2017 (8) TMI 1509 - AT - Income Tax

Tribunal Upholds Carry Forward of Deficit & Set-off Decision for Charitable Organization

ITO (Exemptions) -2 (4), Mumbai Versus Vaibhav Medical & Education Foundation,

The Tribunal dismissed the Revenue's appeal challenging the allowance of carry forward of deficit amounting to Rs. 45,87,98,441 and its set off against ... Exemption u/s 11 - benefit of carry forward of the deficit for future set-off denied - Held that:- There is no error on the part of the CIT(A) in following the decision of the Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection [2003 (7) TMI 52 - BOMBAY HIGH COURT] as well as the decision of the Tribunal in assessee’s own case [2013 (9) TMI 1229 - ITAT MUMBAI] and allowing the stand of the assessee. Issues involved:1. Allowance of carry forward of deficit and set off against subsequent years' income.Detailed analysis:The appeal by the Revenue challenged the order of CIT(A)-1, Mumbai regarding the Assessment Year 2008-09, arising from the Assessing Officer's order under section 143(3) of the Income Tax Act, 1961. The Revenue raised grounds questioning the allowance of carry forward of deficit amounting to Rs. 45,87,98,441 and its set off against future income. The main dispute in the appeal was focused on this issue.The respondent-assessee, a charitable organization registered under section 12A of the Act, claimed the benefit of carrying forward the deficit for future set-off. The Assessing Officer initially denied this benefit, stating that loss/deficit determination is not permissible under section 11 of the Act. However, the CIT(A) allowed the claim, citing the judgment of the Hon'ble Bombay High Court in a specific case as well as a Tribunal decision in the assessee's own case for the previous assessment year.The Revenue argued that the High Court's decision had not been accepted by the Department on merits, and an appeal had been filed before the Supreme Court in a similar case. However, the Revenue did not dispute that the CIT(A)'s decision aligned with the High Court judgment. Subsequently, the High Court in another case considered a similar argument by the Revenue and ruled in favor of the assessee.The Tribunal found that the CIT(A) correctly followed the High Court's decision and allowed the assessee's claim based on legal precedents. The pendency of the Revenue's appeal before the Supreme Court did not alter the binding nature of the High Court judgments. The Tribunal dismissed the Revenue's appeal, upholding the decision of the CIT(A) to allow the carry forward of the deficit for future set-off.In conclusion, the Tribunal pronounced the order on 31st August 2017, dismissing the Revenue's appeal and affirming the decision to allow the carry forward of the deficit for the assessee.