The Commissioner Of Income Tax (Exemptions v. Padma Education And Welfare Society ==========================================================

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 327 of 2020 ========================================================== THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) Versus PADMA EDUCATION AND WELFARE SOCIETY ========================================================== Appearance:MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATHandHONOURABLE 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 the Income Tax Act,1962 (for short “the Act, 1962”) is at the instance of the Revenueand is directed against the order passed by the Income TaxAppellate Tribunal 'B' Bench, Ahmedabad dated 6[th] August, 2019in the ITA No.665/Ahd/2018 for the A.Y.2014-15. 2.The Revenue has proposed the following question for theconsideration of this Court: “Whether on the facts and circumstances of the case and inlaw, the Appellate Tribunal was justified in allowing theclaim of the assessee for carry forward of deficit, ignoringthe fact that there is no express provision in the Income TaxAct, 1961 allowing such claim, and without appreciating thefact that this would have the effect of granting doublebenefits to the assessee, first as accumulation of incomeu/s. 11(1)(a) or Corpus donation u/s.11(1)(d) inearlier/current year, or exempt income u/s. 10(34), and then as application of income u/s.11(1)(a) in subsequent yearswhich is legally not permissible?” 3.The Tribunal, in its impugned order in para-7 has observedthus:- “7.This is the well settled position that income derivedfrom trust property has to be determined on commercialprinciples and if commercial principles for determining theincome are applied, it is but natural that the adjustment ofthe expenses incurred by the trust for charitable andreligious purposes in the earlier year against income earnedby the trust in the subsequent year will have to be regardedas application of income of the trust for charitable andreligious purposes in the subsequent year in which suchadjustment has been made having regard to the benevolentprovisions contained in section 11 of the Act and will have tobe excluded from the income of the trust under section 11(1)(a). Such ratio has been laid by the Jurisdictional High Courtin the matter of Shri Plot Swetamber Murti Pujak JainMandal (supra). The order passed by the learned CIT (A)applying such ratio while allowing carry forward deficit ofRs.6,49,06,986/- does not call for any interference. Hence,revenue's appeal is dismissed. We find that the assessee's case is squarely covered by thejudgment passed by the Coordinate Bench as mentionedherein above which has been decided in favour of theassessee by allowing carry forward deficit and carefullyfollowing the same we find no infirmity in the order passedby the Ld. CIT (A) in allowing the appeal preferred by theassessee so as to warrant interference. Hence, theRevenue's appeal fails and thus dismissed. In the result, the appeal filed by the Revenue is dismissed.Order pronounced in the Court on 06.08.2019 atAhmedabad.” 4.Thus, it appears that the Tribunal has relied upon thedecision of this High Court rendered in the case of CIT vs. ShriPlot Shwetambar Murtipujak Jain Mandal, 211 ITR 293(Guj.) and has taken the view that the income derived by a trustfrom its properties should be determined on the basis of In the result, the appeal filed by the Revenue is dismissed.Order pronounced in the Court on 06.08.2019 atAhmedabad.” 4.Thus, it appears that the Tribunal has relied upon thedecision of this High Court rendered in the case of CIT vs. ShriPlot Shwetambar Murtipujak Jain Mandal, 211 ITR 293(Guj.) and has taken the view that the income derived by a trustfrom its properties should be determined on the basis of commercial principles and if commercial principles are madeavailable in determining the income, it would be obvious that theassessment of the expenses incurred by the trust for charitableand religious purposes in the earlier year against the incomeearned by the trust in the subsequent year will have to beconsidered as the application of income of the trust forcharitable and religious purposes in the subsequent year inwhich such adjustment is made. 5.We do not find any material infirmity in the impugnedorder passed by the Tribunal while taking the aforesaid view.This appeal fails and is hereby dismissed. (VIKRAM NATH, CJ) (J. B. PARDIWALA, J) Vahid