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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-2, NEW DELHI
Before: SHRI H.S. SIDHU
PER H.S. SIDHU, J.M.
The Department has filed the Appeal against the impugned
order dated 6.2.2015 of Ld. CIT(A)-40, New Delhi pertaining to
assessment year 2011-12. The grounds raised in the revenue’s
appeal reads as under:-
On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to allow benefit of carry forward of deficit / loss of Rs. 34,46,030/- ignoring the fact that there is no specific provisions u/s. 11, 12 & 13 of the Act for allowing the carry forward or adjustment of deficit or loss. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to allow benefit of carry forward of deficit / loss of Rs. 34,46,030/- in view of the decision of the Delhi Tribunal in the case of Pushpawati Singhania
Research Institute for Liver, Renal & Digestive Diseases vs. DDIT(E) (2009) 29 SOT 316 (Del) 3. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing. 2. The brief facts of the case are that the assessee had filed the
Return of Income on 1.8.2011 alongwith the Audit Report dated
14.6.2011. The return was processed u/s. 143(1) of the Income Tax
Act, 1961 and the case was selected for scrutiny. Notices u/s.
143(2) was issued on 2.8.2012 and Notice u/s. 142(1) was issued
on 3.4.2013. In response thereto, the Assessee’s AR attended the
hearing from time to time and filed the requisite details which were
examined. The books of accounts were also produced and the same
were also examined on test check basis. Thereafter, the AO
observed that the activities of the assessee society are apparently
charitable in nature and within the meaning of section 2(15) of the
I.T. Act, he did not allow the benefit of carry forwards of deficit /
loss of Rs. 34,46,030 vide his order 21.1.2014 passed u/s. 143(3) of
the I.T. Act, 1961.
Aggrieved with the aforesaid order, assessee preferred an
appeal before the Ld. CIT(A), who vide his impugned order dated
6.2.2015 has allowed the appeal of the assessee.
Now the Revenue is aggrieved against the impugned order and
filed the present appeal before the Tribunal.
Ld. DR relied upon the order of the AO and reiterated the
contentions raised by the Revenue in the grounds of appeal.
On the contrary, Ld. Counsel of the Assessee has relied upon
the order of the Ld. CIT(A). He stated that Ld. CIT(A) has passed a
well reasoned order which does not need any interference on my
part, hence, the same may be upheld and accordingly, the appeal of
the Revenue may be dismissed.
I have heard both the parties and perused the records,
especially the impugned order passed by the Ld. CIT(A). I find that
Ld. First Appellate Authority has elaborately discussed the issues in
dispute by considering the submissions of the assessee and
adjudicated the issues vide paras no. 4.2 to 5 at page no. 2 to 3 of
the impugned order. The said relevant paras are reproduced as
under:-
“4.2 I have considered the order of the AO and the submissions of the assessee and I personally do not find any merit in the submissions of the assessee. However, It is seen that the exemption provisions u/s 11, 12, 12A, 12AA & 13 are independent visions for the computation of income in the case of NGDs, Trust or societies etc. and for allowing exemption in the case of charitable or religious institutions and in these provisions there are no provisions for adjustment or set off of deficit or loss against income of the current year (Section 70) or adjustment of brought forward loss against the current year's income or carry forward of current year's-loss against the adjustment of the subsequent year's income or for allowing any depreciation in fixed assets which are applicable in the case of business concerns only. But it is also seen that the various High Courts have taken a view in favour of the assessees that the income is to be computed in commercial principles and as such adjustment of brought forward loss or deficit and carry
forward of loss/ deficit is to be allowed and the several case laws are as under:- i) CIT vs. Maharana of Mewar Charitable Foundation, 164 ITR 439 (Raj) 1987. ii) CIT vs. Shri Plot Swetamaber Murti Pujak Jain Mandai, 211 ITR 293 (Guj) 1995. (iii) CIT vs. Matrisewa Trust, 242 ITR 20 (Mad) 2000 (iv) Govindu Naicker Estate vs. ADIT, 248 ITR 110 (Bom) 2003. (v) CIT vs. Institute of Banking, 264 ITR 110 (Bom) 2003 . (vi) DIT vs. Raghuvanshi Charitable Trust, 197 Taxmann 170 (Delhi) 2011 vii) CIT vs. Gujarat Samaj, 349 ITR 559 (MP) 2012 4.3 After considering all the facts and circumstances of the case, I am of the view that even though there is no merit in the submissions of the assessee as there is no specific provisions u/s 11, 12, 12A, 12AA & 13 for allowing the benefit of carry forward or adjustment of deficit or loss etc. but keeping in view the decisions of the various High Courts in favour of the assessee on the same issue, the same is followed to maintain the judicial discipline and accordingly the AO is directed to allow the benefit of carry forward of the deficit or loss and as such the appeal of the a sessee is allowed. 5. In the result, the appeal of the assessee is allowed.”
7.1 After going through the findings of the Ld.CIT(A), I am in agreement with the view of the Ld. CIT(A) that the exemption provisions u/s 11, 12, 12A, 12AA & 13 are independent provisions for the computation of income in the case of NGOs, Trust or societies etc. and for allowing exemption in the case of charitable or religious institutions and in these provisions there are no provisions for adjustment or set off of deficit or loss against income of the current year (Section 70) or adjustment of brought forward loss
against the current year's income or carry forward of current year's-loss against the adjustment of the subsequent year's income or for allowing any depreciation in fixed assets which are applicable in the case of business concerns only. But the various Hon’ble High Courts have taken a view in favour of the assessees that the income is to be computed in commercial principles and as such adjustment of brought forward loss or deficit and carry forward of loss/ deficit is to be allowed and the several case laws are as under:- i) CIT vs. Maharana of Mewar Charitable Foundation, 164 ITR 439 (Raj) 1987. ii) CIT vs. Shri Plot Swetamaber Murti Pujak Jain Mandai, 211 ITR 293 (Guj) 1995. (iii) CIT vs. Matrisewa Trust, 242 ITR 20 (Mad) 2000 (iv) Govindu Naicker Estate vs. ADIT, 248 ITR 110 (Bom) 2003. (v) CIT vs. Institute of Banking, 264 ITR 110 (Bom) 2003 . (vi) DIT vs. Raghuvanshi Charitable Trust, 197 Taxmann 170 (Delhi) 2011 vii) CIT vs. Gujarat Samaj, 349 ITR 559 (MP) 2012 7.2 After careful consideration of the facts and circumstances of
the case, I am of the view that there is no specific provisions u/s
11, 12, 12A, 12AA & 13 for allowing the benefit of carry forward or
adjustment of deficit or loss etc. but keeping in view the decisions
of the various High Courts in favour of the assessee on the same
issue, and to maintain the judicial discipline, Ld. CIT(A) has rightly
followed the same and directed the AO to allow the
benefit of carry forward of the deficit or loss. Accordingly,
I am of the view that the Ld. CIT(A) has passed
a well reasoned order on the issue in dispute, which
does not need any interference on my part, hence, I uphold the
order of the Ld. CIT(A) on the issue in dispute. Accordingly, the
issue in dispute is decided against the Revenue.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 18/10/2016. Sd/-
(H.S. SIDHU) JUDICIAL MEMBER
Dated: 18/10/2016 *SR BHATNAGAR*