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TMI Blog2018 (9) TMI 1968X X X X Extracts X X X X X X X X Extracts X X X X ..... of Banking [2003 (7) TMI 52 - BOMBAY HIGH COURT] while dismissing the appeal of the revenue had observed, that as the income of the trust was to be computed on commercial principles, thus adjustment of expenses incurred by the trust for charitable and religious purposes in the earlier years, against the income earned by the trust in the subsequent year, was to be regarded as application of income of the trust for charitable and religious purposes in the subsequent year. Hon‟ble High Court had in unequivocal terms observed, that the adjustment of the expenses incurred by the trust in the earlier years, against the surplus of the subsequent year, will have to be excluded from the income of the trust under Sec. 11(1)(a). Similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd of the said deficit, ignoring the fact that there was no express provision in the I.T. Act, 1961 permitting allowance of such claim. 3. Whether, on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in allowing the claim of the assessee for carry forward of the said deficit by relying upon the judgment of the Hon ble Bombay High Court in the case of Institute of Banking Personnel Selection, ignoring the fact that the Department has not accepted the said decision of the jurisdictional High Court on merit of the case, but due to smallness of tax effect appeal was not filed before Hon ble Supreme Court. However, on this issue the department has filed SLP before the Apex Court in other cases inclusive the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year and, the utilisation of such income for meeting the expenditure of earlier years would not amount to application of income for charitable or religious purposes. The A.O supported his aforesaid conviction on three grounds viz. (i) that the corpus donations received by the assessee trust was not the income derived from property held under trust; (ii) that the expenditure incurred out of/from corpus funds/donations could not be considered as application of income under Sec.11(1)(a) of the Act; and (iii) that only income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India was to be considered as application of income, as per the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the A.O. It was submitted by the ld. A.R that as the utilisation of the corpus donations/funds could not be construed as the Income derived from property held under trust wholly for charitable or religious purposes, hence the application of the same could not be brought within the sweep of Sec. 11(1)(a) of the Act. The ld. D.R in order to buttress his aforesaid contention drew our attention to Sec. 12(1) of the Act, and submitted that voluntary contributions received by the trust created wholly for charitable or religious purposes with a specific direction that they shall form part of the corpus of the trust or institution, was not to be deemed as income derived from property held under trust wholly for charitable or religious purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears was to be excluded from the income of the trust for the subsequent year under Sec. 11(1)(a) of the Act. The ld. A.R further submitted that the issue under consideration was no more resintegra in light of the recent judgment of the Hon‟ble Supreme Court in the case of CIT (Exemption) Vs. Subros Educational Society (2018) 166 DTR (SC) 257. The ld. A.R drawing our attention to the aforesaid judgment, submitted that the Hon‟ble apex court while dismissing the appeal of the revenue had affirmed the order of the High Court of Delhi, wherein it was concluded that any excess expenditure incurred by the trust/charitable institution in an earlier assessment year, could be allowed to be set off against the income of subsequent years b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes in the subsequent year. We find that the Hon‟ble High Court had in unequivocal terms observed, that the adjustment of the expenses incurred by the trust in the earlier years, against the surplus of the subsequent year, will have to be excluded from the income of the trust under Sec. 11(1)(a) of the Act. Still further, a similar view had been taken by the Hon‟ble Supreme Court in the case of CIT(Exemption) Vs. Subros Educational Society (2018) 166 TDR (SC) 257. The Hon‟ble Apex Court, while affirming the judgment of the Hon‟ble High Court of Delhi, had in the aforementioned case dismissed the appeal of the revenue and had declined to dislodge the observations of the High Court, that the excess expenditure inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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