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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 ..... .12AA of the Income-tax Act, 1961 ('the Act' in short). As per the Ld. DR once the assessee was assessed as a trust registered u/s.12A of the Act, there was no question of any business loss being computed or carried forward. As per the Ld. DR excess of expenditure over income resulting in a loss would arise only if a computation is made under 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 assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 department has filed an appeal before the Hon'ble High court of Karnataka vide ITA 1034 of 2008 on the similar issue against the order of the Hon'ble ITAT allowing excess application to be carried 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue as contained in the grounds of appeal. 8. We are of the view that pendency of an appeal before the Hon'ble High Court of Karnataka cannot be the basis not to follow the decision on the issue already rendered in identical cases. Section 11(1)(a) does not contain any words 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income from the same head is not 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 earli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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