2012 (3) TMI 589 - AT - Income Tax

Exemption under section 11 - Held that - We find that assessee deserves to succeed in this ground. We have seem various assessment orders for earlier years, copies of which are placed on record and found that the respective assessing officers had allowed the net deficit to be carried forward in the respective assessment order. Therefore, there is no reason in not allowing the benefit of carry forward losses/deficit. Accordingly, we direct the AO to allow the benefit of quantified carry forward losses to the assessee against the income of the assessee. For the year under consideration there was a positive income and, therefore, assessee has filed its return showing the income of the year, exemption under section 11 of the Act has also been claimed. If the carry forward losses are allowed to be set off then the income will become of negative figure and, therefore, exemption under section 11 cannot be allowed. The ld. Counsel of the assessee has fairly agreed that if the ground no. 8 is allowed in its favour then other grounds will become academic in nature. Since we have allowed this ground in favour of the assessee, therefore, all other grounds having become academic in nature and has become infructuous, they are dismissed.

Summary

Issues:
1. Appeal against the order of ld. CIT (A) for assessment year 2008-09.
2. Benefit of carry forward losses and unabsorbed depreciation under section 32(2) and exemption under section 11.
3. Charging of interest under section 234B.

Analysis:
1. The appeal was made by the assessee against the order of ld. CIT (A) for assessment year 2008-09. The assessee raised various grounds in the appeal, with specific focus on Ground No. 8 related to the benefit of carry forward losses and unabsorbed depreciation under section 32(2) and exemption under section 11 of the Act.

2. The counsel of the assessee argued that if Ground No. 8 is allowed, other grounds would become academic. Ground No. 8 contested the non-allowance of the benefit of carry forward losses and unabsorbed depreciation, along with the denial of exemption under section 11 to the appellant society.

3. The tribunal examined the submissions and assessed the material on record. It was observed that in earlier years, the assessing officers had permitted the carry forward of net deficit in the respective assessment orders. Consequently, the tribunal directed the Assessing Officer (AO) to allow the benefit of quantified carry forward losses to the assessee against its income.

4. It was noted that for the year under consideration, there was a positive income, and the assessee had filed a return claiming exemption under section 11. However, if the carry forward losses were set off, the income would turn negative, rendering exemption under section 11 inapplicable. As Ground No. 8 was decided in favor of the assessee, all other grounds were deemed academic and were dismissed.

5. The tribunal partially allowed the appeal of the assessee, emphasizing the allowance of carry forward losses and addressing the issue of exemption under section 11. The order was pronounced in open court on a specified date, concluding the matter for assessment year 2008-09.