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2023 (3) TMI 419 - HC - Income TaxReopening of assessment u/s 147 - carry forward of deficit which issue was pending before the Apex Court when the case was reopened and secondly, wrong claim of exemption under section 11(1)(a) - HELD THAT:- We find merit in the Petition. It would be appropriate to mention about the case of CIT v/s. Institute of Banking Personnel Selection (IBPS) [2003 (7) TMI 52 - BOMBAY HIGH COURT] which held that income derived from the trust property has also got to be computed on commercial principles and if the commercial principles are applied then the adjustment of expenses incurred by the Trust for charitable and religious purposes in the earlier years 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 adjustment has been made having regard to the benevolent provisions contained in section 11 of 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. It is further well settled in the case of Director of Income-tax (Exem) v/s. MIDC [2013 (3) TMI 654 - BOMBAY HIGH COURT] where this Court had allowed the assessee’s claim to carry forward the deficit relying on the decision of this Court in the matter of CIT v/s. Institute of Banking [2003 (7) TMI 52 - BOMBAY HIGH COURT] In the present case, the AO had recorded in the assessment order u/s 143 (3)that the petitioner was registered with the Director of Income- Tax exemption – Mumbai, under section 12A of the Act and that during the year the Petitioner had claimed exemption u/s 11 of the Act. The reasons recorded in the letter dated 30th April 2015 evince that the AO has come to the conclusion that income has escaped assessment ‘on the perusal of the records’. There is no question of any failure to disclose any material fact necessary for assessment as held in the case of Income-tax Officer vs. Lakhmani Mewal Das [1976 (3) TMI 1 - SUPREME COURT] AO’s the reason to believe must be based on some new tangible material which was not available at the time of passing the original Assessment Order as held in the case of Lalitha Chem Industries (P) Ltd. [2013 (11) TMI 1494 - BOMBAY HIGH COURT] Petitioner had rightly claimed carry forward and set off of deficit. Consequently, the impugned order rejecting the objections deserve to be set aside. Appeal of assessee allowed.
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