TMI Blog2022 (7) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year as held by the Hon ble jurisdictional High Court in the case of CIT Vs. Continental Ware housing Ltd. Vs. DCIT (supra) as well as relying upon the decision in the case CIT Vs. Kabul Chawla (supra) and other judicial precedents on this issue, we confirm the impugned order of the Ld. CIT(A) and dismiss the revenue appeal. - I.T.A. Nos. 2118 And 2119/Mum/2021 - - - Dated:- 20-7-2022 - Shri Aby T. Varkey, JM And Shri Gagan Goyal, AM For the Revenue : Shri H. N. Singh (DR) For the Assessee : Shri Satyaprakash Singh ORDER PER ABY T. VARKEY, JM: These are appeals preferred by the revenue against the order of the Ld. CIT( 49, Mumbai dated 13.03.2021 for A.Y.2011 12 2012 13. Since both the sides agree that issues are similar for both assessment years, the decision rendered in the lead case will determine the outcome of the other assessment year also. Therefore, we take up the grounds of appeals in respect of A.Y.2011 12 as the lead case. 2. Ground No. 1 to 3 are preferred by Revenue against the action of the Ld. CIT(A) allowing exemption of Rs. by not treating the developer fees collected from students by assessee as revenue in nature. The Ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t AYs were unabated assessment years [because both assessments were not pending before the AO on the date of search on 27.07.2016 as per second proviso to section 153A of the Act] and therefore considering the well settled law laid by Hon ble Delhi High Court in the case of CIT Vs. Kabul Chawla (2016) 380 ITR 571 wherein it was held that in assessment/reassessment under Section 153A of the Act, if it is found that the assessment year/years are un-abated assessment, then in that event, the AO has to reiterate the original assessment and can make additions/disallowance only with the aid of incriminating material qua assessee qua assessment year; and as a corollary, if there was no incriminating material qua the assessee qua the assessment year [which was unabated] then no addition/disallowanc can be resorted to or be sustained u/s 153A of the Act; and the SLP preferred by the Department against the aforesaid order of Hon ble Delhi High Court was dismissed by the Hon ble Supreme Court; and the Ld. CIT(A) taking note of the plethora of other decisions laying down similar ratio, he has held that since both the relevant assessment years (A.Y.2011--12 2012--13) being unabated, the AO co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act was denied to those trusts and accordingly similar additions were made, which was deleted by CIT(A) by relying upon the decision rendered by Hon ble Jurisdictional Bombay High Court in the case of CIT Vs. Continental Warehousing 374 ITR 645 (Bom); and decision rendered by Special Bench of the Tribunal in the case of All Cargo Global Logistics Ltd. vs. DCIT (2012) 18 ITR 106 (SB) which was confirmed by the Hon ble Bombay High Court in ITA No.1414 of 2013. On appeal by Revenue, this Tribunal upheld the view of the Ld. CIT(A) by noting that the assessment years before it were unabated assessments and therefore the AO could not have disturbed the completed assessments without incriminating material qua the assessee qua the assessment years. 7. Coming back to the present case, we note that the Ld. CT(A) has followed the binding judicial precedent on similar lines and have given relief to the assessee. Before us, the main plea of the Ld. CIT--DR was that the development fee collected by the assessee trust on the basis of a single fee receipt from the students, shows that the students didn t had any option but to mandatorily give/remit the fees (including the development fees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal if no incriminating material is found during search Held, yes [Paras 28, 29 30][In favour of assessee] 8. Respectfully following the aforesaid binding decision of Hon ble Bombay High Court in the case of CIT Vs. Continental Ware housing Ltd. Vs. DCIT (supra) as well as relying upon the decision of the Hon ble Delhi High Court in the case CIT Vs. Kabul Chawla (2016) 380 ITR 571 (Delhi) and other judicial precedents on this issue, we confirm the impugned order of the Ld. CIT(A) and dismiss the revenue appeal. 9. Coming to the ground no. 4, which is against the action of the Ld. CIT(A) allowing the assessee to carry forward the deficit of Rs.11,14,00,030/-- being excess expenditure of receipt to subsequent years and holding the same as eligible to be set off with the income of the subsequent years. At the outset, the Ld. AR of the assessee submitted that this issue is no longer res-integre and drew our attention to the decision of the Co--ordinate Bench of this Tribunal in the case of assessee s sister trust case DCIT vs Dr. DY Patil Educational Academy [ ITA no 1033 1034/M/20211] order dated 11.02.2022 (supra) wherein similar ground was adjudicated by this Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8.2.4. I find that the Hon'ble Jurisdictional High Court has considered this issue in the case of CIT vs. Institute of Banking Personnel Selection reported in 264 ITR 110, wherein following substantial question of law was admitted by Hon'ble High Court : 3. Whether, on the facts and in the circumstances of the case, the tribunal was justified in law forward the deficit of earlier year and set it off against the surplus of subsequent years when the same was not allowable in the case of assessee trust in whose case income exempted under section 11 of the Income Tax Act, 1961. In this case, the Hon'ble 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Banking Personnel Services reported in 264 ITR 110 while holding in favour of the Respondent assessee. In the case of cre Vs. Subros Educational Society reported in 166 DTR 257, Hon'ble Supreme Court has observed that; (a). Whether any excess expenditure incurred by the trust/charitable institution in earlier assessment year could be allowed to be set off against income of subsequent years by invoking Section 11 of the Income Tax Act, 1961? .... To this extent, Mr. K. Radhakrishnan, learned senior counsel appearing on behalf of the applicant/appellant is correct. Therefore, we have heard him on the aforesaid question of law as 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 basing applied for charitable or religious purposes. That apart income derived fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided that :- 4. With regard to the second question, the Tribunal has held that the trust is entitled to set off the amount of excess application of the last year against the deficiency of Rs.82,516 of the present assessment year. 5. When similar questions came up before Rajasthan High Court and Gujarat High Court in the case of CIT vs. Maharana of Mewar Charitable Foundation (1987) 60 CTR (Raj) 40 : (1987) 164 ITR 439 (Raj) : TC 23R.1198 and CIT vs. Shri Plot Swetamber Murti Pujak Jain Mandal (1994) 119 CTR (Guj) 144 : (1995) 211 ITR (Guj) 293 : TC 23R.1228 respectively, both Rajasthan High Court and Gujarat High Court 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of subsequent years. The AO is accordingly directed to allow the set off of brought forward of deficit in AY 2011-12 and allow to carry forward the balance deficit in the succeeding years for setting off against income of such succeeding years. 8.3.8. I have also taken note of the fact that the issue was previously considered by the Id. CIT(A) in the case of the assessee during original assessment proceedings and the same was allowed to the assessee. Hence, this being an unabated assessment year, in any case the AO did not have jurisdiction to revisit the issue when it was not based on any incriminating material found during the course of search as held in the multiple judicial decisions referred to previously while adjudicating previous grounds of appeal. Ground No.4 for Assessment Year 201112 is accordingly Allowed. 8.3.9. So far as this issue is concerned, facts of the case related to AY 2012-13 and AY 2013-14 are identical to the facts for AY 2011-12 and accordingly the Ground No. 4 for Assessment Year 2012-13 and Ground No. 3 for Assessment Year 2013-14 are also allowed. 16. Moreover, this issue has already been decided in favour of the assessee trust for A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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