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TMI Blog2019 (2) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... enumerated in preceding para’s of this order, we allow the carry forward of excess expenditure over income of ₹ 2,33,03,449/- to be carried forward to subsequent years . Thus, we confirm/affirm decision of learned CIT(A) and dismiss the appeal of the Revenue. We order accordingly. - I.T.A. No.5575/Mum/2017 - - - Dated:- 8-2-2019 - Shri Pawan Singh, Judicial Member And Shri Ramit Kochar, Accountant Member For the Assessee : Ms. Manshi Padhiar For the Revenue : Shri. Manoj Kumar Singh ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by Revenue, being ITA No. 5575/Mum/2017, is directed against appellate order dated 14.06.2017 in appeal no. CIT(A)-I/E-2(6)/2013-14 passed by learned Commissioner of Income Tax (Appeals)-1, Mumbai (hereinafter called the CIT(A) ), for assessment year(AY) 2010-11, the appellate proceedings had arisen before learned CIT(A) from the assessment order dated 30.01.2013 passed by learned Assessing Officer ( hereinafter called the AO ) u/s 143(3) of the Income-tax Act, 1961 (hereinafter called the Act ) for AY 2010-11. 2. The grounds of appeal raised by Revenue in the memo of appeal filed with the Income-Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be spent during the year so that the entire income may be assessed as exempt. The assessee has a choice to spent a portion of the current income in the succeeding year which it could not spent for certain reasons and that portion of income can be deemed to be applied for the charitable purpose and debited from income. Further, the assessee has also an option to accumulate its income for certain specified purposes upto 5 years and utilize the same within a span of 5 years and in that case the amount opted to be accumulated is deemed to be applied for charitable or religious purpose and accordingly debited against income. It is further noted that capital expenditure on construction / acquisition of asset is also treated as application of income and hence the amount of capital expenditure to the extent of available income is deductible from the current income. Any excess expenditure over income is either out of accumulated income or out of corpus fund received by the trust or out of loss. Accumulated income cannot be further subjected to deduction from the income since deduction in -respect of accumulation has been claimed and allowed in the previous years and any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Charitable Trust, their income was assessable under self-contained code mentioned in section 11 to section 13 of the Income Tax Act and that the income of the Charitable Trust was not assessable under the head profits and gains of business under section 28 in which the provision for carry forward of losses was relevant. That, in the case of a Charitable Trust, there was no provision for carry forward of the excess of expenditure of earlier years to be adjusted against income of subsequent years. We do not find any merit in this argument of the department. Income derived from the trust property has also got to be computed on commercial principles and if commercial principles are applied then adjustment of expenses incurred by the Trust for charitable and religious purposes in the earlier years against the income earned by the Trust in the subsequent year will have to be regarded as application of income of the Trust for charitable and religious purposes in the subsequent year in which adjustment has been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) v. Aditya Birla Vikram Memorial trust (ITA No. 1087 of 2014) (Bom.) 5. DIT(E) v. M/s. Aditya Birla Foundation (ITA No. 1497 of 2014) (Bom.) 6. DIT(E) v. Mumbai Education Trust (ITA No. 11 of 2014) (Bom.) 7. ITO (E) v. Vaibhav Medical Education Foundation (ITA No. 6998/M/2016) (Mum.) 8. DDIT Vs. Maharashtra Samaj Ghatkoper (ITA No. 3654/M/2013) (Mum.) 6. We have considered rival contentions and perused the material on record including cited case laws. We have observed that the assessee is a Charitable Trust which is registered with the Director of Income Tax (Exemption), Mumbai u/s. 12A and u/s. 80G of the Act. The assessee had claimed an amount of ₹ 2,33,03,449/- as excess expenditure over income being deficit to be carried forward for setting it off in subsequent years. The AO has denied the said carry forward of the excess of expenditure of income which has been later allowed by the Ld. CIT(A) based upon the decision of Hon ble Bombay High Court in the case of CIT v. Institute of Banking Personnel Selection(IBPS)(supra), wherein following substantial question of law was admitted