INCOME TAX ACT, 1961

Section 143(3)

Assessment - Validity - Allowance of carry forward of deficit to the assessee's trust -

Assessee filed its return of income and assessment order was passed under section 143(3) by AO determining the total income of the assessee as nil. AO disallowed the deficit carry forward from the earlier years and also current years under deficit. AO rejected the claim holding that provision 11 did not permit the determination of deposit. Held: CIT(A) had allowed the deficit to the assessee to be carried forward following the decision of High Court in CIT v. Institute of Banking Personnel Selection (2003) 264 ITR 110 (Bom-HC) : 2003 TaxPub(DT) 1343 (Bom-HC). He also supported such decision by the decision of Supreme Court wherein the SLP filed by the revenue was dismissed. With effect from 1-4-2022 Explanation (2) is inserted after Explanation 1 under section 10 (23C) of the Act by the Finance Act, 2021, which provides that calculation of income required to be applied or accumulated during the previous year shall be made without any set-off or deduction or allowance of any excess application of any of the year preceding to the previous year. Thus, Revenue appeal was dismissed being devoid of merits.

Followed:DIT (E) v. Maharashtra Industrial Development Corporation (MIDC) [ITA No.2652 of 2011, dt. 20-3-2013], CIT v. Institute of Banking Personnel Selection (2003) 264 ITR 110 (Bom-HC) : 2003 TaxPub(DT) 1343 (Bom-HC) and CIT (E) New Delhi v. Subros Educational Society [Misc. Appeal No. 941 of 2018 Civil Appeal No. 5171 of 2016] : 2018 TaxPub(DT) 3810 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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