DY DIT (E)-I(1), MUMBAI v. MAHARASHTRA STATE ROAD TRANSPORT CORPN., MUMBAI

ITA 4779/MUM/2009 | 2004-2005
Pronouncement Date: 23-03-2011 | Result: Dismissed

Appeal Details

RSA Number 477919914 RSA 2009
Assessee PAN AAACM4699J
Bench Mumbai
Appeal Number ITA 4779/MUM/2009
Duration Of Justice 1 year(s) 7 month(s) 6 day(s)
Appellant DY DIT (E)-I(1), MUMBAI
Respondent MAHARASHTRA STATE ROAD TRANSPORT CORPN., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 23-03-2011
Date Of Final Hearing 17-03-2011
Next Hearing Date 17-03-2011
Assessment Year 2004-2005
Appeal Filed On 17-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI R.K. PANDA (AM) & SHRI VIJAY PAL RAO ( JM) I.T.A.NO.4779/MUM/2009 (A.Y. 2004-05) DY.DIRECTOR OF INCOME-TAX (E)-I(1) R.NO.504 PIRAMAL CHAMBERS 5 TH FLOOR PAREL MUMBAI-400 012. VS. MAHARASHTRA STATE ROAD TRANSPORT CORPORATION MAHARASHTRA VAHATUK BHAVAN DR.ANANDRAO NAIR MARG MUMBAI CENTRAL MUMBAI-400 008. PAN: AAACM4699J APPELLANT RESPONDENT APPELLANT BY SHRI SUMEET KUMAR. RESPONDENT BY NONE. O R D E R PER VIJAY PAL RAO JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-XXXII MUMBAI DATED 29-05-2009 FOR THE ASSTT. YEAR 2004-0 5. THE REVENUE HAS RAISED A SOLITARY COMMON ISSUE IN THIS APPEAL AS UNDER : 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN DIRECTING THE AO TO G RANT CARRY FORWARD OF THE DEFICIT OF RS.1796654011/- TO THE SUBS EQUENT YEAR FOR BEING SET OFF AGAINST THE SURPLUS IF ANY IN T HE SUBSEQUENT YEARS IGNORING THAT THE ASSESSEE HAS NO SURPLU S FOR THE CURRENT YEAR INCOME AND THE DEFICIT O CLAIMED HAS ARIS E DUE TO EXCESS EXPENDITURE BEING INCURRED BY THE TRUST. 2. WE HAVE HEARD THE LD. D.R. AND CONSIDERED THE RE LEVANT MATERIAL ON RECORD. SINCE NOBODY HAS APPEARED ON BEHALF OF THE ASSESSEE WE HAVE NO PRIVILEGE TO HEAR THE ASSESSEE. ACCORDINGLY WE PRO CEED TO DISPOSE OF THE APPEAL EX PARTE. ITA NO.4779/M/09 MSRTC 2 3. AFTER CONSIDERING THE SUBMISSIONS OF THE LD. D .R. AND PERUSING THE ORDERS OF THE AO AS WELL AS THE CIT(A) WE FIND THAT THE C IT(A) HAS DECIDED THE ISSUE BY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING (264 ITR 110) AND HAS HELD AS UNDER : 3. THE EXPLANATION VIDE STATEMENT OF FAC T HAS STATED THAT THEY ARE ENTITLED TO CARRY FORWARD AND SET OFF OF T HE DEFICIT IN VIEW OF THE JUDGEMENT OF HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VS. SHRI PLOT SWETAMBER MURTI PUJAK MAN DAL 211 ITR 293 AS WELL AS THE JUDGEMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING 2 64 ITR 110. IT HAS BEE DECIDED IN THESE JUDGMENTS THAT THE DEFI CIT IF ANY IN RESPECT OF A TRUST REGISTERED U/S.12-A WHICH IS ENTITLED FOR EXEMPTION U/S.11 OF THE ACT SHOULD BE CARRIED FORW ARD FOR SET-OFF IN SUBSEQUENT YEARS IN RESPECT OF FUTURE AP PLICATION OF INCOME FOR CHARITABLE PURPOSES. 4. I HAVE CONSIDERED THE SUBMISSIONS OF TH E APPELLANT AND AGREE WITH THE SAME. THE JUDGEMENT OF HONBLE HIGH COURT IN THE CASE OF INSTITUTE OF BANKING (SUPRA) IN THIS RE GARD IS QUITE CLEAR AND BINDING. IT HAS BEEN HELD THAT THE TRIBU NAL WAS JUSTIFIED IN LAW IN ALLOWING CARRY FORWARD OF THE D EFICIT OF EARLIER YEARS AND SE-OFF AGAINST THE SURPLUS OF THE SUBSEQUENT YEARS. IN VIEW OF THIS JUDGEMENT THEREFORE I AM O F THE VIEW THAT THE APPELLANT IS ENTITLED TO CARRY FORWARD OF HE DEFICIT OF THE