TaxTMI 
TaxTMI 
2019 (2) TMI 526
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....g the carry forward of deficit of Rs. 2,30,44,449/- and allowing set off against the income of the subsequent years." 2. Whether, on the facts and in the circumstances of the case and in law, the Ld.CIT (A) erred in allowing the claim of the assessee for carry forward of the said deficit, ignoring the fact that there was no express provision in the I T Act, 1961 permitting allowance of such claim." 3. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in allowing the claim of the assessee for 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 effect appeal was not filed before Hon'ble Supreme Court. However, on this issue the department has filed SLPs in other cases before the Hon'ble Apex Court inclusive the case of MIDC (SLP (Civil) 9891 of 2014), in which leave has been granted and the issue is pending for adjudication before the Hon'ble Supreme Court and the case has ....
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....and hence any further deduction of the same outgoing will amount to double deduction. If source of expenditure is a loan then repayment is allowable as a deduction in the year of repayment. Clearly, scheme of computation of business income has no application in determination of income u/ s. 11. Thus, in view of the above stated facts deficit of Rs. 2,33,03,449/- is not allowed to be carried forward for future set off. Moreover, Department has filed SLP in the case of Gems & Jewellery Export Promotion Council for Assessment Year 2004-05 on the deficit issue." 4. The assessee being aggrieved by assessment framed by the AO vide orders dated 30.01.2013 passed u/s 143(3), filed first appeal with learned CIT(A) which was allowed by Ld. CIT(A) in favour of the assessee vide appellate order dated 14.06.2017, by holding as under:- "6.2 I have considered the facts and circumstances of the case, gone through the assessment order of the A.O and the submissions of the appellant and also discussed the case with the AR of the appellant. The contentions and submissions of the appellant are being discussed and decided here in under: i. Relying upon several case laws the appellant stated that....
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....ed by the judgment of the Gujarat High Court in the case of CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal (1995) 211 1TR 293 (Guj).Accordingly, we answer question No. 3 in the affirmative i.e., in favour of the assessee and against the department." ii. Respectfully following the ratio laid down by the Hon. High Court as above, the AO is directed to allow the carry forward of deficit in the succeeding years after due verification of facts. iii. Ground of appeal No. II is therefore allowed." The Ld. CIT(A) while adjudicating aforesaid appeal in favour of the assessee mainly relied upon the decision of Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection (2003) 264 ITR 110(Bom. HC). 5. Aggrieved by the appellate order dated 14.06.2017 passed by learned CIT(A), the Revenue has now filed an appeal before us. The Ld. DR relied upon the order of the AO and contended that excess of expenditure over income in the case of Charitable Trust being deficit cannot be allowed to be carried forward to subsequent years as Charitable Trust are governed by Provisions of Section 11 to 13 of the 1961 Act which is a complete code in itself and there is no such prov....
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....ion 11 of the Income Tax Act, 1961." The Hon'ble Bombay High Court decided the aforesaid substantial question of law in favour of the assessee in Institute of Banking Personnel Selection (IBPS) (supra) , 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 self-contained code mentioned in section 11 to section 13 of the Income-tax Act and that the income of the Charitab....
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....ress provision in the Income Tax Act, 1961 for permitting allowance of such claims?". (b) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in upholding the decision of the CIT(A) which allowed carry forward of deficit on account of excess expenditure and directed 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 were legally not permissible?". 3 Mrs. Bharucha, learned Counsel appearing for the Revenue very fairly states that the issues arising herein stands concluded against the Revenue and in favour of the RespondentAssessee by the decision of this Court in CIT v/s. Institute of Banking 264 ITR 110. 4 In view of the above, the questions as proposed do not give rise to any substantial questions of law. Thus, not entertained. 5 Accordingly, Appeal dismissed. No order as to costs."....
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....urrent year. The impugned order in fact followed decision of this Court in CIT v/s. Institute of Banking Personnel Services reported in 264 ITR 110 while holding in favour of the RespondentAssessee. 4. Mr. Malhotra, learned Counsel appearing for the Revenue very fairly states that the issue as raised by the Revenue stands concluded against Revenue by decision of this Court in Institute of Banking Personnel Services (supra). 5. In view of the above, the questions as framed do not give rise to any substantial question of law." The Mumbai-tribunal in ITO(Exemptions) vs. Vaibhav Medical & Education Foundation in ITA no. 6998/Mum/2016 for AY 2008-09, vide order dated 31.08.2017 has also decided this issue in favour of the assessee , by holding as under:- " 6. We find that the Hon'ble Bombay High Court subsequent to the decision in the case of Institute of Banking Personnel Selection (supra) considered a similar argument of the Revenue in the case of M/s. Mumbai Education Trust, ITA No. 11/2014 dated 3.5.2016 and allowed the claim of the assessee. In fact, the Grounds of appeal urged by the Revenue before the Hon'ble High Court, which read as under :- "(a) Whether on the....
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....." Further we have also observed that Mumbai Tribunal in DDIT v. Maharashtra Samaj Ghatkoper in ITA no. 3654/Mum2013 , vide order dated 22.06.2016 to which one of us being Judicial Member was part of the Division Bench who adjudicated the appeal in ITA no. 3654/Mum/2012 , has again decided the issue of carried forward of losses in favour of the tax-payer , by holding as under:- "3. We have heard Departmental Representative (DR) for Revenue and Authorised Representative (AR) for assessee and perused the material available on record. Ld. DR argued that Ld DIT wrongly given the relief to the assessee and prayed that order of the AO may be restored. Ld AR for assessee argued that this case is squarely covered by the decision of Bombay High Court in CIT vs. Institute of Banking Personnel Selection (IBPS)(supra). We have seen that Ld. CIT(A) while allowing the appeal of the assessee made the followed observations: "I have carefully considered the submissions of the appellant, assessment order and facts of the case. I find that the appellant's claim of setting off the excess of income over expenditure against the deficit of earlier year is correct in view of the decision of Hon'ble R....
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.... such adjustment will have to be excluded from the income of the Trust under section 11(1)(a) of the Act. Our view is also supported by the Judgment of the Gujarat High Court in the case of CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal *1995+ 211 ITR 293." Further the Hon'ble jurisdictional High Court in case of DIT vs. Mumbai Education Trust in ITA No. 11/2014 dated 3rd May 2016 given the similar relief in respect of allowability of depreciation of capital asset acquired for the purpose of carrying out charitable activities and set off of deficit of earlier years against the income of current year. 5. By respectfully following the judgment of Hon'ble jurisdictional High Court, we hold that the assessee is claimed for setting off of excess income over expenditure against the deficit of earlier years is correct. In view of the above observation, we do not find any illegality or infirmity in the order passed by DIT." We have also observed that Hon'ble Bombay High court has dismissed the appeal of the Revenue in DIT(E) v. Gem & Jewellery Exports Promotion Council in ITA(LOD) No. 1113 of 2010 vide judgment dated 15.02.2011 by following the decision of Hon'ble Bombay High Cour....