The Commissioner of Income-tax (Exemptions) v. Padma Education and Welfare Society
[Citation -2020-LL-1012-48]

Citation 2020-LL-1012-48
Appellant Name The Commissioner of Income-tax (Exemptions)
Respondent Name Padma Education and Welfare Society
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act Income-tax
Date of Order 12/10/2020
Assessment Year 2014-15
Judgment View Judgment
Keyword Tags carry forward of deficit • accumulation of income • application of income • expenses incurred • corpus donation • trust property • exempt income • income earned
Bot Summary: This tax appeal under Section 260A of the Income Tax Act, 1962 is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal 'B' Bench, Ahmedabad dated 6 th August, 2019 in the ITA No.665/Ahd/2018 for the A.Y.2014-15. The Revenue has proposed the following question for the consideration of this Court: Whether on the facts and circumstances of the case and in law, the Appellate Tribunal was justified in allowing the claim of the assessee for carry forward of deficit, ignoring the fact that there is no express provision in the Income Tax Act, 1961 allowing such claim, and without appreciating the fact that this would have the effect of granting double benefits to the assessee, first as accumulation of income u/s. 11(1)(a) or Corpus donation u/s.11(1)(d) in earlier/current year, or exempt income u/s. 10(34), and then Page 1 of 3 Downloaded on : Fri Oct 23 13:29:45 IST 2020 C/TAXAP/327/2020 ORDER as application of income u/s.11(1)(a) in subsequent years which is legally not permissible 3. This is the well settled position that income derived from trust property has to be determined on commercial principles and if commercial principles for determining the income are applied, it is but natural that the adjustment of the expenses incurred by the trust for charitable and religious purposes in the earlier year against income earned by the trust in the subsequent year will have to be regarded as application of income of the trust for charitable and religious purposes in the subsequent year in which such adjustment has been made having regard to the benevolent provisions contained in section 11 of the Act and will have to be excluded from the income of the trust under section 11(1). The order passed by the learned CIT applying such ratio while allowing carry forward deficit of Rs.6,49,06,986/- does not call for any interference. We do not find any material infirmity in the impugned order passed by the Tribunal while taking the aforesaid view.


C/TAXAP/327/2020 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 327 of 2020 COMMISSIONER OF INCOME TAX (EXEMPTIONS) Versus PADMA EDUCATION AND WELFARE SOCIETY Appearance: MRS MAUNA M BHATT(174) for Appellant(s) No. 1 for Opponent(s) No. 1 CORAM: HONOURABLE CHIEF JUSTICE MR. VIKRAM NATH and HONOURABLE MR. JUSTICE J.B.PARDIWALA Date : 12/10/2020 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1. This tax appeal under Section 260A of Income Tax Act, 1962 (for short Act, 1962 ) is at instance of Revenue and is directed against order passed by Income Tax Appellate Tribunal 'B' Bench, Ahmedabad dated 6 th August, 2019 in ITA No.665/Ahd/2018 for A.Y.2014-15. 2. Revenue has proposed following question for consideration of this Court: Whether on facts and circumstances of case and in law, Appellate Tribunal was justified in allowing claim of assessee for carry forward of deficit, ignoring fact that there is no express provision in Income Tax Act, 1961 allowing such claim, and without appreciating fact that this would have effect of granting double benefits to assessee, first as accumulation of income u/s. 11(1)(a) or Corpus donation u/s.11(1)(d) in earlier/current year, or exempt income u/s. 10(34), and then Page 1 of 3 Downloaded on : Fri Oct 23 13:29:45 IST 2020 C/TAXAP/327/2020 ORDER as application of income u/s.11(1)(a) in subsequent years which is legally not permissible? 3. Tribunal, in its impugned order in para-7 has observed thus:- 7. This is well settled position that income derived from trust property has to be determined on commercial principles and if commercial principles for determining income are applied, it is but natural that adjustment of expenses incurred by trust for charitable and religious purposes in earlier year against income earned by trust in subsequent year will have to be regarded as application of income of trust for charitable and religious purposes in subsequent year in which such adjustment has been made having regard to benevolent provisions contained in section 11 of Act and will have to be excluded from income of trust under section 11(1) (a). Such ratio has been laid by Jurisdictional High Court in matter of Shri Plot Swetamber Murti Pujak Jain Mandal (supra). order passed by learned CIT (A) applying such ratio while allowing carry forward deficit of Rs.6,49,06,986/- does not call for any interference. Hence, revenue's appeal is dismissed. We find that assessee's case is squarely covered by judgment passed by Coordinate Bench as mentioned herein above which has been decided in favour of assessee by allowing carry forward deficit and carefully following same we find no infirmity in order passed by Ld. CIT (A) in allowing appeal preferred by assessee so as to warrant interference. Hence, Revenue's appeal fails and thus dismissed. In result, appeal filed by Revenue is dismissed. Order pronounced in Court on 06.08.2019 at Ahmedabad. 4. Thus, it appears that Tribunal has relied upon decision of this High Court rendered in case of CIT vs. Shri Plot Shwetambar Murtipujak Jain Mandal, 211 ITR 293 (Guj.) and has taken view that income derived by trust from its properties should be determined on basis of Page 2 of 3 Downloaded on : Fri Oct 23 13:29:45 IST 2020 C/TAXAP/327/2020 ORDER commercial principles and if commercial principles are made available in determining income, it would be obvious that assessment of expenses incurred by trust for charitable and religious purposes in earlier year against income earned by trust in subsequent year will have to be considered as application of income of trust for charitable and religious purposes in subsequent year in which such adjustment is made. 5. We do not find any material infirmity in impugned order passed by Tribunal while taking aforesaid view. This appeal fails and is hereby dismissed. (VIKRAM NATH, CJ) (J. B. PARDIWALA, J) Vahid Page 3 of 3 Downloaded on : Fri Oct 23 13:29:45 IST 2020 Commissioner of Income-tax (Exemptions) v. Padma Education and Welfare Society
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