9911796707
TMI Blog2022 (1) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the assessee was selected under scrutiny and statutory notices were duly issued and served upon the assessee and assessment under section 143(3) was framed vide order dated 02.05.2013. Thereafter, a search operation under section 132(1) of the Act was conducted on M/s. D.Y. Patil Group (Shri Vijay D. Patil, Smt. Shivani Patil, Pd. Dr. D.Y. Patil University) on 27.07.2016. Thereafter, a satisfaction note under section 153C of the Act was received with relevant evidences and panchnama from AO of the searched persons on 12.09.2018 and accordingly after recording satisfaction by the AO of the assessee a notice under section 153C of the Act was issued and served upon the assessee trust for A.Y. 2011-12 to 2014-15 on 14.09.2018. The assessee is a trust registered under section 12A with DIT(E) dated 28.09.01. The assessee trust is incorporated with main object of promoting, motivating, developing sports, imparting sports knowledge and fitness awareness by establishing coaching/training classes, participating and conducting tournaments in India and abroad. The assessee complied with the notice issued under section 153C by filing return of income on 03.10.2018. Thereafter, statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bombay High Court decided the aforesaid substantial question of law in favour of the assessee by holding as under: " 5. Now coming to question No. 3, the point which arises for consideration is : whether excess of expenditure in the earlier years can be adjusted against the income of the subsequent year and whether such adjustment should be treated as application of income in subsequent year for charitable purposes? It was argued on behalf of the Department that expenditure incurred in the earlier years cannot be met out of the income of the subsequent year and that utilization of such income for meeting the expenditure of earlier years would not amount to application of income for charitable or religious purposes. In the present case, the Assessing Officer did not allow carry 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 selfcontained 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 provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of law ae well But did not find any merit therein." In the case of CIT vs. Shri Plot Swetamber Murti Pujak Jain Mandal reported in 211 ITR 293, Hon'ble High Court of Gujarat had decided that : "There is nothing In the language of s. 11(1}(a) to indicate 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. That apart income derived from trust property has to be determined on commercial principles and if commercial principles for determining the income are applied, it is but natural that the adjustment of the expenses incurred by the trust for charitable and religious purposes 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. 11 and will have to be excluded from the income of the trust under s. 11(1)(a). The deficit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have answered the questions in favour of the assessee and against the Revenue. 6. Following the aforesaid decisions of Rajasthan and Gujarat High Courts, we answer the second question referred to us in favour of the assessee and against the Revenue." In the case of Gonvindu Naicker Estate vs. ACIT reported in 248 ITR 368, Hon'ble High Court of Madras had decided that :- "The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year. The expenditure that 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/ 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 yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 204 (SC), Hon'ble Supreme Court order in the case of CIT(Exemption) vs. Subros Educational Society [2018] 96 taxmann.com 652 (SC), Hon'ble Mumbai ITAT order in the case of Income Tax Officer (Exemptions) vs. Anjuman I-Islams Tibba College & Hospital Public ITA No. 4002/Mum/2017 and Hon'ble Mumbai ITAT order in the case of Income Tax Officer (Exemptions) vs. Garware Charitable Trust ITA. No. 5345/Mum/2016 and the Ld. CIT(A) has passed this order after following some of these decisions and allowed the appeal of the assessee. The Ld. A.R. submitted that in view of the issue being covered by the above decisions, the appeal of the assessee may be allowed. 6. The Ld. D.R., on the other hand, relied on the grounds of appeal. 7. After hearing both the parties and perusing the material on record, we find that the issue of carry forward losses and setting off against the subsequent years surplus is squarely covered by the decision as cited by the Ld. A.R. We have perused the order of Ld. CIT(A) carefully and found that the Ld. CIT(A) has passed a very reasoned order after following the decision of CIT vs. Institute of Banking Personnel Selection (IBPS) (supra) wherein it has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the said separate direction in writing from the donor for utilization of donation, the same can not be treated as general donation. However, the AO rejected the contention of the assessee and added Rs. 20,00,000/- to the income of the assessee. 12. The Ld. CIT(A) allowed the appeal of the assessee by holding that the assessment for A.Y. 2013-14 was already completed vide order dated 07.12.2015 passed under section 143(3) of the Act and thus on the date of search on D.Y. Patil Group on 27.07.2016 the assessment was unabated. The Ld. CIT(A) observed that any addition in an unabated assessment can not be made in absence of incriminating material found during the search. The Ld. CIT(A) observed and held as under: "9.3.1. I have considered the submissions of the Appellant, the contentions of the AO in the assessment order and the other materials available on record on these Grounds of Appeal. 