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Income Tax Appellate Tribunal, “C”, BENCH MUMBAI
Before: SHRI JASON P BOAZ, AM & SHRI RAM LAL NEGI, JM
आदेश / O R D E R PER JASON P BOAZ (A.M): This appeal by the Revenue is directed against the order of the CIT(A)-1, Mumbai dated 05/02/2015 for A.Y.2009-2010. 2. The facts of the case, briefly, are as under:- 2.1. The assessee trust filed its return for A.Y.2009-10 on 30/09/2009 declaring loss of (-) Rs.45,85,501/-. The case was selected for scrutiny and the assessment was completed u/s.143(3) of the Income Tax Act, 1961 (in short ‘the Act’) vide order dated 31/10/2011; wherein the income was assessed at Nil, thereby disallowing the carry forward of the loss of Rs.45,85,501/- as claimed buy the assessee, by treating the same as Malti Vasant Heart Trust, Mumbai excess application of loss u/s.11 to the subsequent years as there is no provision to allow the same. 2.2. Aggrieved by the order of assessment dated 31/10/2011 for A.Y.2009-10 to the assessee preferred an appeal to the CIT(A) – 1, Mumbai on this issue. The learned CIT(A) allowed the assessee’s appeal vide the impugned order dated 05/02/2015, following the decision of the Hon’ble High Court of Bombay in the case of CIT v. Institute of Banking Personnel Selection (2003) 264 ITR 110 (Bombay) 3.1. Revenue, being aggrieved by the order of the CIT(A)-1, Mumbai dated 05/02/2015 for A.Y. 2009-10, has preferred the appeal, raising the following grounds:-
1. Whether on the facts of the case and in law the Ld. CIT(A) erred in allowing in carry forward of deficit on account of excess expenditure of Rs.4585501/- 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 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 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.The Appellant prays that the order of the Commissioner of Income -Tax (Appeals) 1, Mumbai be set aside and that of the Assessing Officer be restored. 4. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary.
Malti Vasant Heart Trust, Mumbai The learned DR for Revenue was heard in support of the grounds raised and placed reliance on the order of the Assessing Officer (AO) on this issue. 3.2. Per contra, the learned AR for the assessee placed strong reliance on the impugned order of the learned CIT(A). According to the learned AR, the issue in question, as raised in revenue’s grounds (supra) is covered squarely in favour of the assessee by the decision of the jurisdictional High Court in the case of CIT v Institute of Banking Personnel Selection (supra), and has also been followed by decision of the Tribunal in the case of ACIT v Mandke Foundation (ITA No.3837/Mum/2015 dt.29/02/2016.) 3.3.1. We have heard the rival contentions and perused and carefully considered the material on record, including the judicial pronouncements cited. The issue raised by Revenue in this appeal is with regard to the decision of the learned CIT(A) in directing the AO to allow the carry forward of excess expenditure of earlier years of Rs.45,85,501/- for set off in the subsequent years. In our considered view, we find that the said finding and directions of the learned CIT(A) is in accordance with the decision of the Hon’ble Bombay High Court in the case of Institute of Banking Personnel Selection (supra) which covers the issue squarely in favour of the assessee. At para 5 thereof the Hon’ble High Court has held as under:-
5. Now coming to question No. 3, the point which arises for consideration is : whether excess of expenditure in the earlier years can be adjusted against the income of the subsequent Malti Vasant Heart Trust, Mumbai year and whether such adjustment should be treated as application of income in subsequent year for charitable purposes? It was argued on behalf of the department that expenditure incurred in the earlier years cannot be met out of the income of the subsequent year and that utilization of such income for meeting the expenditure of earlier years would not amount to application of income for charitable or religious purposes. In the present case, the assessing officer did not allow carry forward of the excess of expenditure to be set off against the surplus of the subsequent years on the ground that in the case of a Charitable Trust, their income was assessable under self-contained code mentioned in section 11 to section 13 of the Income Tax Act and that the income of the Charitable Trust was not assessable under the head "profits and gains of business" under section 28 in which the provision for carry forward of losses was relevant. That, in the case of a Charitable Trust, there was no provision for carry forward of the excess of expenditure of earlier years to be adjusted against income of subsequent years. We do not find any merit in this argument of the department. 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 and religious purposes in the earlier years against the income earned by the Trust in the subsequent year will have to be regarded as application of income of the Trust for charitable and religious purposes in the subsequent year in which adjustment has been made having regard to the benevolent provisions contained in section 11 of the Act and that such adjustment will have to be excluded from the income of the Trust under section 11(1)(a) of the Act. Our view is also supported by the judgment of the Gujarat High Court in the case of CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal (1995) 211 ITR 293 (Guj). Accordingly, we answer question No. 3 in the affirmative i.e., in favour of the assessee and against the department.
3.3.2. Respectfully, following the decision of the Hon’ble Bombay High Court in the case of Institute of Banking Personnel Selection (2003) 264 ITR 110 (Bom), and finding no error in the finding of the learned CIT(A) in the impugned order, we uphold the directions of learned CIT(A) to the AO to allow the assessee carry forward of excess expenditure of earlier years Malti Vasant Heart Trust, Mumbai amounting to Rs.45,85,501/-. Consequently, finding no merit in the grounds raised by the Revenue in this appeal, the same are dismissed.
4. In the result, Revenue’s appeal for A.Y. 2009-10 is dismissed.