BOMBAY SCOTTISH ORPHANAGE SCOEITY, MUMBAI v. ITO (E) 1(1), MUMBAI

ITA 6665/MUM/2012 | 2003-2004
Pronouncement Date: 19-10-2016

Appeal Details

RSA Number 666519914 RSA 2012
Assessee PAN AAATB3820B
Bench Mumbai
Appeal Number ITA 6665/MUM/2012
Duration Of Justice 3 year(s) 11 month(s) 16 day(s)
Appellant BOMBAY SCOTTISH ORPHANAGE SCOEITY, MUMBAI
Respondent ITO (E) 1(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-10-2016
Appeal Filed By Assessee
Bench Allotted B
Tribunal Order Date 19-10-2016
Date Of Final Hearing 22-12-2015
Next Hearing Date 22-12-2015
Assessment Year 2003-2004
Appeal Filed On 02-11-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH MUMBAI BEFORE: SHRI R.C.SHARMA AM & SHRI SANDEEP GOSAIN JM ITA NO.6665 - 6669 /MUM/2012 ( ASSESSMENT YEAR : 200 3 - 200 4 2005 - 2006 2006 - 2007 2008 - 2009 & 2009 - 2010 ) BOMBAY SCOTTISH ORPHANAGE SOCIETY VEER SAVARKAR MARG MAHIM MUMBAI - 400016 VS. INCOME TAX (E) - 1(1) MUMBAI PAN/GIR NO. : AAATB3820B ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : MS. USHA GOPALAN REVENUE BY : MR. NEIL PHILIP DATE OF HEARING : 1 2 /07/2016 DATE OF PRONOUNCEMENT : 19/10 /2016 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2003 - 2004 2005 - 2006 2006 - 2007 2008 - 2009 & 2009 - 2010 . THE AO HA S PASSED ORDER UNDER SECTION 143(3) READ WITH SECTION 147 FOR THE ASSESSMENT YEAR 2003 - 2004 TO 2006 - 2007 AND UNDER SECTION 143(3) FOR THE ASSESSMENT YEAR 2008 - 2009 AND 2009 - 2010. 2. THE FACTS IN BRIEF ARE THAT ASSESSEE IS A CHARITABLE TRUST REGISTERED UND ER SECTION 12A(A) OF THE INCOME TAX ACT AND ALSO UNDER THE BOMBAY PUBLIC TRUST ACT. OBJECT OF THE ASSESSEE IS TO PROVIDE EDUCATION TO CHILDREN OF ALL COMMUNITIES AND RELIGIONS. DURING THE COURSE OF ASSESSMENT THE AO DECLINED ASSESSEES 2 ITA NO. 6665 - 6669/MUM/2012 BOMBAY SCOTTISH ORPHANAGE SOCIETY CLAIM OF DEPRECIAT ION AND PROVISION FOR GRATUITY. AO ALSO REDUCED DEDUCTION CLAIMED UNDER SECTION 11(1) (A). IN ONE OF THE ASSESSMENT YEAR I.E. 2009 - 10 THE AO DECLINED CARRY FORWARD OF DEFICIT. ASSESSEE IS IN APPEAL BEFORE US IN RESPECT OF ALL THE YEARS UNDER CONSIDERATION. 3. COMMON GROUNDS HAVE BEEN TAKEN BY ASSESSEE IN ALL YEARS UNDER CONSIDERATION. THE FIRST GRIEVANCE OF ASSESSEE RELATE TO DISALLOWANCE OF GRATUITY PAYMENT. AT THE OUTSET LEARNED AR PLACED ON RECORD ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSE SSMENT YEAR 2007 - 2008 DATED 27/04/2016 WHEREIN EXACTLY SIMILAR CLAIM WAS DEALT WITH BY TRIBUNAL AND MATTER WAS RESTORED BACK TO FILE OF AO AFTER HAVING THE FOLLOWING OBSERVATION. IT IS NOTED THAT THE YEAR BEFORE US IS ASSESSMENT YEAR 2007 - 08 AND THE LD.CI T(A) HAS ALSO MENTIONED THE ASSESSMENT YEAR OF THE ORDER OF HIS