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TMI Blog2020 (2) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... im of assessee because section 11 provides for exemption of income of charitable organization. However, it is a fact that assessee claimed carry forward of the losses for subsequent year as per law which should have been appreciated and should be considered in favour of the assessee. - ITA No.2061/Del./2017 - - - Dated:- 3-2-2020 - Shri Bhavnesh Saini, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : Shri V. Raja Kumar, Adv. For the Respondent : Ms. Rakhi Vimal, Sr.DR ORDER PER O.P. KANT, AM: The present appeal by the Revenue is directed against order dated 20.01.2017 passed by learned Commissioner of Income Tax(Appeals), Meerut [in short the CIT(A) ] pertaining to assessment year 2012-13. The Revenue has raised following grounds of appeal: 1. On the facts and circumstances of the case, the learned CIT(A) has erred in deleting the addition of ₹ 1.60.62.047/- by opining that the provision of section 13 is not applicable without considering the fact that assessee has not carried out any charitable activity. 2. On the facts and circumstances of the case, the learned CIT(A) has erred in law and in fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to establishing a university and not in the nature of any real estate operation. The assessee is, therefore, entitled to benefits of Section 11 of the Act. The learned CIT(A) also allowed the benefit of carry forward of losses to next assessment year. Hence, the Revenue is before the ITAT. 3. Ground no. 1 of the appeal of Revenue relate to denying the benefit of section 11 of the Act and addition of ₹ 1,60,62,047/-. 3.1 Before us, the learned Departmental Representative relied on the order of the Assessing Officer and submitted that the assessee has failed to produce any evidence that the investment was for the purposes of charitable activities and, therefore, the Assessing Officer is justified in denying the benefit of exemption under Section 11 of the Act. 3.2 On the contrary, the learned Authorized Representative submitted that identical issue was involved in assessment year 2011-12, i.e., immediately preceding assessment year, wherein the assessee s investment in purchase of land, tube well, flat etc., totaling to ₹ 2,67,51,128/-, which was not allowed by the Assessing Officer as investment made for the purpose of the charitable. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, we do not find any merit in the Departmental Appeal. It is an admitted fact that assessee trust is registered u/s 12AA of the Act. The main objects of the assessee trust are to work for upliftment of the rural area and to promote education. The assessee in pursuance of the objects of the trust carried out certain activities as explained above. The assessee further explained that it wanted to open a Private University and for that efforts were going on to acquire huge land and to comply with the rules and regulations for forming Private University. In reference thereto assessee made investment in land and flats which were ultimately to be converted into source of opening of a Private Educational University. It is a fact that section ll(5)(x) authorizes investment in immovable property. The AO has not considered the investment in land and flat has been done for charitable purposes. He has not accepted the explanation of assessee that investment in immovable property has been done as preliminary steps towards establishment of University. The AO was under the impression that in order to qualify for charitable purpose, the trust has to spend the amount on charitable activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for A.Y. 2006-2007 was passed under section 143(3)/148, but, proceedings under section 148 have been dropped vide Order dated 16.12.2010 by verifying that assessee-society is registered under section 12A of the I.T. Act. Similarly, assessment order for A.Y. 2007- 2008 was passed under section 143(3) which was appealed before Ld. CIT(A) who has granted benefit under sections 11 and 12 of the I.T. Act to the assessee-society. The order of Ld. CIT(A) have been upheld by the Tribunal. The Ld. CIT(A) in the order for A.Y. 2007-2008 has specifically noticed that in respect of unutilized amounts, assessee-society has for the purpose of Section 11(1) set apart/accumulated profits of ₹ 7,22,67,210/ - filed Form No. 10 along with return of income and also subsequently, made investment in purchase of land to the extent of ₹ 8,71,42,582/-. Hence, the income to the extent of ₹ 7.22 crores was treated to have been applied for charitable purposes. It is well settled law that exemption under section 11(1 A) for capital gains for a charitable trust has been upheld in the case of CIT vs. Aurobindo Memorial Fund Society (2001) 247 ITR 93 (Mad.) and DIT (Exemptions) vs. DLF Qutab Enc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -educational and noncharitable purposes. The Ld. CIT(A) made a reference to two properties at Aravalli which have got no bearing on the issue, as the said two properties according to the explanation of assessee-society, are not utilized for accumulated profits under section 11(2) of the I.T. Act because the accumulation have been made under section 11(2) in respect of three properties only i.e., Sadharna, Gopalpura and Lohari. Ld. CIT(A) wrongly applied Section 11 (IB) of the I.T. Act as the assessee-society accumulated its income under section 11 (2) and in that situation Section 11 (IB) is not applicable. Accumulation was under section 11(2) and not under Explanation to sub-section 11(1) as is clear from the order passed by the Ld. CIT(A) and the Tribunal in AY 2007-2008 and it was clearly noticed that Form-10 have been filed in A.Y. 2007-2008 which is applicable for accumulation of income under section 11 (2) only. The findings of the Ld. CIT(A) at Section 11 (3) is applicable is also not correct because income accumulated under section 11 (2) was applied for educational purposes. Considering the totality of the facts and circumstances of the case noted above in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the current income, if any or in case of loss of current year i.e Rs.(-)1,64,41,978/- in the impugned matter the total of Rs(-) 5,80,12,138/- is hereby carried forward to the subsequent years. I am further fortified in my above findings by various judgments of the Hon ble ITAT Delhi benches which have consistently held in favour of the assessee on this issue. In the case of Director of Income Tax Vs Raghuvanshi Charitable Trust [2011] 197 Taxmann 170 Delhi it has been held that section 11 of the Income Tax Act, 1961 Charitable or religious trust- Exemption of income from property held under trust- Whether a trust can be allowed to carry forward deficit of current year and to set off same against income of subsequent year would amount to application of income of trust for charitable purposes in subsequent year within the meaning of section ll(l)(a) - held Yes. I have also decided the similar issue in favour of the assessee in the case of Devender Kumar Garg Charitable Trust for the A/Y 2011-12 vide order dated 18-11-2015 in ITA number 541/2013-14. Thus following the rule of consistency and in respectful agreement with the aforesaid order of Hon ble ITAT, I allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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