Grounds raised are dismissed.
In the result, appeal filed by the Revenue is dismissed. ./2018 ITA no.3165/Mum./2018 ITA no.3167/Mum./2018 ITA no.3168/Mum./2018
Before us, the learned Counsel appearing for both the parties have agreed that the facts and circumstances of the issue arising out of the grounds raised in these appeals are identical to the facts and circumstances relating to the issue arising out of the grounds raised by the Revenue in its appeal being ITA no.3163/Mum./2018, for the assessment year 2011–12, wherein the said issue is decided against the Revenue and in favour of the assessee vide Para–8 and 9 of this order. Consistent with the view taken therein, similar directions are issued on the grounds raised in all these appeals also. Consequently, the grounds raised in all these appeals are dismissed.
10 Dorabji Tata Trust
In the result, all the appeals of the Revenue are dismissed. Order pronounced in the open Court on 19.07.2019