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Income Tax Appellate Tribunal, DELHI BENCH “D”, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI PRASHANT MAHARISHI
ORDER PER H.S. SIDHU, JM Assessee has filed the Appeal against the Order dated 23.4.2015 passed by the Ld. Commissioner of Income Tax (Appeals)—Meerut pertaining to assessment year 2010-11
The grounds raised by the assessee read as under:-
The Ld. CIT(A) has failed to appreciate the content and tenor of various High Court and Tribunal judgments cited before him which are a direct authority on the issue at hand and has thereby violated the principles of judicial principles.
2. That the Ld. CIT(A) has failed to appreciate that income has to be computed commercially even in case covered u/s. 11-13 of the Income Tax Act, 1961 and resultant loss, if any, arising due to surplus application of income, has to be computed and carried forward to next year to be set off therein accordingly. 3. The Ld. CIT(A) has also failed to appreciate that neither section 11 nor section 72 of the Income Tax Act, 1961 have a mutual rider for computation of income or for its carry forward and set off and hence the impugned order deserves to be quashed.
The brief facts of the case are that AO noted that the assessee in its computation of income has claimed, excess application made during the year and excess application of income of earlier year to be carried forward and to be set off against the future income receipts. As per AO that even though the capital expenses in the case of the charitable institution are allowable as application of income, no claim for carry forwards of loss on account of capital expenses is allowable. The AO did not allow the carry forward of either the current year loss or that of earlier year loss. The observed that the assessee satisfies the condition for exemption u/s. 11 and 12 and completed the assessment at NIL vide his order dated 12.2.2013 passed u/s. 143(3) of the I.T. Act, 1961.
Against the assessment order dated 12.2.2013, assessee appealed before the Ld. CIT(A), who vide impugned order dated 23.4.2015 has dismissed the appeal of the assessee.
Aggrieved with the aforesaid order of the Ld. CIT(A), assessee is in appeal before the Tribunal.
6. During the hearing, Ld. Counsel of the Assessee has submitted that the issues involved in the present assessment year i.e. 2010-11 are squarely covered by the Delhi Bench ‘Meerut Camp” Order dated 29.2.2016 in assessee’s own case for the assessment year 2009-10 passed in (AY 2009-10). In this behalf, he filed the copy of the Tribunal’s order dated 29.2.2016 before us and requested that the same may be respectfully followed in the instant case and the ground raised by the assessee may be accordingly allowed.
7. On the other hand, Ld. DR relied upon the orders of the authorities below and requested that same may be upheld.
We have heard both the parties and perused the relevant records available with me, especially the orders passed by the revenue authorities and the Tribunal’s Delhi Bench ‘Meerut Camp” Order dated 29.2.2016 in assessee’s own case for the assessment year 2009-10 passed in (AY 2009-10). For the sake of convenience, we are reproducing the relevant para no. 6 to 10 at page no. 3 to 5 as under:-
In support of the ground, the ld. AR submitted that the issue raised in the present appeal is fully covered by several decisions of Delhi Bench of the Tribunal and a list of those decisions has been furnished. Some of these decisions are in the cases of Fateh Chand Charitable Trust vs. ACIT, (AY 2006-07) order dated 21.06.2012 and ACIT vs. M/s.
Subharti K.K.B. Charitable Trust, (AY 2006-07) order dated 11.05.2012.
The ld. Sr. DR on the other hand placed reliance on the orders of the authorities below. He submitted that the above cited decisions having distinguishable facts are not helpful to the assessee. He also submitted that there was no provision to carry forward of excess of expenditure of earlier years.
8. Having gone through the above cited decisions, we find that the Delhi Bench of the Tribunal in the case of Fateh Chand Charitable Trust vs. ACIT(supra) has decided an identical issue in favour of the assessee. In that case, assessee was running an Charitable Trust and medical college as well as hospital. During the course of original assessment proceedings it was gathered by the AO that the assessee had filed a revised return wherein loss of Rs. 5.83,85,975/- was to be carried forward to the assessment year 2007-08. The AO did not allow the claim of loss and loss for carry forward. The ld. CIT(A) allowed the same. The revenue went in appeal before the Tribunal, wherein vide order dated 17.11.2009, the matter was set aside to the file of the AO to decide the same afresh according to the law after examining the case laws cited by the assessee. The AO held that the assessee failed to justify, how, the excess expenses or excess application of income could merit allowance of loss to the assessee. The assessee again went in first appeal and the ld. CIT(A) rejected the claim of assessee. Thereafter the assessee came to the Tribunal and placed reliance on number of decisions including the decision of Hon'ble Bombay High Court in the case of CIT vs. Institute of banking 264 ITR 110 (Bomb.). The assessee also placed reliance on the decision of Delhi Bench of the Tribunal in the case of MIs City Educational and Social Welfare Society order dated 26.8.2011. Discussing these decisions and the recent decision of Hon'ble Delhi High Court in the case of DIT vs. Biswa Jagiriti Mission, ITA no. – 140/2012 dated 29.03.2012 as the claim of the assessee, the Tribunal has held that an identical issue has been considered by the Hon'ble Delhi High Court-in the case of DIT vs. Biswa Jagiriti Mission (supra) wherein decision of Hon'ble (Bom.) High Court in the case of CIT vs. Institute of banking (2003) 264 ITR 110 (Born.) has been followed. It has been held by the Hon'ble High Court that the judgment of Hon'ble Supreme Court in the case of Escorts Ltd. arid Ors. V s. UOI, 119 ITR 43 (SC) is not applicable to the case.
9. In the case of MIs. City Educational and Social Welfare Society (supra) before the Delhi Bench of the Tribunal, the revenue had denied similar claim on the basis that there was no provision for carry forward of the excess expenditure of earlier year to be adjusted against the income of subsequent years. The Tribunal has noted that such argument was rejected by the Hon'ble Bombay High Court in the case of CIT vs. Institute of Banking (supra) and it was held by the Hon'ble High Court that income derived from the trust property has also got to be computed on commercial principles and if commercial principles are applied then adjustment of expenses incurred by the trust for charitable religious purpose in the earlier year against the income earned by the trust in the subsequent year will have to be regarded as application of the income of the trust for charitable and religious purpose. We, thus, respectfully following the above cited decisions by the ld. AR decide the issue in favour of the assessee with direction to the AO to allow the claimed carry forward of losses to next assessment years. The grounds involving the issue are thus, allowed. 6
In the result appeal of the assessee is allowed.”
8.1 After perusing the aforesaid order of the Tribunal dated 29.2.2016, we are of the considered view that the issues involved in the instant assessment year i.e. 2010-11 are exactly similar and identical to the assessment year 2009-10 in assessee’s own case wherein the Tribunal has allowed the appeal of the Assessee, as aforesaid. Therefore, respectfully following the Coordinate Bench decision dated 29.2.2016, as aforesaid, the present Appeal of the assessee is allowed.
In the result, the Appeal filed by the Assessee stands allowed.
Order pronounced in the Open Court on 16/12/2016.