TaxTMI 
TaxTMI 
2020 (2) TMI 709
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....ng loss/carry forward of loss of Rs. 1113503/-by not appreciating the settled legal position of law that excess application of income of earlier year can be adjusted against surplus of subsequent year." 3. Assessee is a charitable trust, filed its return of income in 19/09/2013 having an excess of expenditure over income by Rs. 1 407083/-. The assessment under section 143 (three) of the income tax was passed on 11/12/2015 by the learned income tax officer (exemption), Rohtak assessing Nil income. However the learned assessing officer noted that assessee is deriving income from rent of Rs. 9 78600/- and has claimed a deduction at the rate of 30% amount into Rs. 2 93580/- and the net rental income is been shown at Rs. 6 85020/-. AO noted that assessee is registered under section 12 AA, accordingly, claiming the benefit of section 11 of the income tax act so the income was to be computed on commercial principle as per the provisions of section 11 and 12 of the act. Assessee was therefore not entitled to claim standard deduction under section 24 (a) of the act as assessee has already claimed all the capital expenditure at the time of acquiring/construction of the property. AO objected....
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.... No 106/Mum/2016 Nandlal Tolani Charitable vs ITO (E)-2(1), Mumbai where in it has been held that :- "6. We have heard both the parties, perused the material available on record and gone through the orders of authorities below. We find that the issue involved in the present appeal, i.e. deductibility of deduction u/s 24(a) against rental income in case of a trust / institution claiming benefit of exemption u/s 11 is a recurring issue in assessee's case for earlier period. The co-ordinate bench of ITAT, Mumbai Bench "B" in assessee's own case for AY 2005-06 in ITA No.200/Mum/2011 had considered similar issue in the light of provisions of section 24(a) and also section 11 of the Income-tax Act, 1961, and held that income of a trust / institution shall be computed under normal commercial principles without resorting to computation mechanism as provided under respective head of income while determining income available 8 ITA 106/Mum/2016 for application u/s 11 of the Act. The relevant observations of the Tribunal are as under:- "8. We have heard the rival parties and gone through the material available on record. On a perusal of the Tribunal order dated 30.09.2013 in ITA Nos.6970 ....
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.... by the tribunal in the case of Pravin Shah Trust vs. Dy. CIT(in ITA No. 4782/Mum/2010 dated 05. 07. 2013): 9 ITA 106/Mum/2016 3.3.... That is, an income exempt u/c. HI of 'the Act, not forming of the total income, would not enter the computation process determine the quantum of income under the relevant head of each of which has its own computation provisions. ' To the same effect and purport are its observationsin the case of LKP Securities Ltd.(in ITA Nos. 638 & W93/Mum/20l2 dated 17.05.2013): '14 ....... The income (and loss, which is only negative income) failing under chapter in of the Ad d/iu, uius, exempt from the levy of the tax, would not form part of the computation of the income under Chapter IV of the Act. That in fact is a fundamental premise; the basis of sec. HA of the Act. The Revenue's case in this regard is unexceptional, and we confirm the same. ' In both the decisions, the tribunal relied on the decision in the case of Harprasad & Co. (P.) Ltd. (supra). The reliance by the id. CIT(A) on the Circular issued by the Board (No. 5P(LXX6) dated 19.06.1968), explaining the position In the matter, is also apposite. It stands explained that o....
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.... the assessee has been allowed ad the expenditure on repairs and maintenance as debited in its accounts, i.e., on actual basis (Rs. 11.97 lacs/PB 1 pg. 39), even as directed by the Id. CIT(A), and which fact was also clarified by us during hearing. Accordingly, the assessee f s ground/s for the claim of the standard deduction u/s.24 fail. We decide accordingly. Finally, the reliance by the assessee on the decision in the case of IAC, Mumbai vs. Saurashtra Trust [2007] 1061TO 1 (Mum) (SB) is, under the circumstances, misplaced. The said decision is, firstly, sansany reference to any precedents; nay, even without a discussion of the law in the matter. This aspect would in fact become clear in view of the questions referred to and answered by tribunal. As a reading of its order would show (refer para 1), are not directly connected with the issue before us. decision, thus, would be of no assistance to the assessee, w/jffi fve having even otherwise decided the matter following the precedentsin the matter, so that the decision in the case of of Baroda v. H.C Shrivastava[2002] 256 TTR 385 (Bom), advocating judicial discipline with reference to the decision by the apex court in CCE v. D....