TMI Blog2019 (2) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... ct,1961 (in short of the Act ) passed by the Addl. DIT(E), Range-II, Mumbai) (in short the AO ). 2. The revenue has raised the following grounds: - 1.1 Whether, on the facts of the case and in law, the Ld. CIT(A) erred in allowing the carry forward of deficit of ₹ 9,76,12,251/-, and directing the Assessing Officer to allow carry forward of deficit on account of excess expenditure without appreciating the fact that this would have the effect of granting double benefit to the assessee, first as 'accumulation' of income u/s 11(1)(a) or as corpus donation u/s 11(1)(d) in earlier years/current year and then as'application' of income u/s 11(1)(a) in the subsequent years which was legally not permissible.? 1.2 Whether, on the facts of the case and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the claim of the assessee carry forward of the said deficit by relying upon the judgment of Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection, ignoring the fact that the Department has not accepted the said decision of the jurisdictional High Court on merit of the case, but due to smallness of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be regarded as application of income of the Trust 2.3 Further, the department's appeal against the above, decision of the Tribunal has beerl dismissed by the Bombay High Court (copy of the order is enclosed as Annexure 6). Thus, it is settled that a trust exempt under section 11 of the Act is permitted to carry forward its deficit of one financial year in the subsequent financial years. 2.4 In view of the above, request your good-self to kindly direct the Learned AO to allow the carry forward of deficit of ₹ 9,76,12,2511or adjustment in subsequent years. We would be glad to clarify the above and address any further aspects that you may require. The ld. CIT (A) vide para 6.2.1. has given his finding as under: 6.2 I have considered the facts of the case and the submissions made by the assessee. I find that this issue is covered in favour of the assessee by the decision of the Hon'ble jurisdictional Bombay High Court in the case of CIT vs. Institute of Banking and Personnel Selection (supra). Inthe said decision the question before the Hon'ble Court was 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment of the Gujarat High Court in the case of ar v Shri Plot Swetamber MuLti Pujak Jain Mandal (1995) 211 ITR 293 (Guj). Accordingly, we answer question No. 3 in the affirmative i.e., in favour of the assesse and against the department. 6.2.2 In the Director of Income-tax (Exemption) vs. MIS. Gem Jewellery Exports Promotion Council, Income Tax Appeal (LOD) No. 1113 of 2010 dated 15th February 2011, one of the two questions raised by the Department before the Hon. Bombay High Court was Whether on the facts and circumstances of the case and in law the Tribunal was right in directing the A.O. to set off the deficit of earlier years to the surplus of this year and consider such adjustment as application of income for charitable purpose . The Hon. High Court held as follows: - 4. As regards second question is concerned, counsel on both sides agree that the said question is covered against the revenue by the decision of this Court in the case of Commissioner of Income Tax vs. Institute of Banking reported in (2003] 264 1. TI? 110. In this view of the matter, we see no merit in the appeal and the same is dismissed with no order as to costs. 6.2.3 Similarly, in a recent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee in the return of income. However, for working out the deficit For the year, benefit of accumulation of 15% of the income shall not be allowed to the assessee, the present case is not a case where the whole of the income has not been applied for charitable purposes. Rather, the present case before us is a case where more than the income derived by the assessee has been applied for charitable purposes. The question of any accumulation, therefore, would not arise. This is because if there is no income available, from where will the assessee accumulate the income? My above decision is supported by the decision of the HON. ITAT G Bench Mumbai in the case of Dawat Institute of Dawoodi Bohra Community in ITA No. 4309/Mum/2005 for the A.Y, 2001-02 dated 30.4.2013, wherein the same issue was involved. It was held by the Hon. ITAT as follows: 5. We have perused the records and considered the rival contentions carefully. The dispute raised in this appeal is whether the assessee can still be allowed statutory accumulation of 25% of the income u/s 11 (1)(a) of the IT Act even if the entire income has been applied for the year and no income is left for accumulation. The auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spent on charitable purposes, then it will never taxable but in case there was saving, 25% or ten thousand whichever was more could not be included in the total income. lion tie Supreme Court also observed that section 11(2) further enlarged and liberalized the exemption. The section 11(2) was pressed into service if there was still some accumulated income left to be dealt with i.e. beyond 25% or ten thousand whichever was more. This additional income could be accumulated u/s 11(2) subject to the fulfillment of conditions mentioned there in. but in respect of accumulation of 25% or 10 thousand whichever is more u/s 11(1)(a), the conditions mentioned u/s 11(2) could not be applied. In other words, Hon ble Supreme Court held that accumulation of 25% or 10 thousand whichever was more was absolute and unfettered without any conditions. Thus observations absolute and unfettered exemption was only in relation to fulfillment of conditions mentioned in section 11(2). It was not held by the Hon ble Supreme Court that such accumulation had to be allowed even if there was no income left for application. 5.2 Similar was the position in case of C1T Vs. Trustees of Bhat Family Research F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al cannot be considered as binding precedent. The said decision of Tribunal was also followed by another bench of Tribunal in the assessee's own case in the assessment years 97-98 98-99 (Supra) in which the Tribunal also referred to the judgment of Hon'ble Supreme Court in case of Programme for Community Organization (Supra) but as pointed out earlier the issue decided by the apex court in case of Programme for Community Organization (Supra) was not whether accumulation had to be allowed even if there was no income left for application but the issue was whether accumulation had to be computed with respect to gross income or net income. Similarly, the Tribunal allowed the claim of the assessee in the assessment years 2002-03 and 2003-04 (Supra) in the same manner. Therefore, the decision of Tribunal in assessee's own case in earlier years in our, view, cannot be considered as binding precedent. As regards the decision of CIT (A) in assessment year 2004-05 (Supra) nothing has been produced on record to show that it was a conscious decision of the government to accept the order. Mere failure of an official to not file appeal in one year could not be the ground to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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