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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI C.N. PRASAD, HONBLE & SHRI RAMIT KOCHAR, HONBLEDr. D.N. Road, Fort Shri Firoz Andhyarujina Shri Vivek Anand Ojha
Date of Hearing : 02.07.2019 Date of Pronouncement : 04.07.2019 O R D E R PER C.N. PRASAD (JM) 1. This Appeal is filed by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-1, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 23.02.2018 for the A.Y. 2013-14.
Revenue has raised the following grounds in its appeal: -
1. Whether on the facts of the case and in law the Id.CIT(A) was erred to allowing the carry forward of deficit of Rs. 5,54,70,179/- 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?
(A.Y: 2013-14) M/s Anjuman E Shiate Ali 2. Whether, on the facts and in the circumstances of the 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 judgement 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 Hon'ble Tribunal 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.
3. At the outset Ld. Counsel for the assessee Shri Firoz Andhyarujina submits that the issue in appeal has been decided in favour of the assessee by the Hon'ble Bombay High Court in a series of decisions namely CIT (Exemption) v. M/s. Dawat E. Hadiya in ITA.No. 741 of 2016 and 755 of 2016 dated 03.12.2018, DIT (Exemption) v. M/s. Nijam Baug Trust in ITA.No. 69 of 2013 dated 14.01.2015 and DIT(Exemption) v. M/s.Anjuman E. Mohammedi Trust in ITA.No. 248 of 2013 dated 09.01.2015. He further submitted that the Hon'ble Supreme Court in the case of CIT v. Rajasthan and Gujarati Charitable Foundation Poona in Civil Appeal No. 7186 of 2014 dated 13.12.2017 affirmed the view of the Hon'ble Jurisdictional High Court in the case of CIT v. Institute of Banking Personnel Selection [131 Taxman 386] wherein it has been held that assessee is entitled for carry forward excess of expenditure incurred towards the objects of the trust over income of the trust from property held
(A.Y: 2013-14) M/s Anjuman E Shiate Ali for charitable purposes to the subsequent years and be set off against income of the subsequent years.
4. Ld. DR vehemently supported the orders of the Assessing Officer.
We have heard the rival submissions, perused the orders of the authorities below and the case laws relied on. This issue of whether the assessee can carry forward the deficit and such deficit can be allowed to be set off against income of the subsequent years is squarely covered by the Hon'ble Bombay High Court in the case of CIT (Exemption) v. M/s.Dawat E. Hadiya (supra) wherein the Hon'ble Jurisdictional High Court dismissed the appeals of the Revenue following the decision of the Hon'ble Apex Court in the case of CIT v. Rajasthan and Gujarati Charitable Foundation Poona (supra) holding that no substantial question of law would arise. While holding so, the Hon'ble High Court observed as under: - “1. These Appeals under Section 260-A of the Income Tax Act, 1961 (the Act) challenges the common order dated 30th July, 2015 passed by the Income Tax Appellate Tribunal (the Tribunal). The common impugned order relates to Assessment Years 2010-11 and 2011-12. 2. The Revenue has urged the following reframed questions of law in both the appeals for our consideration: (i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in allowing the appeal of the assessee on account of disallowing depreciation on fixed assets for A.Y. 2010-11 and 2011-12? (ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in allowing the carry forward of deficit for A.Y. 2010-11 and 2011-12 and allowing set off against the income of the subsequent years?
(A.Y: 2013-14) M/s Anjuman E Shiate Ali 3. Mr. Kotangle, learned Counsel appearing for the Revenue very fairly states that the issues raised herein stands concluded against the Revenue and in favour of the respondent assessee by the decision of the Apex Court in Commissioner of Income Tax-III, Pune Vs. Rajasthan & Gujarati Charitable Foundation Poona, (2018) 89 Taxmann.com 127. Thus, the questions as proposed do not give rise to any substantial questions of law. Thus, not entertained.”
We also observe that the Hon'ble Jurisdictional High Court in the case of DIT (Exemption) v. M/s. Nijam Baug Trust (supra) held as under:-
2. The appellant revenue have formulated the following questions of law for consideration of this court: “(1) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in law, in allowing the claim of the assessee for carry forward and set off of deficit of earlier years ignoring the fact that no provisions as such exist in the I.T. Act, 1961? (2) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in law, in accepting the claim of brought forward of deficits of earlier years and deciding the issue ignoring the fact that as per the accounting norms, capital expenditure is not to be debited to income and expenditure account and hence no occasion arises when a deficit can be computed while allowing claim of application of income by way of capital expenditure as deduction?
We find that the order of the tribunal dated 20th March, 2012 dismissed the revenue's appeal inter alia recording as under: “4. At the time of hearing both the parties have agreed that this issue is squarely covered in favour of the assessee by the decision of the Hon'ble Jurisdictional High Court in CIT Vs. Institute of Banking Personnel Selection (2003) 264 ITR 110 (Bom.).”
Mr. Malhotra learned counsel for the Revenue submits that although the issue stands covered by the decision of this court in Institution of Banking Personnel Selection (supra), the fact is that revenue is aggrieved by it, however, Revenue did not challenge it in the higher forum in view of low tax effect. Be that as it may, no fault can be found with the order of the tribunal giving rise to the substantial question of law as it merely followed the decision of this court in Institution of Banking (supra).”
Respectfully following the said decisions, we uphold the order of the Ld.CIT(A) in holding that deficit of the current year is to be carried forward
(A.Y: 2013-14) M/s Anjuman E Shiate Ali and allowed to be setoff in subsequent years. Grounds raised by the Revenue are rejected.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on the 04th July, 2019