TaxTMI 
TaxTMI 
2022 (2) TMI 590
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....s erred in deleting the disallowance made by the AO on account of development fee received by the assessee trust from the students amounting to Rs. 53,07,564/-. 2. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) is justified in deleting the disallowance made on account development fee of Rs. 53,07,564/- without appreciating the fact that the decision of the Bombay High Court in the case of All Cargo Logistics Pvt. Ltd (ITA No. 1414 of 2013) on similar issue has not been accepted by the department and SLP has been filed which is pending as on date. 3. Whether On the facts and in the circumstances of the case and in law, the Ld.CIT(A) is justified in allowing the assessee to carry forward the deficit, being excess of expenditure over receipts, to subsequent years and the same is eligible to be set-off with the income of subsequent years by relying upon the judgment of Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection (IBPS), ignoring the fact that there was no express provision in the I T Act, 1961 permitting allowance of such claim. 4. Whether on the facts and in the circumstances of t....
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....,02,69,738/- and Rs. 1,48,51,509/- for A.Y. 2011-12, 2012-13 & 2013-14 respectively of the development fee/fund collected by the assessee trust. The AO also made disallowance of carried forward losses claimed by the assessee trust for A.Y. 2011-12, 2012-13 & 2013-14 and thereby framed the assessment under section 153C read with section 143(3) of the Act for A.Y. 2011-12, 2012-13 & 2013-14. 6. The assessee trust carried the matter before the Ld. CIT(A) by way of challenging the assessment orders who has partly allowed the appeals filed by the assessee trust. 7. Feeling aggrieved, the Revenue has come up before the Tribunal by way of challenging the impugned order passed by the Ld. CIT(A) by filing present appeals. 8. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and case law relied upon. 9. Undisputedly, the earlier assessments in this case for A.Y. 2011-12, 2012-13 & 2013-14 were completed under section 143(3) of the Act at the total income at Rs.NIL. It is also not in dispute that the L....
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....u/s 153A/153C of the Act does not empower the AO to adjudicate the issues which are not based on any incriminating material found during the course of search and, hence, in such cases the AO does not have jurisdiction to make additions/disallowances which are not based on any incriminating material found during the course of search. To conclude, in the case of completed/un-abetted assessments, where no incriminating material is found during the course of search, the assessment u/s 153A/153C of the Act is to be made on originally assessed / returned income and no addition or disallowance can be made de hors the incriminating evidences recovered during the course of search. 7.3.35. In this case, the AO has not referred to any incriminating material in the assessment order while making the additions. In the remand report, although the AO has stated that 'books of accounts" and the "receipts of payment" on account of tuition fee paid by the students were seized during the course of search action, but he failed to identify those documents and had not forwarded copies of the same despite of having been asked specifically as mentioned previously. The claim of the Id.AO made i....
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....ion on account of Development Fee is directed to be deleted. The Grounds No. 2 and 3 for AY 2012-13 are accordingly also allowed. 7.3.37. So far as AY 2013-14, is concerned, the material fact in this year remains exactly the same as AY 2011-12, as in this year also assessment was previously completed u/s 143(3) of the Act and there is no reference of any incriminating material in the assessment order and the Id. AO further failed to bring any such material on record even during the remand proceedings. Since, this too is an unabated assessment year, the addition could not have been made without having support of any incriminating material. The grounds No. 1 and 2 of Assessment Year 2013-14 are, therefore, also allowed accordingly. 7.3.38. The contentions and submissions of the assessee as to the merit of this addition for the all the aforesaid assessment years become only academic in view of the above and the same is, therefore, not adjudicated upon for ^the Assessment Years under consideration." 13. We are of the considered view that the Ld. CIT(A) has returned correct findings on the basis of fact and law applicable thereto because when original assessment has....
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....m previous years and also not allowed the losses of the current year to be carried forward. It is observed that while disallowing such claim ld. AO has not placed reliance on any incriminating documents found during the course of search which could be said to be adversely affecting the case of the assessee as to this issue. 8.2.2. The assessee submitted that this disallowance was made previously during the original assessment proceedings and issue has been allowed in favour of appellant by the Ld.CIT(A), and the claim of carry forward and set off has been allowed vide order dated 06.07.2018 and 28.03.2018 for A.Y. 2013-14 and A.Y. 2014-15 respectively. 8.2.3. It was submitted in the online submissions filed that the deficit of impugned year being the excess of expenditure over receipts is eligible for carry forward to subsequent years. It was also submitted that the deficit incurred during previous year is to be regarded as application of funds in subsequent years and thus the appellant is eligible to set-off the deficit of previous year with the income of subsequent years. In this context, the assessee relied on several judicial decisions of Hon'ble Apex Court, J....
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....he Trust for charitable and religious purposes in the earlier years against the income earned by the Trust in the subsequent year will have to be regarded as application of income of the Trust for charitable and religious purposes in the subsequent year in which adjustment has been made having regard to the benevolent provisions contained in section 11 of the Act and that 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. Accordingly, we answer question No. 3 in the affirmative ie., in favour of the assessee and against the Department." ( emphasis supplied) Further, in the case of DIT vs. Mumbai Education Trust reported in 244 Taxman 163, Hon'ble Jurisdictional High Court of Bombay had decided that : "Impugned order of the Tribunal has dismissed the Revenue's appeal on both the issues namely - allowability of depreciation on capital assets acquired for the purposes of carrying out charitable activities and set off of deficit of earlier years against ....
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.... Pradesh had decided that : "In view of s.11(1)(a) it cannot be said 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 being applied for charitable or religious purposes: Having regard to s.11(1)(a) when the income of the trust is used or put to use to meet the charitable or religious purposes it is applied for charitable purpose and the said application of the income for charitable or religious purposes takes place in the year in which the income is adjusted to meet the expenses incurred for charitable or religious purposes. Thus even if the expenses for charitable and religious purposes have been incurred in the earlier year and the said expenses are adjusted against the income of a subsequent year, the income of that year can be said to have been applied for charitable and religious purposes in the year in which expenses incurred for charitable and religious purposes had been adjusted. There are no words of limitation in s.11(1)(a) explaining that the income should have been applied for charitable or religi....
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....e claim of the assessee for set off of excess expenditure of earlier years against current year's income following the above decision of the Hon'ble Jurisdictional High Court (supra)." 8.2.5. It is found that the other Judicial decisions relied upon by the assessee also supports the case of the appellant. In fact, it is evident that the Hon'ble Courts, including the Hon'ble jurisdictional High court, and the Tribunal has consistently pronounced that in case of Charitable Trust excess expenditure over income is to be allowed to be carried forward for setting off against income of subsequent years. 8.2.6. Furthermore, it is found that the decision in the case of CIT vs. Institute of Banking Personnel Selection (supra) has subsequently been followed by the Hon'ble Bombay High Court in the case of Director of Income-tax Exemption v. Society for Applied Microwave Electronic Engineering & Research [2019] 106 taxmann.com 203 (Bom.) and the SLP filed by the department in respect of order in this case has been dismissed by the Hon'ble Apex Court in 106 taxmann.com 204 (SC). 8.2.7. Hence, respectfully following the judicial decisions cited supra, I hold....