2022 (4) TMI 224 - AT - Income Tax

Assessment of trust - Carry forward and set off of excess deficit pertaining to earlier years against the income of the current year - whether the deficit of earlier years can be set off against income of the current assessment year or not? - CIT-A allowed the claim - HELD THAT - This issue has been decided in favour of the assessee by various High Courts including the jurisdictional High Court in the case of DIT Vs. Raghuvanshi Charitable Trust 2010 (7) TMI 158 - DELHI HIGH COURT Thus the claim of the assessee for set off of earlier years deficit against current year's income. We see no infirmity in the order passed by the ld. CIT (Appeals). Thus, the grounds raised by the Revenue are rejected.

Summary

Issues:
- Carry forward and set off of excess deficit from earlier years against the income of the current year.

Analysis:
The appeal filed by the Revenue was against the order of the ld. Commissioner of Income Tax (Appeals) for the assessment year 2012-13. The Revenue's grievance was specifically related to the carry forward and set off of excess deficit from earlier years against the income of the current year. The Assessing Officer initially denied the assessee's claim for set off based on certain court decisions. However, the ld. CIT (Appeals) directed the Assessing Officer to allow the set off, relying on the decision of the jurisdictional High Court in a specific case. The key issue was whether the deficit from earlier years could be set off against the income of the current assessment year.

The main contention during the proceedings was the interpretation of whether the deficit from earlier years could be set off against the income of the current assessment year. The ld. CIT (Appeals) based their decision on the judgment of the jurisdictional High Court, which allowed the carry forward and set off of deficits from earlier years against the current year's income. The decision was supported by references to various High Court judgments that interpreted the provision in a similar manner. The appellant also highlighted that the Assessing Officer failed to consider the option exercised by the assessee in terms of the Explanation to section 11(1), which should have been taken into account while computing the income.

Ultimately, the Tribunal upheld the decision of the ld. CIT (Appeals) and dismissed the Revenue's appeal. The Tribunal found no infirmity in the order passed by the ld. CIT (Appeals) and rejected the grounds raised by the Revenue. The judgment emphasized the importance of following the legal provisions and court decisions in determining the eligibility for carrying forward and setting off deficits from earlier years against the income of the current assessment year.