PREDECESSOR RELIED UPON BY HIM AS 2007 - 08. THERE SEEMS TO BE SOME CONFUSION ON THE PART OF THE CIT(A). NONE OF THE PARTIES WAS ABLE TO BRING BEFORE US THE CORRECT FACTS NOR ANY INFORMATION WAS GIVEN ABOUT THE ULTIMATE FATE THE ORDER WHICH HAS BEEN RELIED UPON BY THE ID.CLT(A}. IT IS FURTHER NOTED THAT A S SESSEE'S COUNSEL WAS ASKED DURING THE COURSE OF HEARING BY US TO SHOW US THE EVIDENCES WITH REGARD TO BASIS OF COMPUTATION OF AMOUNT OF GRATUI TY PROV IDED FOR IN THE BOOKS OF ACCOUNT. THE ID. COUNSEL WAS UNABLE TO READILY SHOW US THE REQUIRED DETAILS AND EVIDENCES IN THIS REGARD. IT IS ALSO NOTED BY US THAT THE ID.A O HAS ALSO NOT COMMENTED ANYTHING IN THE ASSESSMENT ORDER WITH REGARD TO COMPUTATI ON OF GRATUITY. IT HAS BEEN SUBMITTED BY THE ID.CO U NSEL THAT IF THE AMOUNT OF GRATUITY PAYABLE HAS ACCRUED DURING THE YEAR AND THE AMOUNT HAS BEEN CORRECTLY COMPUTED THEN THE CLAIM OF GRATUITY SHOULD BE ALLOWED. WE ARE INCLINED TO AGREE WITH SUBMISSION OF THE ASSESSEE PRINCIPLY. IN OUR VIEW AN EXPENSE INCURRED OR ACCRUED DURING THE YEAR SHOULD BE ALLOWED AS AN EXPENSE OF THAT YEAR EVEN IF PAID SUBSEQUENTLY. BUT SINCE REQUISITE FACTS DETAILS AND EVIDE NCES ARE NOT AVAILABLE BEFORE US WE FIND IT P ROPER T O SEND THIS GROUND BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSEE SHALL SUBMIT REQUISITE DETAILS AND EVIDENCES TO THE ASSESSING OFFICER SHOWING THE BASIS OF COMPUTATION AND THE ASSESSING OFFICER SHALL DECIDE THIS ISSUE AFRESH KEEPING IN VIEW THE GUIDELINES GIVEN ABOVE AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO 3 ITA NO. 6665 - 6669/MUM/2012 BOMBAY SCOTTISH ORPHANAGE SOCIETY THE ASSESSEE. THUS WITH THESE DIRECTIONS THIS GROUND IS SENT BACK TO THE ASSESSING OFFICER AND MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSE' 4. WE HAVE GONE THROUGH THE ORDER OF T HE TRIBUNAL IN ASSESSEE' S OWN CASE WHEREIN CLAIM ON ACCOUNT OF DEDUCTION OF GRATUITY WAS RESTORED BACK TO AO BY OBSERVING THAT EXPENSES INCURRED OR ACCRUED DURING THE YEAR SHOULD BE ALLOWED AS AN EXPENSE OF THAT YEAR EVEN IF PAID SUBSEQUENTLY. S INCE REQUI SITE FACTS DETAILS AND EVIDE NCES WERE NOT AVAILABLE BEFORE THE TRIBUNAL MATTER WAS RESTORED BACK TO THE FILE OF THE AO WITH A DIRECTION TO THE ASSESSEE TO FILE REQUISITE DETAILS AND EVIDENCES AND DIRECTION TO THE AO FOR DECIDING THE ISSUE AFRESH KEEPING IN VIEW GUIDELINES LAID DOWN BY THE TRIBUNAL IN THE SAID ORDER. 5. AS THE FACTS AND CIRCUMSTANCES DURING ALL THE YEARS UNDER CONSIDERATION ARE SAME RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE THE ISSUE WITH REGARD TO DEDUCTION ON ACCOUNT OF GRATUITY IS RESTORED BACK TO THE FILE OF THE AO FOR DECIDING AFRESH IN TERMS OF THE DIRECTION GIVEN BY TRIBUNAL IN THE ABOVE MENTIONED ORDER. 