2015 (3) TMI 1117 - AT - Income Tax

Carry forward of deficit on account of excess expenditure - Assessee is a trust registered under section 12A - CIT(A) allowed the claim of set-off - Held that - Since the view taken by the learned CIT(A) is in conformity with the view taken by the Hon ble Bombay High Court in assessee s own case for A.Y. 2005-06 2013 (3) TMI 654 - BOMBAY HIGH COURT , which is not disputed by the Revenue, we do not find any infirmity in the order passed by the CIT(A) allowing the carry forward of deficit on account of excess expenditure - Decided in favour of assessee.

Summary

Issues:
- Allowance of carry forward of deficit on account of excess expenditure
- Interpretation of provisions of the Income Tax Act regarding carry forward claims

Analysis:

Issue 1: Allowance of carry forward of deficit on account of excess expenditure
The appeal before the Appellate Tribunal ITAT Mumbai pertained to the order passed by CIT(A)-1, Mumbai for the Assessment Year 2007-08. The primary contention raised by the Revenue was regarding the allowance of carry forward of a deficit amounting to Rs. 40,58,62,345 on account of excess expenditure. The Revenue argued that allowing such carry forward would result in granting double benefit to the assessee, which was legally impermissible. The Revenue cited the decision of the Hon'ble Bombay High Court in a similar case, emphasizing the potential double benefit issue. The CIT(A) had allowed the carry forward based on the assessee's claim, which was supported by a previous decision in the assessee's favor for the Assessment Year 2008-09. The ITAT, considering the previous rulings and the conformity with the High Court's decision for the Assessment Year 2005-06, upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

Issue 2: Interpretation of provisions of the Income Tax Act regarding carry forward claims
The second ground raised by the Revenue related to the absence of an express provision in the Income Tax Act, 1961 permitting the allowance of the claim for carry forward of the deficit. The Revenue contended that such a claim should not be allowed without specific statutory backing. However, the CIT(A) and subsequently the ITAT relied on the consistency with previous decisions and the High Court's stance in similar cases to support the allowance of the carry forward. The ITAT, in its order, highlighted the alignment of the CIT(A)'s decision with the Hon'ble Bombay High Court's rulings for the benefit of the assessee. The ITAT's analysis focused on the legal permissibility of the carry forward based on established precedents and interpretations of the Income Tax Act provisions. Ultimately, the ITAT dismissed the Revenue's appeal, affirming the CIT(A)'s decision and emphasizing the importance of consistency with legal precedents in tax matters.

In conclusion, the Appellate Tribunal ITAT Mumbai upheld the allowance of carry forward of deficit on account of excess expenditure, citing consistency with previous decisions and legal interpretations. The Tribunal's decision highlighted the significance of aligning with established legal precedents and the High Court's rulings in similar cases to ensure the legality and validity of tax-related claims.