Carry forward set off charitable loss us 11 12 allowed by ITAT despite there being no such provisions but for the various decisions of High Courts
ABCAUS Case Law Citation:
1040 (2016) (10) ITAT
Brief Facts of the Case:
The respondent assessee was a charitable society. The income tax return of the society was selected for scrutiny.
During the course of the proceedings, the Assessing Officer (AO) though observed that the activities of the assessee society were apparently charitable in nature and within the meaning of section 2(15) of the Income Tax Act, 1961, he did not allow the benefit of carry forwards of deficit / loss and passed his order u/s 143(3).
Aggrieved with the aforesaid order, assessee preferred an appeal before the CIT(A), who allowed the appeal of the assessee.
The Revenue was aggrieved against the order of the CIT(A) and had filed the present appeal before the Tribunal.
Observations made the Tribunal:
The ITAT observed that CIT(A) had elaborately discussed the issues in dispute by considering the submissions of the assessee and adjudicated the issues.
CIT (A) had held that the exemption provisions u/s 11, 12, 12A, 12AA & 13 are independent provisions for the computation of income in the case of NGOs, Trust or societies etc. and for allowing exemption in the case of charitable or religious institutions and in these provisions there are no provisions for adjustment or set off of deficit or loss against income of the current year (Section 70) or adjustment of brought forward loss against the current year’s income or carry forward of current year’s-loss against the adjustment of the subsequent year’s income or for allowing any depreciation in fixed assets which are applicable in the case of business concerns only.
However, CIT(A) was of the view that the various High Courts had taken a view in favour of the assessees that the income is to be computed in commercial principles and as such adjustment of brought forward loss or deficit and carry forward of loss/ deficit is to be allowed and the several case laws as quoted were as under:-
(i) CIT vs. Maharana of Mewar Charitable Foundation, 164 ITR 439 (Raj) 1987.
(ii) CIT vs. Shri Plot Swetamaber Murti Pujak Jain Mandai, 211 ITR 293 (Guj) 1995.
(iii) CIT vs. Matrisewa Trust, 242 ITR 20 (Mad) 2000
(iv) Govindu Naicker Estate vs. ADIT, 248 ITR 110 (Bom) 2003.
(v) CIT vs. Institute of Banking, 264 ITR 110 (Bom) 2003 .
(vi) DIT vs. Raghuvanshi Charitable Trust, 197 Taxmann 170 (Delhi) 2011
(vii) CIT vs. Gujarat Samaj, 349 ITR 559 (MP) 2012
ITAT held that though there is no specific provisions u/s 11, 12, 12A, 12AA & 13 for allowing the benefit of carry forward or adjustment of deficit or loss etc. but keeping in view the decisions of the various High Courts in favour of the assessee on the same issue, and to maintain the judicial discipline, CIT(A) has rightly followed the same and directed the AO to allow the benefit of carry forward of the deficit or loss.