6. IN THE ASSESSMENT YEARS 2003 - 2004 AND 2005 - 2006 ASSESSEE IS AGGRIEVED FOR REDUCING THE DEDUCTIO N OF DEEMED ACCUMULATION UNDER SECTION 11(1)(A). WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE A.O. HAS COMPUTED THE DEDUCTION U/S. 11(1)(A) @15% OF THE INCOME ARRIVED AT AFTER DEDUCTING DEPRECIATION FROM THE GROSS INCOME. HOWEVER IN THE 4 ITA NO. 6665 - 6669/MUM/2012 BOMBAY SCOTTISH ORPHANAGE SOCIETY ASSESSM ENT YEAR 2003 - 2004 THE AO HAS COMPUTED DEDUCTION U/S. 11(1)(A)@15% ON RS.5 66 86 794/ - AND ALLOWED DEDUCTION OF RS.85 03 019/ - ONLY. IN THE ASSESSMENT YEAR 2005 - 2006 DEDUCTION ALLOWABLE U/S 11(1)(A) WORKS OUT TO RS.1 02 73 180/ - BEING 15% OF RS.6 84 87 87 0/ - HOWEVER T HE ASSESSING OFFICER HAS ALLOWED DEDUCTION OF RS.96 13 803/ - WHICH IS 15% OF TOTAL INCOME AFTER DEPRECIATION I.E. 15% OF RS.6 40 92 021 WHICH IS INCOME AFTER DEPRECIATION. AS PER THE PROVISIONS DEDUCTION U/S 11(1)(A) IS ALLOWABLE ON INCOME AS COMPUTED BEFORE DEPRECIATION. 7 . IN VIEW OF THE ABOVE DISCUSSION WE DIRECT THE AO TO RECOMPUTE THE ALLOWABLE DEDU CTION U/S 11(1)(A) ON THE INCOME SO COMPUTED BEFORE ALLOWING CLAIM OF DEPRECIATION. WE DIRECT ACCORDINGLY. 8 . IN THE ASSESSMENT YEAR 2009 - 2010 ASSESSEE IS AGGRIEVED FOR NOT ALLOWING CARRY FORWARD OF DEFICIT OF RS.8 65 36 862/ - . WE HAVE CONSIDERED RIVAL CONTENTIONS. THE ISSUE WITH REGARD TO CARRY FORWARD OF DEFICIT IS COVERED BY THE DECISION OF JURISDICTIONAL HIGH COURT IN CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (264 ITR 110) WHEREIN IT WAS HELD THAT INCASE OF CHARITABLE TRUST WHOSE INCOME IS EXEMPT UNDER SECTION 11 EXCESS OF EXPENDITURE IN THE EARLIER YEARS CAN BE ADJUSTED AGAINST INCOME OF SUBSEQUENT YEARS AND SUCH ADJUSTMENT WOUL D BE APPLICATION OF INCOME FOR SUBSEQUENT YEARS. RESPECTFULLY FOLLOWING THE DECISION OF JURISDICTIONAL HIGH 5 ITA NO. 6665 - 6669/MUM/2012 BOMBAY SCOTTISH ORPHANAGE SOCIETY COURT WE DIRECT THE AO TO ALLOW ASSESSEES CLAIM OF CARRY FORWARD OF DEFICIT OF EARLIER YEARS. 9 . AS WE HAVE ALREADY DECIDED ALL THE THREE ISSUES O N MERIT WE ARE NOT TOUCHING THE LEGAL GROUND TAKEN BY ASSESSEE ON ACCOUNT OF REOPENING OF ASSESSMENT FOR THE ASSESSMENT YEAR 2003 - 04 TO 2006 - 07 OF I.T. ACT . 1 0 . IN THE RESULT APPEALS OF THE ASSESSEE ARE ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. ORD ER PRONOUNCED IN THE OPEN COURT ON THIS 19/10/ 2016. S D/ - ( SANDEEP GOSAIN ) S D/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 19/10/ 2016 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : / BY ORDER / ( ASSTT. REGISTRAR) / ITAT MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) MUMBAI. 4. / CIT 5. / DR ITAT MUMBAI 6. / GUARD FILE. //TRUE COPY//