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TMI Blog2022 (7) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... s not voluntarily given by the student to the assessee and was part of single receipt. The Ld. CIT(A) also did not accept the contention of the AO that the developer fees collected from the students was mandatorily collected from them and so, there was no choice for the students but to give it. 3. The brief facts of the case is that search and seizure operation u/s 132 of the Act was conducted by the Investigation Wing in the case of M/s. D.Y. Patil group on 27.07.2016 (AY. 2017-18). The assessee in these appeals is Padmashree Dr. D. Y. Patil University which is one of the main Trusts of the D.Y. Patil Group, Navi Mumbai. The premises of the assessee trust at Sector-7, Dr. D. Y. Patil Vidya Nagar, Nerul Navi Mumbai was covered under the Search operation. The assessee trust has been registered u/s 12A of the Act w.e.f 01.04.2006 by DIT (Exemption) vide order dated 21.03.2007. The primary object of the trust is to impart education; and the trust inter-alia runs a Medical College, Dental College, Physiotherapy, Biotechnology and Nursing College at Nerul, Navi Mumbai. The assessment for A.Y.2011-12 was previously completed u/s 143(3) of the Act on 18.03.2014 determining total income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the additions made by the AO for both the assessment years. Aggrieved by aforesaid action of the Ld. CIT(A), the revenue before us. 5. We have heard both the parties and perused the record. We note that pursuant to the search conducted at the assessee trust's premises on 21.07.2016, the AO issued notice u/s 153A of the Act inter-alia, for both the assessment years also (A.Y.2011--12 & 2012--13). Later assessment u/s 153A of the Act was framed and on the strength of the fee receipt wherein development fee was found to have been included in the common fee receipt, the AO held that the assessee was collecting the development fee which was nothing but mandatory/compulsive extraction from the students; and since the assessee has shown the development fee collected as corpus donation, according to AO, it is not allowable because section 11(1)(d) of the Act only allows benefits of corpus donation if it is voluntarily given by the donors, and since the development fees are compulsorily charged/extracted from the students, the assessee cannot be given the benefit of section 11(1)(d) of the Act and disallowed the claim that development fee should be treated as corpus fund and treated it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same cannot be given benefit u/s 11(1)(d) of the Act. However, we note that the AO based on copy of fee receipt from which it was evident that development fees was also collected, has formed an opinion that the assessee is collecting the corpus fund involuntarily from the students. This action of the AO cannot be per-se treated as incriminating material, because the fee receipt in question is in public domain; and not discovered during search for the first time. And it is not the case of AO that assessee has been collecting the development fee without any receipt being given to the students and done the same secretly without accounting for it in its books; or neither, there was any complaint from the students/parents against giving this development fees nor the AO has made any inquiry after he discovered about assessee collecting development fee from students and has come to factual conclusion after inquiry that assessee was in fact compulsorily extracting the development fee/corpus in-voluntarily from students. In the absence of any complaint or inquiry as aforestated merely because copy of fee receipt was found during search which [ fee receipt] include the item of development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut relying upon any incriminating material, if any, found during the course of search. However, the Ld. CIT(A) allowed the set off of carried forward losses claimed by the assessee trust qua the years under consideration i.e. A.Y. 2011-12, 2012-13 & 2013-14 by relying upon the decision rendered by the Hon'ble Bombay High Court in assessee's sister concern case (CIT vs. D.Y. Patil Sports Academy in ITA No.1030 of 2017 dated 04.11.2019) which order has been upheld by relying upon the decision rendered by the Hon'ble Supreme Court in the case of CIT(Exemption) vs. Subros Educational Society 2018 (7) SCC 548 by returning following findings:- "8.2.1. 1 have considered the facts of the 'case, the findings of the AO as incorporated in the assessment order, and the submissions of the assessee in this regard. In assessment order, the A.O. has not allowed set off in respect of losses brought forward from previous years and also not allowed the losses of the current year to be carried forward. It is observed that while disallowing such claim ld. AO has not placed reliance on any incriminating documents found during the course of search which could be said to be adversely affecting the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 having regard to the benevolent provisions c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the earlier year against 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 such adjustment has been made having regard to the benevolent provisions contained in s. 117 and will have to be excluded from the income of the trust under s. 11(1)(a). The deficit arising out of excess of expenditure over income during the previous year relevant to the assessment year should, therefore, be set off against the surplus of income over expenditure relating to subsequent year in computing the taxable income of the later assessment year." (emphasis supplied) In the case of CIT vs. Shri Gujrati Samaj (Regd) reported in 257 ITR 397, Hon'ble High Court of Madhya Pradesh had decided that : "In view of s.11(1)(a) it cannot be said that the expenditure incurred in the earlier year cannot be met out of the income of the subsequent year and utilization of such income for meeting the expenditure of the earlier year would not amount to such income being applied for charitable or religious purposes: Having regard to s.11(1)(a) when the income of the trust is used or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t can be so adjusted can only be expenditure on religious and charitable purposes and no other." In the case of OTC Exchange of India vs. ADIT reported in ITA No.7189, 7190 & 7191/1 Mum/ 2016, Hon'ble ITAT, Mumbai had decided that; "Ground No. 7 of the grounds of appeal is regarding confirming the action of the Assessing Officer in not allowing the setoff of earlier years loss against current year's income. ............ Respectfully following the said decision, we hold that excess of expenditure in earlier years can be adjusted against income of subsequent years and such adjustment would be application of income for subsequent years and therefore we direct the Assessing Officer to allow the claim of the assessee for set off of excess expenditure of earlier years against current year's income following the above decision of the Hon'ble Jurisdictional High Court (supra)." 8.2.5. It is found that the other Judicial decisions relied upon by the assessee also supports the case of the appellant. In fact, it is evident that the Hon'ble Courts, including the Hon'ble jurisdictional High court, and the Tribunal has consistently pronounced that in case of Charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C of the Act unless incriminating material qua the issue in question has been unearthed during the search operation. Undisputedly, no such incriminating material has come on record. 17. Moreover, the Revenue has raised this issue just to generate unnecessary litigation on the pretext that since Department has not accepted the decision rendered by the Hon'ble Supreme Court in the case of M/s. Subros Educational Society in M.P. No.941/2018 in CA No.5171/2016 as the Department has already filed a review petition vide diary No.20745/202, the outcome of which has not been brought on record by the Ld. D.R. during the course of argument, which is not permissible under law. 18. So in view of what has been discussed above, the Ld. CIT(A) has validly and legally decided this issue in favour of the assessee by relying upon the decision rendered by the Tribunal, Hon'ble Bombay High Court and Hon'ble Supreme Court. Hence, ground No.3 & 4 of appeal Nos.1033, 1034 & 1035/M/2021 are also determined against the Revenue. 19. In view of what has been discussed above, aforesaid appeals filed by the Revenue are dismissed. 10. Since the Ld. CIT--DR could not point out any change in fact and or la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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