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 ITO vs. Vikram A. Pradhan (ITAT Mumbai)

Asst. DIT (Exemption)-II(2) M/s. Vaibhav Medical & Room No. 507, Piramal Chambers Education Foundation Lalbaug, Parel Vs. C-1, Aditya Birla Centre Mumbai 400012 S.K. Ahire Marg, Worli Mumbai 400030
September, 20th 2013
                IN THE INCOME TAX APPELLATE TRIBUNAL
                           "F" Bench, Mumbai

                 Before Shri D. Manmohan, Vice President
             and Shri D. Karunakara Rao, Accountant Member

                          ITA No. 2248/Mum/2012
                          (Assessment Year: 2007-08)

     Asst. DIT (Exemption)-II(2)        M/s. Vaibhav Medical &
     Room No. 507, Piramal Chambers Vs. Education Foundation
     Lalbaug, Parel                     C-1, Aditya Birla Centre
     Mumbai 400012                      S.K. Ahire Marg, Worli
                                        Mumbai 400030
                                        PAN - AAATB3207A
                 Appellant                      Respondent

                    Appellant by:     Shri D. Prabhakar Reddy
                    Respondent by:    Shri Ronak G. Doshi

                    Date of Hearing:       10.09.2013
                    Date of Pronouncement: 10.09.2013

                                   ORDER

Per D. Manmohan, V.P.

      This appeal by the Revenue is directed against the order passed by the
CIT(A)-I, Mumbai and it pertains to A.Y. 2007-08.

2.     The following grounds were urged by the Revenue: -

      "1. Whether on the facts of the case and in law, the Ld. CIT(A) erred
          in allowing the carry forward of deficit and allowing set off
          against the income of the subsequent years, as allowing the
          deficit will tantamount to double deduction on account of
          expenditure out of exempt income.
      2.   Whether on the facts of the case and in law, the Ld. CIT(A) was
           right in ignoring the ratio of Hon'ble Supreme Court judgement in
           the case of Escorts Ltd. vs. Union of India (199 ITR 43) wherein
           Hon'ble Supreme Court has held that double deduction cannot
           be presumed if the same is not specifically provided by law, in
           addition to normal deduction."

3.     We have heard the learned D.R. as well as the learned counsel for the
assessee in this regard and carefully perused the record. The assessee is a
charitable trust registered with Charitable Commissioner as well as under
                                      2                   ITA No. 2248/Mum/2012
                                            Vaibhav Medical & Education Foundation




section 12A of Income Tax Act, 1961. The activities of the Trust are to
provide financial assistance to various charitable institutions for medical
relief, sports and cultural activities. For the year under consideration the
assessee claimed set off of deficiency of earlier years against current year's
income. In the opinion of the AO there is no provision for carry forward of
expenditure since there is only a provision for carry forward of income under
section 11(2) of the Act.

4.    Aggrieved by the order of the AO the assessee contended before the
CIT(A) that the issue stands squarely covered by the decision of the Hon'ble
Bombay High Court in the case of CIT vs. Institute of Banking Personnel
264 ITR 110 as well as the decision of the Hon'ble Gujarat High Court in the
case of CIT vs. Swetamber Murti Pujak 211 ITR 293. It was thus contended
that the excess expenditure incurred in the earlier years can be carried
forward and adjusted against the income of the current year and any
unadjusted amount can be allowed to be carried forward.

5.    The learned CIT(A) accepted the contention of the assessee in the light
of the decisions cited supra. He further observed that the deficit in each year
should be worked out without considering the accumulation of 25%/15%.
Accordingly the AO was directed to verify the records and workout the
correct amount of loss and allow the balance loss, if any, to be carried
forward.

6.    Aggrieved by the order of the learned CIT(A) Revenue is in appeal
before us. At the time of hearing the learned D.R. submitted that in the
absence of clear statutory prescription permitting the assessee to carry
forward and set off against the income of the current year the AO was
justified in rejecting the claim of the assessee. It may be noticed that the AO
referred to the judgement of the Hon'ble Bombay High Court (supra) but the
claim of the assessee was rejected on the ground that the decision of the
Hon'ble Bombay High Court has not reached its finality though the
Department could not file SLP on technical reasons. The learned D.R. could
not point out any direct contrary decision on this point and he impliedly
admitted that against the view taken by the Hon'ble Bombay High Court
                                        3                    ITA No. 2248/Mum/2012
                                               Vaibhav Medical & Education Foundation




Revenue has not taken in further appeal/SLP to the Hon'ble Supreme Court.
Having regard to the circumstances of the case we are of the firm view that
the order passed by the learned CIT(A) does not call for any interference. We,
therefore, dismiss the appeal filed by Revenue and uphold the order of the
learned CIT(A).

Order pronounced in the open court on 10th September, 2013.

                   Sd/-                                     Sd/-
           (D. Karunakara Rao)                         (D. Manmohan)
           Accountant Member                           Vice President

Mumbai, Dated: 10th September, 2013

Copy to:

   1.   The   Appellant
   2.   The   Respondent
   3.   The   CIT(A) ­ I, Mumbai
   4.   The   Director of Income Tax (Exemptions), Mumbai
   5.   The   DR, "F" Bench, ITAT, Mumbai

                                                         By Order

//True Copy//
                                                    Assistant Registrar
                                            ITAT, Mumbai Benches, Mumbai
n.p.

 
 
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