2021 (8) TMI 924 - AT - Income Tax

Assessment of trust - carry forward of deficit - HELD THAT - CIT(A) correctly drawing support from the decision of the Hon ble High Court of Delhi in the case of Raghuvanshi Charitable Trust 2010 (7) TMI 158 - DELHI HIGH COURT directed the AO to allow the set off of carry forward deficit. - Decided against revenue.

Summary

Issues:
1. Allowance of carry forward of deficit under section 12A of the Income-tax Act.
2. Interpretation of provisions of sections 11, 12 & 13 of the Act regarding set-off of deficit/loss/excess expenditure of earlier assessment year.

Analysis:
1. The appeal by the revenue challenges the order of the CIT(A) allowing the carry forward of deficit of ?6,40,70,201 for A.Y. 2014-15 under section 12A of the Income-tax Act.
2. The grievance of the revenue questions the correctness of allowing the carry forward of deficit and the set-off provisions under sections 11, 12 & 13 of the Act for an assessee registered under section 12A.
3. The assessee society, registered under section 12A and 80G(5)(vi), claimed the carry forward of excess application of income for set off in subsequent years.
4. The AO disallowed the carry forward based on lack of provision for set-off in the Act, leading to the appeal before the CIT(A).
5. The CIT(A), relying on the decision of the Hon'ble High Court of Delhi in a similar case, directed the AO to allow the set off of carry forward deficit.
6. The DR argued against the allowance, stating no provision in the Act permits set-off for trusts under sections 11 to 13.
7. The Counsel for the assessee supported the CIT(A)'s decision, emphasizing the charitable nature of the trust's activities.
8. The Tribunal referred to the judgment of the Hon'ble Delhi High Court and other High Courts, supporting the view that excess expenditure incurred in earlier years can be adjusted against income of subsequent years for charitable purposes.
9. The Tribunal found no merit in the revenue's argument and upheld the CIT(A)'s decision based on consistent judicial interpretations.
10. The Tribunal dismissed the revenue's appeal, citing the lack of distinguishing decisions and alignment with the Hon'ble jurisdictional High Court's ruling.
11. The decision to allow the carry forward of deficit under section 12A was upheld, and the revenue's appeal was dismissed accordingly.