DCIT (E) 1(1), MUMBAI vs. AAMBY INTERNATIONAL SCHOOL ACADEMY, MUMBAI

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ITA 6649/MUM/2016Status: DisposedITAT Mumbai10 November 2017AY 2011-125 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT(A) was correct in allowing the carry forward of the deficit, as it followed the binding judgment of the Bombay High Court. The pendency of an SLP before the Supreme Court by the department was considered of no consequence.

What were the facts?

The assessee, a charitable organization, claimed carry forward of a deficit of Rs. 1,61,52,536/- for future set-off. The Assessing Officer denied this claim, stating that loss/deficit cannot be determined for income computation under Section 11. The CIT(A) allowed the claim, relying on a Bombay High Court judgment.

What were the issues?

Whether a deficit shown by a charitable institution registered under Section 12A can be carried forward for set-off against future income, and if so, whether the CIT(A) erred in allowing such a claim.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI

Before: SHRI G.S. PANNU & SHRI PAWAN SINGH

For Appellant: Shri Suman Kumar
Hearing: 07/11/2017Pronounced: 10/11/2017

The captioned appeal by the Revenue is directed against the order of CIT(A), Mumbai-1 dated 02.08.2016 pertaining to the Assessment Year 2011-12, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 28.02.2014 u/s 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).

2.

At the time of hearing, it was noticed that none appeared on behalf of the respondent-assessee inspite of service of notice by RPAD. On the other hand, the ld. DR appeared on behalf of the Revenue.

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3.

Accordingly, in view of Rule 25 of the Income Tax (Appellate Tribunal) Rules, 1963, the appeals of the Revenue are being disposed off ex-parte the respondent-assessee after hearing the appellant- Revenue on merits.

4.

In its appeal, Revenue has raised the following Grounds of appeal:-

“1. Whether on the facts of the case and in law the Id. CIT(A) erred in allowing the carry forward of deficit of Rs. 1,61,52,536/- and allowing set off against the income of the subsequent years.

2. Whether, on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred 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. Whether, on the facts and in the circumstances of the case and in law, the Ld CIT(A) 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.

4. The appellant prays that the order of the Commissioner of Income Tax (Appeals)-l, Mumbai be set aside and that of the Assessing Officer be restored.”

5.

Although the Revenue has raised multiple Grounds of appeal, but the solitary dispute involved in this appeal is against the action of the CIT(A) in allowing the assessee the benefit of carry forward of the deficit for future set-off.

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6.

In this background, now we may refer to the relevant facts. The respondent-assessee is a charitable organisation registered u/s 12A of the Act and is engaged in carrying on activities of charitable nature. The Assessing Officer noticed that assessee had shown Rs.1,61,52,536/- as deficit and claimed benefit of carry forward for future set-off. The Assessing Officer denied the benefit by observing that loss/deficit cannot be determined while computing income u/s 11 of the Act. The CIT(A) has since allowed the claim of the assessee following the judgment of the Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection, 264 ITR 110 (Bom).

7.

Before us, the plea of the Department is that the decision of the Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection (supra) has not been accepted by the Department on merits and on a similar issue, SLP (Civil) no. 9891 of 2014 has been filed before the Hon'ble Supreme Court in the case of Maharashtra Industrial Development Corporation (MIDC). So, however there is no controversion by the Revenue to the fact that the decision of the CIT(A) is in line with the judgment of the Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection (supra).

8.

We find that the Hon'ble Bombay High Court subsequent to the decision in the case of Institute of Banking Personnel Selection (supra) considered a similar argument of the Revenue in the case of M/s. Mumbai Education Trust, dated 3.5.2016 and allowed the claim of the assessee. In fact, one of the Grounds of appeal urged by the Revenue before the Hon'ble High Court, which read as under :-

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“................... (b) Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in confirming the order of the CIT(A) to allow to carry forward of deficit of earlier years relying on the decision of this Court in the case of CIT v/s. Institute of Banking Personnel Services reported in 264 ITR 110 (Bom) while the revenue did not file SLP against the case of CIT v/s. Institute of Banking Personnel Services reported in 264 ITR110 (Bom) due to low tax effect?”. stands on the same footing as are being canvassed before us in the instant case. Thus, there is no error on the part of the CIT(A) in following the decision of the Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection (supra) and allowing the stand of the assessee. The other argument taken by the Revenue that its SLP filed before the Hon'ble Supreme Court is pending on a similar issue is of no consequence inasmuch as the binding judgments of the Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection (supra) as well as in the case of M/s. Mumbai Education Trust (supra) continue to subsist. Therefore, in this background, we find no merit in the Ground raised by the Revenue and the same is accordingly dismissed.

9.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on 10th November, 2017

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