2010 (6) TMI 765 - AT - Income Tax

Summary

Issues involved: Two appeals filed by the Revenue against the orders of ld. CIT(A) for Asst. Years 2006-07 and 2007-08, involving the carry forward of unabsorbed expenditure over income to subsequent years for adjustment against receipt/income of subsequent years for treating as application in such subsequent years.

Asst. Year 2006-07:
The only issue involved in this appeal is the direction by ld. CIT(A) to carry forward unabsorbed expenditure over income to subsequent years for adjustment against receipt/income of subsequent years for treating as application in such subsequent years. The Tribunal held that grants-in-aid were for the purposes of corpus of the Trust, based on the decision of the Hon. Gujarat High Court in CIT vs. Sthanakvasi Vardhman Vanik Jain Sangh. The ld. CIT(A) directed the deficit to be carried forward for adjustment against income of subsequent years by treating it as application, following the decision of the Hon. Gujarat High Court in CIT vs. Plot Swetamber Murti Pujak Jain Man. The Revenue appealed against this decision, arguing that there is no provision in the Income-tax Act to allow carry forward of unabsorbed application where income is computed under sections 11 & 13. However, the Tribunal upheld the order of ld. CIT(A) as it was in line with the decision of the Jurisdictional High Court.

Asst. Year 2007-08:
The issue involved is the carry forward of unabsorbed application to subsequent years for being treated as application in such subsequent years to be adjusted against receipts/income of that subsequent year. The Tribunal decided in favor of the assessee based on the decision of the Jurisdictional High Court in the case of CIT vs. Shri Plot Swetamber Murti Pujak Jain Man. The grant in aid received from the Government was treated as a contribution to corpus in the previous year and had to be excluded from the computation of income under section 11, following the decision in the previous year. Consequently, the appeal of the Revenue was dismissed in both instances.

Separate Judgement: No separate judgment was delivered by the judges in this case.

This judgment by the Appellate Tribunal ITAT Ahmedabad involved the carry forward of unabsorbed expenditure over income to subsequent years for adjustment against receipt/income, based on the decisions of the Jurisdictional High Court. The Tribunal upheld the orders of ld. CIT(A) in both Asst. Years 2006-07 and 2007-08, dismissing the appeals filed by the Revenue.