by Hon ble High Court, as under:- 3. Whether, on the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act and that such adjustment will have to be excluded from the income of the Trust under section 11 (1){a) of the Act. Our view is also supported by the Judgment of the Gujarat High Court in the case of CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal [1995] 211 ITR 293 . Accordingly, we answer question No. 3 in the affirmative i.e., in favour of the assessee and against the Department. Further , we have also observed that Hon ble Bombay High Court in ITA no.1087 of 2014 vide judgment dated 16.12.2016 in DIT (Exemptions) v. M/s. Aditya Vikram Memorial Trust has decided the issue by relying on the decision of Hon ble Bombay High Court in the case of CIT v. Institute of Banking Personnel Selection(IBPS) (2003) 264 ITR 110(SC) that no substantial question of law arises as the issue is settled by decision of Hon ble Bombay High Court in 264 ITR 110, by holding as under: This Appeal under Section 260A of the Income Tax Act, 1961 (the Act), challenges the order dated 27th November, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order dated 27th November,2013 relates to the Assessment Year 2009-10. 2 . The Revenue urges the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in CIT v/s. Institute of Banking 264 ITR 110 and the order of this Court in Director of Income Tax (Exemption) v/s. M/s. Gem Jewellery Exports Promotion Council (Income Tax Appeal No.610 of 2011) decided on 15th February, 2011. (b) In view of the above submission, question no.(ii) as proposed also does not give rise to any substantial question of law. Thus not entertained. Further , we have also observed that Hon ble Bombay High Court in the case of DIT (Exemption) v. Mumbai Education Trust in ITA no. 11 of 2014 vide judgment dated 03.05.2016 wherein Revenue raised following substantial question of law, as under:- (b) Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in confirming the order of the CIT(A) to allow to carry forward of deficit of earlier years relying on the decision of this Court in the case of CIT v/s. Institute of Banking Personnel Services reported in 264 ITR 110 (Bom)while the revenue did not file SLP against the case of CIT v/s. Institute of Banking Personnel Services reported in 264 ITR 110 (Bom)due to low tax effect? . The Hon ble Bombay High Court decided the issue in favour of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Services reported in 264 ITR 110 (Bom) while the revenue did not file SLP against the case of CIT v/s. Institute of Banking Personnel Services reported in 264 ITR110 (Bom) due to low tax effect? stand on the same footing as are being canvassed before us in the instant case. Thus, there is no error on the part of the CIT(A) in following the decision of the Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection (supra) as well as the decision of the Tribunal dated 10.09.2013 (supra) in assessee s own case and allowing the stand of the assessee. The other argument taken by the Revenue that its SLP filed before the Hon'ble Supreme Court is pending on a similar issue is of no consequence inasmuch as the binding judgments of the Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection (supra) as well as in the case of M/s. Mumbai Education Trust (supra) continue to subsist. Apart from the aforesaid, the Ld. Representative for the assessee also pointed out that the Hon'ble Bombay High Court has approved the stand of the assessee in the case of DIT (Exemption) vs. M/s. Gem Jewellery Exports Promotion Council (ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure incurred in the earlier years cannot be met out of the income of the subsequent year and that utilization of such income for meeting the expenditure of earlier yeas 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 Charitable Trust, their income was assessable under self-contained code mentioned in section 11 to section 13.of the Income-tax Act and that the income of the Charitable Trust was not assessable under the head profits and gains of business under section 28 in which the provision for carry forward of losses was relevant. That, in the case of a Charitable Trust, there was no provision for carry forward of the excess of expenditure of earlier years to be adjusted against income of subsequent years. We do not find any merit in this argument of the Department. Income derived from the trust property has also got to be computed on commercial principles and if commercial principles are applied then adjustment of expenses incurred by the Trust fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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