Charitable trust deficit carry forward remains allowable against later income when binding precedent supports the set-off.

A charitable trust registered under section 12A may carry forward a deficit and set it off against income of later years while computing income under section 11 when binding jurisdictional precedent supports that treatment. The Tribunal applied High Court authority recognising excess expenditure or deficit as allowable for carry forward in charitable institutions, and treated the Department's separate challenge in another matter as irrelevant while the precedent remained operative. It also followed its own prior decision in the same assessee's case for the preceding year. The assessee was therefore entitled to the claimed set-off in subsequent years.

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Issues: Whether a charitable trust registered under section 12A of the Income-tax Act, 1961 is entitled to carry forward a deficit and set it off against income of subsequent years while computing income under section 11.

Analysis: The claim was allowed by the appellate authority following binding jurisdictional precedent that had approved carry forward of excess expenditure or deficit in the case of charitable institutions. The contrary contention that the Department had not accepted the precedent and had filed an SLP in another matter was held to be of no consequence so long as the binding High Court decisions continued to operate. The Tribunal also noted that its own earlier decision in the assessee's case for the preceding assessment year had taken the same view.

Conclusion: The assessee was entitled to carry forward the deficit and claim set-off in subsequent years.

Ratio Decidendi: A charitable institution may carry forward deficit incurred in a year and adjust it against income of subsequent years when such treatment is supported by binding jurisdictional precedent.

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