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TMI Blog2020 (8) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... r years against the income of subsequent year - carry forward the depreciation as well - correctness of decision of Id. CIT(A) of allowing the benefit of the carrying forward - HELD THAT:- Gone through the material on record and it is noticed that ld. CIT(A) has placed reliance on decision of Shri Plot Shwetambar Murtipujak Jain Mandal [ 1993 (11) TMI 17 - GUJARAT HIGH COURT ] wherein it is held that excess of expenditure over the income would be allowed to be carried forward to be set off against the future income. CIT(A) has also placed reliance on the decision of CIT vs. Rajathan Gujarat Charitable Trust, Pune [ 2017 (12) TMI 1067 - SUPREME COURT ] wherein it is held that once the assessee is allowed depreciation, he shall be entitled to carry forward the depreciation as well. In the light of the above facts/findings of the ld. CIT(A) and the decision of Hon ble Supreme Court in the Subros Education Society [ 2018 (4) TMI 1622 - SC ORDER ] as referred by ld. counsel, we do not find any infirmity in the decision of ld. CIT(A). - Decided against revenue. - Shri Amarjit Singh, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Assessee : Shri S.N. Soparkar, Sr. A.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) vide order dated 13-06-2017 has directed the Assessing Officer to make various additions of various items of receipts which resulted in enhancement of income. Subsequently, the assessee has filed application for rectification u/s. 154 of the Act for incorrectly computing total income of the assessee after giving appeal effect to the order of the ld. CIT(A) dated 12/04/2017. Accordingly, the Assessing Officer has rectified the mistake and total income was revised to ₹ 13,29,88,496/- from ₹ 1,52,71,89,842/- at the time of giving appeal effect to CIT(A) s order dated 12-04-2017. 4. Against the order u/s. 143(3) r.w.s. 250 of the Act, the assessee had filed appeal before the ld. CIT(A). The Id. CIT(A) has placed reliance on the judgment of Hon'ble Gujarat High Court in the case of the assessee itself vide ITA No. 423, 424, 425 of 2016 dated 02-052017 holding that the assessee is eligible to claim deduction u/s. 11 of the Act as proviso of section 2(15) is not applicable in the case of the assessee. The Id. CIT(A) has elaborated the decision of Hon'ble Gujarat High Court at para 4.3 from page no. 5 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration. In both the activities, in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and prime objective of the WP(C) 1872/13 Page 54 of 55 institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of am' service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a 'charitable purpose'. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purposes. 13. Applying the aforesaid decisions lo the facts of the case on hand and with respect to the activities of the ADDA Ahmedabad Urban Dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, proviso to Section 2(15)of the Act shall not be applicable so far us assessee is concerned and therefore, the assessee is entitled to exemption under Section II of the Income Tax Act. Therefore, the question no. I is to be held in favour of the assessee and against the revenue. 15. Now, so far as another question which is posed for the consideration of this Court i.e. whether while collecting the cess or fees, activities of the assessee can be said to be rendering any services in relation to any trade, commerce or business is concerned, for the reasons stated above, merely because the assessee is collecting cess or fees which is regulatory in nature, the proviso to Section 2(15)of the Act shall not be applicable. As observed herein above neither there is element of profiteering nor the same can be said to be in the nature of trade, commerce or business. At this stage, decision of the Division Bench of this Court in the case of Sabarmati Ashram Gaushala Trust (supra) is required to be referred to. In the case before the Division Bench, the assessee Trust Sabarmati Ashram Gattshala Trust was engaged in the activity of breeding milk cattle; to improve the quality of cows and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmerce or business or any activity of rendering any service in relation to any trade, commerce or business. Whether the purpose is a charitable purpose will depend on the totality of the facts of the case. Ordinarily. Chambers of Commerce and similar organizations rendering services to their members would not be affected by the amendment and their activities would continue to be regarded as advancement of any other object of general public utility. 7. In consonance with such assurance given by the Finance Minister on the floor of the House, CBDT issued a Circular No. 11 of 2008 dated 19th December 2008 explaining the amendment as under: 3. The newly inserted proviso to section 2 (15) will apply only to entities whose purpose is advancement of any other object of general public utility i.e. the fourth limb of the definition of charitable purpose contained in section 2 (15). Hence, such entities will not be eligible for exemption under section 11 or under section 10 (23Ctof the Act if they carry on commercial activities. Whether such an entity is carrying on any activity in the nature of trade, commerce or business is a question of fact which will he decided based on the nature, scop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aritable purpose if it is engaged in any activity in the nature of trade, commerce or business or renders any service in relation to trade, commerce or business for a cess, fee and/or any other consideration. It is not aimed at excluding the genuine charitable trusts of general public utility but is aimed at excluding activities in the nature of trade, commerce or business which are masked as charitable purpose. 12. All these were the objects of the general public utility and would squarely fall under section 2 (15) of the Act. Profit making was neither the aim nor object of the Trust. It was not the principal activity. Merely because while carrying out the activities for the purpose of achieving the objects of the Trust, certain incidental surpluses were generated, would not render the activity in the nature of trade, commerce or business. As clarified by the CBDT in its Circular No. 11/2008 dated 19th December 2008 the proviso aims to attract those activities which are truly in the nature of trade, commerce or business but are carried out under the guise of activities in the nature of public utility. 15.1. Applying the aforesaid decision to the facts of the case on hand and the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of the revenue is also dismissed. 9. In both the appeals vide ITA nos. 1255/Ahd/2018 and 1256/Ahd/2018, the revenue has also filed similar grounds of appeal on identical facts against the decision of Id. CIT(A) of allowing the benefit of the carrying forward of excess capital expenditure of earlier years against the income of subsequent year in absence of any express provision in the act regarding the same. The Id. counsel has brought to our notice that this issue is fully covered in favour of the assessee by the decision of Hon'ble Supreme Court in the case of CIT vs. Subros Educational Society (2018) 101 CCH 0264 ISCC, (2018) 166 DTR 0257(SC), 2018 303 CTR 000l(SC) dated 16lh April, 2018. The ld. Departmental Representative was fair enough not to controvert the same. 10. With the assistance of ld. representatives, we have gone through the material on record and it is noticed that ld. CIT(A) has placed reliance on decision of Hon ble Gujarat High Court in the case of Shri Plot Shwetambar Murtipujak Jain Mandal 211 ITR 293 wherein it is held that excess of expenditure over the income would be allowed to be carried forward to be set off against the future income. The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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