×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
This appeal, filed by Revenue, being ITA No. 5575/Mum/2017, is directed against appellate order dated 14.06.2017 in appeal no. CIT(A)-I/E-2(6)/2013-14 passed by learned Commissioner of Income Tax (Appeals)-1, Mumbai (hereinafter called “the CIT(A)”), for assessment year(AY) 2010-11, the appellate proceedings had arisen before learned CIT(A) from the assessment order dated 30.01.2013 passed by learned Assessing Officer ( hereinafter called “the AO”) u/s 143(3) of the Income-tax Act, 1961 (hereinafter called “the Act”) for AY 2010-11.
2. The grounds of appeal raised by Revenue in the memo of appeal called “the tribunal”) read as under:- filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter
“ 1. Whether on the facts of the case and in law the Ld. CIT(A) erred in allowing the carry forward of deficit of Rs. 2,30,44,449/- and allowing set off against the income of the subsequent years."
2. Whether, on the facts and in the circumstances of the case and in law, the Ld.CIT (A) erred in allowing the claim of the assessee for carry forward of the said deficit, ignoring the fact that there was no express provision in the I T Act, 1961 permitting allowance of such claim."
3. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in allowing the claim of the assessee for carry forward of the said deficit by relying upon the judgment of Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection, ignoring the fact that the Department has not accepted the said decision of the jurisdictional High Court on merit of the case, but due to smallness of tax effect appeal was not filed before Hon'ble Supreme Court. However, on this issue the department has filed SLPs in other cases before the Hon'ble Apex Court inclusive the case of MIDC (SLP (Civil) 9891 of 2014), in which leave has been granted and the issue is pending for adjudication before the Hon'ble Supreme Court and the case has not reached finality."
4. The appellant prays that the order of the Commissioner of Income Tax (Appeals)-1, Mumbai be set aside and that of the Assessing Officer be restored.
5. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary."
3. The assessee trust is registered with the Director of Income Tax (Exemption), Mumbai u/s. 12A of the Act and u/s. 80G of the Act. The assessee had claimed an amount of Rs. 2,33,03,449/- as excess expenditure over income to be carried forward for setting it off in future years. The AO denied the claim of deficit to be carried forward vide assessment order dated 30.01.2013 passed by the AO u/s 143(3) of the 1961 Act, on the following grounds as under:-
“ There is no provision which allows determination of loss while computing taxable income u/s.11 This is so because Section 11 prescribes certain conditions for claiming exemption. The first 15% of income is exempt u/s.11(1) of the Act, the next 85% of the income requires to be spent during the year so that the entire income may be assessed as exempt. The assessee has a choice to spent a portion of the current income in the succeeding year which it could not spent for certain reasons and that portion of income can be deemed to be applied for the charitable purpose and debited from income.
Further, the assessee has also an option to accumulate its income for certain specified purposes upto 5 years and utilize the same within a span of 5 years and in that case the amount opted to be accumulated is deemed to be applied for charitable or religious purpose and accordingly debited against income.
It is further noted that capital expenditure on construction / acquisition of asset is also treated as application of income and hence the amount of capital expenditure to the extent of available income is deductible from the current income.
Any excess expenditure over income is either out of accumulated income or out of corpus fund received by the trust or out of loss. Accumulated income cannot be further subjected to deduction from the income since deduction in - respect of accumulation has been claimed and allowed in the previous years and any further allowance of the same will amount to double deduction for the same outgoing. If excess expenditure is out of corpus then any corpus received is separately exempt u/s. 11(1)(d) of the Act and hence any further deduction of the same outgoing will