9911796707
TMI Blog2008 (4) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... not been accepted by the Department and SLP has been filed. (ii) The learned CIT(A) has failed to appreciate that neither sec. 11 nor any other provisions of the I.T. Act, 1961 specifically permit carry forward of excess capital expenditure incurred by the Trust for set off against the income of succeeding years. 2. The brief facts of the case are that a search was made u/s.132 of the Income-tax Act, 1961 (hereinafter referred to as the 'Act'), on the business premises of Dayanand Pai on 4.2.2004. The search revealed documents concerning Medical Relief Society of South Kanara. These documents contained various transactions of the said Society. Consequently, the provisions of Section 153A and 153C had to be invoked. The assessee filed a return claiming loss of ₹ 23.91 crores. The Assessing Officer ('AO' for short) noted that the original return as was filed earlier showed the total income at nil on the basis that the gross receipts are exempt u/s.10(23C)(via) of the Act. In the return filed consequent to the search in the premises of Dayananda Pai, the assessee claimed exemption u/s.10(23C)(via). The seized material indicated that certain properties belongi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer. In MAHE case ITAT has ruled Revenue has failed to establish nexus with Sri. Dayanand Pai. For all the previous and subsequent years society is treated as exempt u/s. 10(22A) and also has section 12A registration from the CIT. In assessment year 1998-99 to 2000-01, and 2002-03 and 2003-2004, whether a result of assessment order or appellate order the society has been treated as exempt u/s. 10(23C). As per the Delhi Special Bench Samaj Kalyan Parishat, it has been held following the rule of consistency also the assessee claim has to be upheld. and, this would apply to society case as also preceding and subsequent years it has been held that society is for philanthropic purposes. There is also much weight in the appellant case that in any case, substantial unabsorbed depreciation and loss is available to the appellant society, even if it is considered that the income is not exempt. As per the case of CIT v. Institute of Banking Bombay High Court. It has been held that while computing income of the trust, capital expenditure on acquisition of assets and depreciation on the assets is allowable. It has also submitted by the appellant that in an associated case of TMA Pai Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter of 10(23C) (via) of I. T. Act. Conclusion:- Therefore, I direct the AO to give brought forward capital expenditure and operating loss for the A. Ys 1998-99, 1999-00, 2000-01, 2002-03 and 2003-04 and allow the ground No. 1(c). 3. On the above facts, the submissions of both parties have been very carefully considered. During the course of hearing the order of Karnataka High Court, dated.4.12.2006 in the case of the assessee in Income Tax Appeal No.254/2001, was filed by the Departmental Representative. In this case, the exemption that was granted u/s. 10(22A) was withdrawn or so to say not allowed on the reasoning that the funds of the society were transferred to Dayananda Pai and others to the disadvantage of the society and to benefit them. The Hon'ble High Court in para 4 of its order had noted that the CIT(A) had allowed the appeal of the assessee on the ground that the main activity of the assessee was for philanthropy and hence exemption is permissible and this was upheld by the Tribunal on the basis of its own order for the assessment years 1988-89 and 1989-90. The High Court in its order in para 8 observed as under: 8. Before the assessing authority, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and set it off against the surplus of subsequent years when the same was not allowable in the case of the assessee-trust in whose case income exempted under section 11 of the Income-tax Act, 1961? In regard to the issue of adjustment of capital expenditure etc., and set off of carry forward against income of subsequent years, the conclusion of the Bombay High Court is reproduced below: Now coming to question No.3, the point which arises for consideration is: whether excess of expenditure in the earlier years can be adjusted against the income of the subsequent year and whether such adjustment should be treated as application of income in the subsequent year for charitable purposes ? It was argued on behalf of the Department that expenditure incurred in the earlier years cannot be met out of the income of the subsequent year and that utilisation of such income for meeting the expenditure of earlier years would not amount to application of income for charitable or religious, purposes. In the present case, the Assessing Officer did not allow carry forward of the excess of expenditure to be set off against the surplus of the subsequent years on the ground that in the case of a chari ..... X X X X Extracts X X X X X X X X Extracts X X X X
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