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TMI Blog2016 (1) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... of any relevance, if the expenditure incurred was for religious or charitable purposes, 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the head profits and gains of business or profession . In any case, according to him, claim of the assessee for the impugned assessment year were for carry forward of losses from A Ys.2005-06 and 2006-07. As per the Ld. DR, at the most what could be allowed was set off was losses of the immediately preceding assessment year and not any earlier assessment years. As per the Ld DR, the impugned assessment year was 2010-11 and carry forward losses pertained to A. Ys.2005-06 and 2006-07. Reliance was placed on the judgment of Hon ble Madras High Court in the case of Govindu Naicker Estate v. ADIT [248 ITR 368]. 03. Per contra, Ld. AR supported the order of CIT (A) and placed on record a decision of coordinate bench in the case of ITO v. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried forward and set off. The same is pending before the jurisdictional High Court as on date. Since the matter is pending before the jurisdictional High Court, the loss declared of ₹ 3,08,66,139/- for the A.Y. 2011-12 is not allowed to be carried forward to the A.Y 2012-13 in order to keep the issue alive. 5. On appeal by the assessee, the CIT(A) directed the AO to allow claim of the assessee and in doing so, held as follows:- This issue was also before me in the following Trusts cases, wherein I have decided the issue in favour of the assessee trusts. i) Manipal Hotel Restaurant Management College Trust, (Manipal in ITA Nos. 187/UDP/CTI(A)MNG/10-11, dated 14.3.2013. ii) ii) Manipal Academy of Higher Educ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation to the effect that the income should have been applied for charitable or religious purpose only in the year in which the income has arisen. The application for charitable purposes as contemplated in section 11(1)(a) takes place in the year in which the income is adjusted to meet the expenses incurred for charitable or religious purposes. Hence, even if the expenses for such purposes have been incurred in the earlier years and the said expenses are adjusted against the income of a subsequent year, the income of such subsequent year can be said to be applied for charitable or religious purposes in the year in which such adjustment takes place. In other words, the set-off of excess of expenditure incurred over the income of earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst 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 religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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