9.3.2. In the assessment order, the AO has relied on the statement of Shri Ajay Rai and concluded that Rs. 20.00 lakhs given by Shri Rai to another Trust of the group Pd. Dr. D Y Patil University, as donation was in fact usage charges for filming in the studio belonging to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of search. In fact, there is no discussion in the assessment order about any specific incriminating material, which have been found during the course of search operation so as to support a view that the said amount was paid as usage charges of the stadium of the assessee Trust. 9.3.6. In the present case at hand, I have noted that the assessment for the AY under reference was already completed u/s 143(3) on 07.12.2015. The date of search in the D.Y. Patil group is 27.07.2016, thereby making it an unabated assessment, as on the date of search. Accordingly, as on the date of search, the assessment year under consideration was unabated and not pending before the AO. Since, the proceedings for A.Y. 2013-14 had not abated and the assessment for the said assessment year already stood completed, the contention of the assessee is that the AO was empowered only to make additions based on the incriminating seized material found during the course of search operation. It is a material fact on record that the AO had failed to bring on record any incriminating material in the assessment order. 9.3.7. It is pertinent to note here that the Section 153A(1) of the Act starts with a non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Mumbai ITAT in the case of All Cargo Global Logistics Ltd vs DCIT (supra), has also observed as under:- "58. Thus, question No.1 before us is answered as under: a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately; b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search." It has been categorically observed in the above-mentioned judgment that only the pending proceedings, as on the date of search shall abate meaning thereby that the completed proceedings attain finality. 9.3.11. The next question which needs to be answered is what is the scope of assessment/ reassessment under the provisions of section 153A of the Act for the assessments/reassessments which have not ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiation of the proceedings under Section 153A, it is only the assessment / reassessment proceedings that are pending on the date of conducting search under Section 132 or making requisition under Section 132A of the Act stand abated and not the assessments/reassessments already finalized for those assessment years covered under Section 153A of the Act. ii. By a circular No. 8 of 2003 dated 18-9-2003 (See 263 ITR (St) 61 at 107) the CBDT has clarified that on initiation of proceedings under Section 153A, the proceedings pending in appeal, revision or rectification proceedings against finalised assessment/ reassessment shall not abate. It is only because, the finalised assessments/reassessments do not abate, the appeal revision or rectification pending against finalised assessment/reassessments would not abate. iii. Therefore, the argument of the revenue, that on initiation of proceedings under Section 153A, the assessments/reassessments finalised for the assessment years covered under Section 153A of the Income-tax Act stand abated cannot be accepted. Similarly on annulment of assessment made under Section 153A(1) what stands revived is the pending assessment/reassessment proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 132A of the Act stand abated and not the assessment/reassessments already finalized for those assessment years covered under Section 153A of the Act. By a circular No. 8 of 2003 dated 18-9-2003 (See 263 ITR (St) 61 at 107) the CBDT has clarified that on initiation of proceedings under Section 153A, the proceedings pending in appeal, revision or rectification proceedings against finalized assessment/reassessment shall not abate. It is only because, the finalized assessments/reassessments do not abate, the appeal, revision or rectification pending against finalized assessments/reassessments would not abate. Therefore, the argument of the revenue, that on initiation of proceedings lender Section 153A, the assessments/reassessments finalized for the assessment years covered under Section 153A of the Income-tax Act stand abated cannot be accepted. Similarly on annulment of assessment made under Section 153A(1) what stands revived is the pending assessment/reassessment proceedings which stood abated as per section 153A(1). 11. In the present case, as contended by Shri Mani, learned counsel for the assessee, the assessment for the assessment year 1 998-99 was finalized on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .......... .................................. It is noted that the Department had filed a Special Leave Petition in S.L.P (C) No- 34554 of 2015 before the Hon'ble Apex Court against the above judgment of the Delhi High Court, which has since been dismissed. The relevant extracts reported in 380ITR (st) 64-Ed is as follows: "Their Lordships Madan B.Lokur and S.A. Bobde JJ dismissed the Department's special leave petition against the judgment dated July 06,2015 of the Delhi High Court in I. T.A No 369 of 2015, whereby the High Court held that no substantial question of law arose since there was a factual finding, that no incriminating evidence related to share capital issued was found during the course of search and that the assessing officer was not justified in invoking section 68 of the Act for the purpose of making additions on account of share capital" 9.3.22. The Hon'ble Delhi High Court in the case of Pr. CIT vs. Meeta Gutgutia [2017- TIOL-1000-HC-DEL-IT], has affirmed the view that no addition can be made for a particular assessment year without there being an incriminating material that relates to the said assessment year which would justify such an addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
