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TMI Blog2016 (2) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee : Shri Suresh Muthukrishanan, CA For The Revenue : Shri Sunil Kumar Aggarwala, JCIT ORDER PER SHRI INTURI RAMA RAO, AM : This appeal filed by the assessee is directed against the order of the learned CIT(A)-14,LTU, Bangalore, dated 24-02-2014 for the assessment year 2011-12. 2. The assessee society raised the following grounds of appeal; 1. The orders of the authorities below in so far as they are against the assesee are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The ld. CIT(A) is not justified in upholding the denial of carry forward of the deficit being the excess application of income amounting to ₹ 14,58,490/- to be set off against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Mumbai Bench in the case of ITO Vs Trustees of Sri Satya Sai Trust (33 ITD 320) and also in the case of Pushpavati Singhania Research Institute for Liver, Renal and Digestive Diseases Vs DDIT (E) (29 SOT 316). 5. Being aggrieved by the order of the lower authorities the assessee is in appeal before us. The learned counsel for the assessee submitted that this issue in hand is covered by the decision of the Co-ordinate Bench of this Tribunal in the case of Society of St. Francis De Sales in ITA No.315(B)/2015 dated 10- 07-2015. 6. On the other hand, learned SR.DR relied on the decisions in the case refereed above i.e ITO Vs Trustees of Sri Satya Sai Trust (33 ITD 320) and also in the case of Pushpavati Singhania Research Insti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set off against the surplus of the subsequent years on the ground that in the case of a charitable trust, their income was assessable under self-contained code mentioned in s. 11 to s. 13 of the IT Act and that the income of the charitable trust was not assessable under the head Profits and gains of business under s. 28 in which the provision for carry forward of losses was relevant. That, in the case of a charitable trust, there was no provision for carry forward of the excess of expenditure of earlier years to be adjusted against income of subsequent years. We do not find any merit in this argument of the Department. Income derived from the trust property has also got to be computed on commercial principles and if commercial principles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect 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 earlier years against the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequent 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 the trust such earlier e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the issue and the same is allowable. 5.3.4 In the case of Indian National Theater (supra) relied on by the learned Departmental Representative. The Hon'ble High Court of Delhi has held that to satisfy the requirements of section 11(2)(b) of the Act, the investment must necessarily come out of current year s income and the investment made in the past obviously cannot satisfy the requirements for the current year. The above decision of the Hon'ble Delhi High Court has considered the provisions of section 11(2) of the Act and has taken the view that the accumulation under Section 11(2) of the Act can be only out of current income. We, however, find that the co-ordinate benches of the Bangalore Tribunal have consistently follow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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