ITO, Sirsa v. Market Committee, Rania

ITA 563/CHANDI/2011 | 2008-2009
Pronouncement Date: 19-09-2011 | Result: Dismissed

Appeal Details

RSA Number 56321514 RSA 2011
Assessee PAN AAALM0157E
Bench Chandigarh
Appeal Number ITA 563/CHANDI/2011
Duration Of Justice 3 month(s) 27 day(s)
Appellant ITO, Sirsa
Respondent Market Committee, Rania
Appeal Type Income Tax Appeal
Pronouncement Date 19-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 19-09-2011
Date Of Final Hearing 08-09-2011
Next Hearing Date 08-09-2011
Assessment Year 2008-2009
Appeal Filed On 23-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE MS. SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI MEHAR SINGH ACCOUNTANT MEMBER ITA NOS. 561/CHD/2011 ASSESSMENT YEAR: 2007-08 THE ITO VS. THE MARKET COMMITTEE WARD-I KALANWALI SIRSA PAN NO. AAALM0157E & ITA NOS. 563/CHD/2011 ASSESSMENT YEAR: 2008-09 THE ITO VS. THE MARKET COMMITTEE WARD-I RANIA SIRSA PAN NO. AAHFR5988F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MITTAL RESPONDENT BY : SHRI R.R.THAKUR DATE OF HEARING : 08.09.2011 DATE OF PRONOUNCEMENT : 19.09.2011 ORDER PER BENCH BOTH THE APPEALS BY THE REVENUE RELATING TO DIFFERE NT MARKET COMMITTEES ARE AGAINST THE SEPARATE ORDERS OF CIT(A ) ROHTAK DATED 29.3.2011 AND 7.3.2011 RELATING TO ASSESSMENT YEARS 2007-08 AND 2008-09 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF TH E I.T. ACT 1961. 2 2. THE REVENUE HAS RAISED THE FOLLOWING COMMON GROU ND OF APPEAL IN BOTH THE APPEALS:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF EXCESS APPLICATION OF INCOME OF RS. 1 11 82 365 ( ITA NO. 561/CHD/2011) AND RS.7 60 43 369/- (ITA NO.563/CHD/2011) FOR THE EARLIER YEARS AS APPLICATION OF INCOME AGAINST THE CURRENT YEARS INCOME. 3. SHRI S.K.MITTAL APPEARED FOR THE REVENUE AND SHR I R.R. THAKUR APPEARED FOR THE ASSESSEE AND PUT FORWARD THEIR CON TENTIONS 4. BOTH THE APPEALS OF THE REVENUE THOUGH RELATING TO THE DIFFERENT MARKET COMMITTEES WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 5. WE FIND THAT THE MATTER IN QUESTION WAS SENT BAC K BY THE TRIBUNAL IN ITA NO. 405/CHD/2010 VIDE ORDER DATED 26.5.2010 TO THE FILE OF THE CIT(A) TO DECIDE THE ISSUE ON THE MERITS OF THE CLA IM. 6. WE FIND THAT THE PRESENT ISSUE RAISED BY THE ASS ESSEE IS COVERED BY THE RATIO LAID DOWN BY HON'BLE BOMBAY HIGH COURT IN CIT V INSTITUTE OF BANKING PERSONNEL SELECTION [(2003) 264 ITR 110(BOM )]. THE HON'BLE COURT HELD AS UNDER:- NOW COMING TO QUESTION NO. 3 THE POINT WHICH ARIS ES 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 UTILI SATION OF 3 SUCH INCOME FOR MEETING THE EXPENDITURE OF EARLIER YEARS WOULD NOT AMOUNT TO APPLICATION OF INCOME FOR CHARI TABLE OR RELIGIOUS PURPOSES. IN THE PRESENT CASE THE ASSESS ING OFFICER DID NOT ALLOW CARRY FORWARD OF THE EXCESS OF EXPEND ITURE TO BE SET OFF AGAINST THE SURPLUS OF THE SUBSEQUENT YE ARS ON THE GROUND THAT IN THE CASE OF A CHARITABLE TRUST THEI R 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 CHARITABLE TRUST WAS NOT ASSESSABLE U NDER THE HEAD 'PROFITS AND GAINS OF BUSINESS' UNDER SECTION 28 IN WHICH THE PROVISION FOR CARRY FORWARD OF LOSSES WAS RELEVANT. THAT IN THE CASE OF A CHARITABLE TRUST THERE WAS NO PROVISION FOR CARRY FORWARD OF THE EXCESS OF EXPENDITURE OF E ARLIER YEARS TO BE ADJUSTED AGAINST INCOME OF THE SUBSEQUE NT YEARS. WE DO NOT FIND ANY MERIT IN THIS ARGUMENT OF THE DE PARTMENT. INCOME DERIVED FROM THE TRUST PROPERTY HAS ALSO GOT TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND IF COMMERCIAL PRINCIPLES ARE APPLIED THEN ADJUSTMENT OF EXPENSES INCURRED BY THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE EARLIER YEARS AGAINST THE INCOME EARNED BY THE TRUS T IN THE SUBSEQUENT YEAR WILL HAVE TO BE REGARDED AS APPLICA TION OF INCOME OF THE TRUST FOR CHARITABLE AND RELIGIOUS PU RPOSES IN THE SUBSEQUENT YEAR IN WHICH ADJUSTMENT HAS BEEN MA DE HAVING REGARD TO THE BENEVOLENT PROVISIONS CONTAINE D 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 JUDGM ENT OF THE GUJARAT HIGH COURT IN THE CASE OF CIT V. SHRI PLOT SWETAMBER MURTI PUJAK JAIN MANDAL [1995] 211 ITR 29 3. ACCORDINGLY WE ANSWER QUESTION NO. 3 IN THE AFFIRM ATIVE I.E. IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEP ARTMENT. 7. SIMILAR ISSUE AROSE BEFORE THE HON'BLE DELHI HIG H COURT IN DIRECTOR OF INCOME TAX (EXEMPTION) V RAGHUVANSHI CHARITABLE TRUST & ORS [(2011) 3 SCT 40)] AND ALSO HON'BLE RAJASTHAN HIGH COURT IN CIT V MAHARANA MEWAR CHARITABLE FOUNDATION [(1987)164 ITR 439 (RAJ )] HON'BLE MADRAS HIGH COURT IN CIT V MATRISEVA TRUST (2000) 242 ITR 20(MAD)] AND 4 HON'BLE CALCUTTA HIGH COURT IN CIT V RAMCHANDRA POD DAR CHARITABLE TRUST [164 ITR 666 (CAL)]. IN VIEW OF THE ABOVE SA ID PRINCIPLE BEING LAID DOWN BY VARIOUS COURTS WE UPHOLD THE ORDER OF CIT( A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE CARRY FORWARD OF EXC ESS APPLICATION OF INCOME FOR EARLIER YEARS AS APPLICATION AGAINST THE CURRENT YEAR INCOME. THE GROUND OF APPEAL RAISED BY THE REVENUE IN BOTH THE APPEALS ARE THUS DISMISSED. 8. IN THE RESULT BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF SEPTEMBER 2011. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 TH SEPTEMBER 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR