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2010 (2) TMI 1156
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....such. The other grounds are identical on all points, which read as under : i) The learned Commissioner of Income-tax(A) erred in allowing assessee's application u/s.154 even though the same was barred by limitation u/s.154(7) of the Income tax Act. ii) The learned Commissioner of Income-tax(A) erred in considering assessee's application for rectification in respect of processing order u/s.143(1), dt.13.3.2003, even though the said processing order is not appealable order, and erred in assuming jurisdiction on the processing orders wherein no adjustments were made, which is against the provision of section 246(a) of the Income tax Act. iii) The learned Commissioner of Income-tax(A) erred in not taking cognizance of the fact that the mistakes pointed out by the assessee in the application filed u/s.154, that in the return (a) Donation received of Rs. 2,93,99,450 (b) Endowment Fund receipts of Rs. 41,300 and (c) Profit on sale of shares of Rs. 1,63,22,821 were omitted to be included, were non-existent since these items of income were included in the total receipts of Rs. 892m84m700, and therefore, there was no cause of action for filing application u/s.154. iv) The....
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....Court in the case of Union of India v. Dharmendra Textiles Processors (2008) 306 ITR 277 (SC) wherein the Apex Court held that the Hon'ble High Courts can only interpret the law and not legislate and legislative casus omissus cannot be supplied by judicial interpretative process. 3. The facts narrated by the Commissioner of Income-tax(A) for all the years, briefly is as under. The assessee is a trust evidenced by deed of trust, carrying on the activities in the field of education. assessee filed return for the Assessment Year 2002-03 on 18.10.2002 declaring gross receipts of Rs. 8,92,84,700/- and the amount spent for charitable purpose was shown at Rs. 19,14,49,623/- (The amount varies for the other years, otherwise the facts are identical). For all the four years assessee has shown nil taxable income. Return was processed u/s.143(1) of the Act. Subsequently assessee filed a rectification application dt.17.11.2008 and claimed deficit amounting to Rs. 10,21,28,627/- should be allowed to be carried forward and requested the Assessing Officer to rectify the same. The Assessing Officer rejected the claim of set off of brought forward losses vide order u/s.154, dt.29.1.2009. Aggr....
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....ecorded that in asst years 2002-03 to 2005-06, the appellant has not specified and claimed the amount of deficits (i.e. excess of expenditure over income) to be carried forward. Accordingly, the Assessing Officer issued letter dt.14.10.2008 proposing to disallow the carry forward and brought forward of unabsorbed expenses for set off in asst year 2006-07. The appellant has filed return for each year showing the total income and the total expenditure from asst years 2002-03 to 2005-06. However, neither the appellant in the returns nor the Assessing Officer in the asst orders have mentioned the details of deficits to be carried forward. Against the Assessing Officer's proposed rectification under section 154 vide letter dt.14.10.2008, the appellant has filed letter dt.17.11.2008 wherein, the appellant has shown the gross receipts and expenses and also details of yearwise deficits to be carried forward. All these details have also been furnished during the course of appellant proceedings." 6. Coming to the facts it is to be seen that the order of the Commissioner of Income-tax(A) for Assessment Year 2006-07 dt.19.3.2009 was anterior to the common order u/s/154 which is now in a....
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....wed in appellate or revisional proceedings or as a result of a reference and by that time, the assessment for the year or years following are completed, the Officer is duty bound to rectify the assessments by allowing proper set off. Similar decisions have been rendered in Kanaka Films Pvt Ltd., v. ITO (1989) 43 Taxmann 113/177 ITR 88 (Mad) and ITO v. Gujarat State Co-op Union, (1985) 11 ITD 450 (Ahmedabad Tribunal)." 7. For the reasons mentioned above the Commissioner of Income-tax(A) held, the Assessing Officer cannot debar the assessee to claim the set off of the unabsorbed expenses which has rightly arisen in earlier assessment years, but not specified by him in the respective returns of income. Hence he held the rectification order passed by the Assessing Officer u/s.154 (the orders relevant for the assessment years under consideration) denying the carry forward of the deficit are not correct and it is against the provisions of law. The Commissioner of Income-tax(A) directed the Assessing Officer to verify the deficit and allow the carry forward of deficit represented by excess of expenditure over income for all the four years and allow the benefit of set off in the assessm....
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....rust will not lose exemption under section 11 of the Income tax Act, 1961". 9. One of the objection take by the assessee before the Commissioner of Income-tax(A) was that in the case of a trust since the carry forward is only of the "deficit" and there is no time limit as such like what is provided in sections 70 to 79 of the Act and therefore the decision of the Hon'ble Supreme Court in the case of Goetze India Ltd., v. Commissioner of Income-tax (supra) is not applicable. The assessee was in fact not making any fresh claim. Further it was contended that this decision was not applicable in the case of the assessee as the facts are distinguishable. It was the Assessing Officer who instructed the assessee to file the rectification application so as to set right the mistakes if any committed, so that the correct amount of 'deficit' could be carried forward for the Assessment Year 2006-07. The assessee submitted that the Assessing Officer should have allowed the entire unabsorbed depreciation to be carried forward amounting to Rs. 10,21,81,627/-. In support of the view, assessee relied on the decisions mentioned in para 5 of the Commissioner of Income-tax(A)'s order....
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....e further submitted that the decision relied upon by the revenue in the case of Escorts Ltd., and another v. Union of India (199 ITR 43) comes into picture only when deduction is claimed for computing the income under the head "income from business or profession". There was no deduction with regard to the cost of the assets as was claimed by the assessee while computing the surplus. The deduction was allowed by the Assessing Officer by way of application of surplus which the assessee was eligible u/s.11(1) of the Act. Thus, there was no double deduction as contemplated in the case referred to. Hence the counsel for the assessee submitted the order of the first appellate authority must be allowed. 11. With regard to the second issue, the learned counsel submitted that the stand of the revenue that the assessee did not claim the carry forward in the original return and the claim was made for the first time through application u/s.154 of the Act which was time barred and there is no provision under the Income tax to allow carry forward of the loss of the preceding years any excess expenditure/application of the preceding years were not to be set off against the subsequent yea....
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....ness u/s.28 for which provision the benefit of carry forward loss was relevant. The assessee is a charitable trust for education purpose and has no profit motive. Surplus is required to be determined for the purpose of section 11 and the provisions of section 28 has no application significantly the provisions of section 70 of the Act also cannot be brought in. The surplus is computed after taking into account the net outgoing of the relevant year and earlier years. The Bombay High Court took support of the decision of the Gujarat High Court in Shri Plot Swetamber Murti Pujak Jain Mandal (supra). The learned counsel submitted that the Commissioner of Income-tax(A) decided the issue in assessee's favour following the above decision of the Bombay High Court. The Hon'ble Madras High Court decision reported in Govindu Naicker Estate (supra) also supports the case of the assessee he submitted. The assessee is enjoying exemption u/s.10(23C)(vi). Thus no income for the relevant assessment year is liable to be taxed as exemption continues to be in operation for the relevant assessment years. Hence the learned counsel for the assessee submitted the appeal by the revenue is to be dism....
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....ctified in the light of the above facts is a debatable point and, therefore, it is beyond the scope of section 154, as held by the Hon'ble Supreme Court and rightly relied by the assessee in the case of T. S. Balram, ITO v. Volkart Brothers (82 ITR 50). On this ground appeal by the revenue ITA.480 to 485/B/09 & CO.28 to 33/B/09 Page - 20 ITA.486 to 491/B/09 & CO.34 to 39/B/09 is to be allowed and we quash the order of the Commissioner of Income-tax(A). The order of the Assessing Officer stands. Since we have decided the preliminary issue in favour of the revenue, there is no need for us to decide the other points on merit. 15. In the result, appeals by the revenue for assessment years 2002- 03 to 2005-06 are allowed. ITA No.482 to 484/Bang/2009-M/s. Academy of General Education - Assessment Years 2003-04 to 2005-06 : 16. Since the facts are identical to the appeal in ITA.481/Bang/2009 decided by us in the superceding paragraphs, following the same, we allow these appeals by the revenue. ITA No.486 to 490/Bang/2009-M/s. Dr. T. M. A Pai Foundation- Assessment Years 2001-02 to 2005-06 : 17. Since the facts are identical to the appeal in ITA.481/Bang/2009 decided by us ....
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....Total 11,16,36,643 1,00,20,322 10,16,16,321 Vide his letter dt.14.10.2008 it was mentioned that for the year under consideration assessee claimed set off of excess expenditure incurred in the earlier assessment years against the surplus of this i.e., 2002-03 of Rs. 9,31,07,223/-; 2003-04 of Rs. 1,58,31,552/-; and 2004-05 of Rs. 26,97,868/-. However, he further mentioned that on verification of the records and the returns filed for the earlier years, assessee has ITA.480 to 485/B/09 & CO.28 to 33/B/09 Page - 22 ITA.486 to 491/B/09 & CO.34 to 39/B/09 not claimed carry forward of excess expenditure for set off against succeeding assessment year. Hence it was informed in view of the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd., v. Commissioner of Income-tax (2006) 284 ITR 323 the assessing authority has no power to entertain the claim made otherwise than by way of revised return. It was further informed that the claim of set off of expenditure was also not found to be correct and he informed accordingly.....
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....purpose of exemption u/s.11 of the Act. 19. While coming to the above conclusion he further held in spite of specific request assessee has not specified under which provision of the Income tax Act, 1961 the set off of earlier years' deficit is admissible. The case of Medical Relief Society of South Kanara wherein the decision of the Bombay High Court in the case of Commissioner of Income-tax v. Institute of Banking (264 ITR 110) has been referred to, has been taken up in further appeal to the High Court. Hence, he did not follow the decision. The Hon'ble Supreme Court in the case of Goetze India Ltd., (supra), the Assessing authority has no power to entertain claim made otherwise than by way of revised return. The claim of the assessee to carry forward of the deficit of the earlier years cannot be allowed. While coming to the above conclusion the Assessing Officer also referred to the decision of the Hon'ble Supreme Court in the case of Dharmendra Textiles Processors (2008) 306 ITR 277 (SC), particularly to the principles enunciated, which read as under : "It is well settled principle of law that the Court cannot read anything into a statutory provision or a stipu....
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....ciation. Coming to the denial of adjustment of excess expenditure of earlier years, he relied mainly on the following decisions : i) Govindu Naicker Estate v. ADIT (1999) 105 Taxman 719 (Mad); ii) CITv. Institute of Banking (264 ITR 110) (Bom); iii) Dawat Institute of Dawoodi Bohra Community v. ITO (22 SOT 359) : This was a case wherein the assessee applied an amount of Rs. 58,09,87,048/- for charitable or religious purposes of the trust against the total income of Rs. 35,60,82,101/-. The assessee claimed accumulation or set apart of 25% of the total income and thereafter claimed carry forward of excess amount incurred for application of objectives of the trust over and above the remaining income i.e., 75% of the total income for set off against the income of the trust in the succeeding years. Assessing Officer disallowed the claim. On further appeal the Tribunal allowed the claim of the assessee and remanded the matter back to the file of the Assessing Officer with a direction to allow carry forward of excess expenditure incurred by the assessee to subsequent years. 21. The Commissioner of Income-tax(A) further relied on the decision of the Hon'ble Gujarat High ....
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....evi Sarabhai Trust (No.2) 172 ITR 698 (Guj), the Commissioner of Income-tax(A) allowed the appeal of the assessee. Revenue is in appeal before us. 23. The learned counsel for the assessee reiterated the submissions made for the earlier years. 24. After considering the rival submissions, respectfully following the decision of the Hon'ble Bombay High Court in the case of Institute of Banking (supra), we hold that the Commissioner of Income-tax(A) was justified in allowing the assessee's claim of depreciation on new assets put into use during the accounting year, even if the entire cost of these assets have been claimed by the assessee and allowed as an application of the income for charitable purposes. This ground of the revenue is allowed. 25. Coming to carry forward of deficit of earlier years, this ground of the revenue is liable to be dismissed. In the other cases for the Assessment Years 2002-03 to 2005-06, we allowed the appeal of the revenue for the reason that the order was passed u/s.154 and the issue was beyond the scope of section 154. Coming to Assessment Year 2006-07, this ground by the revenue is to be dismissed because, merit we have held that though t....