2020 (2) TMI 706 - AT - Income Tax

Exemption u/s 11 - section 2(15) Applicability - Carry forward and set off of unabsorbed deficit - HELD THAT - We notice that the learned CIT(A) has followed the decisions rendered by the Co-ordinate Benches in M/S. KARNATAKA INDUSTRIAL VERSUS THE ADDITIONAL DIRECTOR OF INCOME TAX (EXEMPTIONS) , BANGALORE. 2015 (10) TMI 481 - ITAT BANGALORE deciding the first issue, i.e., the issue relating to applicability of proviso to sec.2(15) of the Act and accordingly held that the said proviso will not apply to the activities carried on by the assessee. We also notice that the Ld CIT(A) has followed SHRI PLOT SWETAMBER MURTI PUJAK JAIN MANDAL 1993 (11) TMI 17 - GUJARAT HIGH COURT case holding that the assessee is entitled to claim set off of brought forward excess application (deficit) during the year under consideration. Accordingly, we do not find any infirmity in the order passed by the CIT(A). Appeals filed by the Revenue are dismissed.

Summary

Issues:
- Applicability of CBDT Circular No.17/2019 on appeals for Assessment Years 2008-09 to 2011-12
- Carry forward and set off of unabsorbed deficit for Assessment Year 2011-12
- Rejection of exemption under section 11 for Assessment Year 2011-12

Analysis:
1. The judgment addressed the issue of the applicability of CBDT Circular No.17/2019 on appeals for Assessment Years 2008-09 to 2011-12. The Revenue filed appeals against the orders passed by the CIT(A) for these years. The tax effect involved was less than ?50.00 lakhs, falling within the monetary limit prescribed by the circular. The Tribunal dismissed the appeals for these years based on the circular but granted liberty to the Revenue to seek a recall if exceptions applied later.

2. For the Assessment Year 2011-12, the judgment focused on two main issues: the carry forward and set off of unabsorbed deficit and the rejection of exemption under section 11. The AO rejected the exemption claim under section 11, citing commercial activities by the assessee. However, the CIT(A) allowed the appeal based on precedents showing the activities were not hit by the proviso to section 2(15). Additionally, the CIT(A) permitted the set off of brought forward deficit, following decisions by Co-ordinate Benches and High Courts.

3. The assessee, an Urban Development Authority, was engaged in planned development and sale of sites. The CIT(A) found that the proviso to section 2(15) did not apply to the assessee's activities, emphasizing the non-profit motive and public utility nature. The Tribunal upheld the CIT(A)'s decisions, citing consistency with Co-ordinate Bench rulings and High Court precedents, thereby dismissing all four appeals filed by the Revenue.

In conclusion, the judgment provided a detailed analysis of the issues involved, emphasizing the application of CBDT Circular No.17/2019, the interpretation of relevant legal provisions, and the reliance on precedents to determine the outcome of the appeals.