CURRENT YEAR AND ITS SET-OFF IN THE SUBSEQUENT YEARS. I HOLD ACCORDINGLY. IT IS TO BE NOTED HAT THE ISSUE IS COVERED BY THE D ECISION OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA) IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE HONBLE HIGH COURT ADJUDICATED THE ISS UE AS UNDER : NOW COMING TO QUESTION NO.3 THE POINT WHICH ARISE S FOR CONSIDERATION IS: WHETHER EXCESS OF EXPENDITURE IN THE EARLIER YEARS CAN BE ADJUSTED AGAINST THE INCOME OF THE SUB SEQUENT YEAR AND WHETHER SUCH ADJUSTMENT SHOULD BE TREATED AS APPLICATION OF INCOME IN THE SUBSEQUENT YEAR FOR CH ARITABLE PURPOSES ? IT WAS ARGUED ON BEHALF OF THE DEPARTMEN T THAT EXPENDITURE INCURRED IN THE EARLIER YEARS CANNOT BE MET OUT OF THE INCOME OF THE SUBSEQUENT YEAR AND THAT UTILIZAT ION OF SUCH INCOME FOR MEETING THE EXPENDITURE OF EARLIER YEARS WOULD NOT AMOUNT TO APPLICATION OF INCOME FOR CHARITABLE OR R ELIGIOUS PURPOSES. IN THE PRESENT CASE THE ASSESSING OFFICE R 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 INCOM E WAS ASSESSABLE UNDER SELF-CONTAINED CODE MENTION IN SEC TION 11 TO ITA NO.4779/M/09 MSRTC 3 SECTION 13 OF THE INCOME-AX ACT AND THAT THE INCOME OF THE CHARITABLE TRUST WAS NOT ASSESSABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS UNDER SECTION 28 IN WHICH TH E PROVISION FOR CARRY FORWARD OF LOSSES WAS RELEVANT. THAT IN T HE CASE OF A CHARITABLE TRUST THERE WAS NO PROVISION FOR CARRY FORWARD OF THE EXCESS EXPENDITURE OF EARLIER YEARS TO BE ADJUS TED AGAINST INCOME OF THE SUBSEQUENT YEARS. WE DO NOT FIND ANY MERIT IN THIS ARGUMENT OF THE DEPARTMENT. INCOME DERIVED FRO M THE TRUST PROPERTY HAS ALSO GOT TO BE COMPUTED ON COMME RCIAL PRINCIPLES AND IF COMMERCIAL PRINCIPLES ARE APPLIED THEN ADJUSTMENT OF EXPENSES INCURRED BY THE TRUST FOR CH ARITABLE AND RELIGIOUS PURPOSES IN EARLIER YEARS AGAINST THE INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAV E TO BE REGARDED AS APPLICATION OF INCOME OF THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE SUBSEQUENT YEAR IN WH ICH ADJUSTMENT HAS BEEN MADE HAVING REGARD TO THE BENEV OLENT PROVISIONS CONTAINED IN SECTION 11 OF THE ACT AND T HAT SUCH ADJUSTMENT WILL HAVE TO BE EXCLUDED FROM THE INCOME OF THE TRUST UNDER SECTION 11(1)(A) OF THE ACT. OUR VIEW I S ALSO SUPPORTED BY THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF CIT V. SHRI PLOT SWETAMBER MURI PUJAN JAIN MANDIR [1995] 211 ITR 293. ACCORDINGLY WE ANSWER QUESTION NO. 3 IN THE AFFIRMATIVE I.E. IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. RESPECTFULLY FOLLOWING THE ABOVENOTED DECISION OF H ONBLE JURISDICTIONAL HIGH COURT WE FIND NO REASON TO INTERFERE WITH THE ORDE R OF THE CIT(A). THE SAME IS UPHELD. 4. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON THE 23RD DAY OF MARCH 201 1. SD/- SD/- (R.K. PANDA) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 23RD MARCH 2011. NG: COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-XXXII MUMBAI. 4 DIT(E) MUMBAI. ITA NO.4779/M/09 MSRTC 4 5.DR H BENCH MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER ASST.REGISTRAR ITAT MUMBAI. ITA NO.4779/M/09 MSRTC 5 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 17-03-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 17-03-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER