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TMI Blog2015 (12) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... , and the expenditure adjusted against the income of the trust in a subsequent year, would not amount to an incidence of loss of an earlier year being set off against the profit of a subsequent year. The object of the religious and charitable trust can only be achieved by incurring expenditure and in order to incur that expenditure, the trust should have an income. So long as the expenditure incurred is on religious or charitable purposes, it is the expenditure properly incurred by the trust, and the income from out of which that expenditure is incurred, would not be liable to tax. The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere sought to be carried forward for setting off and on treatment as application of income in the subsequent assessment years. The income declared in the return of income was NIL. 4. The issue is with regard to claim of assessee for carry forward of deficit of current year and unabsorbed deficit of earlier assessment years. The AO rejected the claim of assessee observing as follows:- The assessee trust has claimed carry forward of excess amount applied during the year for charitable purposes. The assessee has relied on various judicial decisions including the decision of the Hon,ble ITAT, Bangalore in the case of Medical Relief Society of South Kanara. It is observed that in the case of Medical Relief Society of South Kanara, the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed forward to the subsequent assessment years to set off the same as application of income. Hence, the first grounds of appeal is allowed. 6. Aggrieved by the order of CIT(A), the Revenue has filed the present appeal before the Tribunal. 7. In the grounds of appeal, the Revenue accepts the fact that the issue raised in this appeal is squarely covered by the decisions referred to by the CIT(A), but has only contended that the department has not accepted the decisions of the Tribunal and an appeal is pending before the Hon'ble High Court of Karnataka on the issue. The ld. DR reiterated the stand of the Revenue as contained in the grounds of appeal. 8. We are of the view that pendency of an appeal before the Hon'ble High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r subsequent years and that depreciation is allowable on the assets the cost of which has been fully allowed as application of income under s. 11 in past years. In Govindu Naicker Estate VS. ADIT 248 ITR 368 (Mad), the Hon ble Madras High Court held that the income of the trust has to be arrived at having due regard to the commercial principles, that s. 11 is a benevolent provision, and that the expenditure incurred on religious or charitable purposes in earlier year or years can be adjusted against the income of the subsequent year. The principle that the loss incurred under one head can only be set off against the income from the same head is not of any relevance, if the expenditure incurred was for religious or charitable purposes, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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