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TMI Blog2021 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... onsider the CBDT No. 100 dated 24.01.1973 which allowed repayment of loan taken in earlier years for fulfilment of charitable objects as application - It is of the view that the same principle should apply if instead of taking the loan the organization spent more out of its corpus and it is reimbursed in subsequent years. Similarly, the Hon'ble High Court of Delhi in the case of Raghuvanshi Charitable Trust [ 2010 (7) TMI 158 - DELHI HIGH COURT] has held that the assessee trust can be allowed to carry forward deficit of current year and to set off the same against the income of subsequent years. We do not find any error or infirmity in the findings of the ld. CIT(A). - Decided against revenue. - ITA No. 4579/DEL/2017 - - - Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under respective heads as envisaged u/s 15 to 59 are not applicable to the computation of income in respect of charitable trust/institution for the purpose of claiming exemption under section 11,12 and 13 and therefore the provisions relating to set off of loss from one source against the income from another source, set off of loss from one head against another income derived from another head and carry forward and set off of loss against the income of subsequent years as envisaged u/s 70 to 79 of the Act are also not applicable to the charitable trusts/institutions. 4. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing. 3. Briefly stated, the facts of the case are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The deficit reflected in the tax computation for the Assessment Year 2014-15 is on account of excess of expenditure over income by ₹ 9.92 Crores. The major expenditure, leading to the deficit, is the amount spent on construction of new school building reflected in books of accounts as addition in capital work in progress of ₹ 26.47 Crores during the financial year 2013-14. The school is in the process of construction of new school building which will be completed in the F,Y. 2016-17. The deficit is being funded through reserves accumulated over the past many years since founding of the School. The reserves had been invested in fixed deposits and are now being liquidated, as required as reflected in the financial st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n stated before the ld. CIT(A) and once again relied upon several judicial decisions. 10. We have carefully considered the orders of the authorities below. The bone of contention is carry forward of deficit of ₹ 9,91,758/-. The deficit has been computed as under: Total income as per income Expenditure account 53,42,10,185/- Expenditure as per income Expenditure Account 37,69,26,957/- Less : Depreciation 15591524/- Provision for leave encashment 1,62,841/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on commercial principles and if commercial principles are applied, then 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 will have to be regarded as application of income of the trust for charitable and religious purposes in the subsequent year in which adjustment has been made having regard to the benevolent provisions contained in section 11 and such adjustment will have to be excluded from the income of the trust under section ll(l)(a). Accordingly, on the facts and in the circumstances of the instant case, the Tribunal was justified in law in allowing carrying forward of the deficit of earlier year and set it off against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the income of the subsequent year, the trust would not be entitled to claim exemption in respect of such reimbursement under section ll(l)(a) if the contention advanced by the revenue was accepted. The construction which leads to such an anomaly has got to be avoided. There is nothing in the language of section ll (l) (a) to indicate that the expenditure incurred in the earlier year cannot be met out of the income of the subsequent year or that utilization of such income for meeting the expenditure of the earlier year, would not amount to such income being applied for charitable or religious purposes. 14. The issues raised by the ld. DR have been answered by the Hon'ble High Court of Gujarat [supra]. Similarly, the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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