Vidya Vihar Nyas Samiti Vs ITO (ITAT Delhi)
In a recent ruling ITAT Delhi relied upon the binding precedent of the Hon’ble Supreme Court of India in the case of CIT vs. Subros Educational Society, (2018) 96 taxmann.com 652 (SC) in deciding that the set off of accumulated deficit is allowable.
Assessee filed its return declaring NIL income. Assessment was completed at Rs. 1,03,44,990/-. AO the disallowed set off of accumulated deficit of Rs. 5,66,68,630/- as on 01.04.2015. CIT (A) partly allowed the appeal.
Before ITAT it was submitted on behalf of the assessee that CIT(A) has erred in law in confirming the action of the AO in not allowing the set off of accumulated deficit of Rs. 5,66,68,630/- against the current year surplus and that too without any basis and without appreciating / considering the
facts and circumstances of the case. The same is allowable in view of the Hon’ble Supreme Court decisions referred the cases of CIT vs. Subros Educational Society, (2018) 96 taxmann.com 652 (SC), CIT vs. Subros Educational Society, (2022) 136 taxmann.com 236 (SC) and following decisions wherein it has been held that excess of expenditure in earlier year can be set off against income of subsequent years and would amount to application of income for subsequent years. Though amendment has been made in Section 11 denying the set off of such deficit by the Finance Act, 2021 w.e.f. 01.04.2022 by inserting explanation 5 to section 11(1) but this is applicable prospectively.
