Set-off of excess application is not barred for earlier years, while corpus donation treatment depends on proof of specific donor direction.

A later restriction on set-off of excess application under Explanation 5 to section 11, effective from 01.04.2021, did not apply to the relevant assessment years, so belated filing of the return did not by itself deny carry-forward set-off of excess expenditure. By contrast, corpus treatment of voluntary contributions depends on proof of a specific donor direction under section 11(1)(d); where the record was unclear on that point, the matter required fresh factual examination and was remitted for reconsideration.

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Issues: (i) whether set-off of brought forward excess expenditure could be denied merely because the return was filed belatedly; (ii) whether donations treated as corpus receipts were liable to be assessed as income in the absence of a clear specific direction from the donor.

Issue (i): whether set-off of brought forward excess expenditure could be denied merely because the return was filed belatedly.

Analysis: The amendment introducing Explanation 5 to section 11, which restricts set-off of excess application of earlier years, was brought into force only with effect from 01.04.2021. For the relevant assessment years, that restriction was not applicable. The Tribunal therefore accepted that belated filing of the return did not, by itself, justify denial of set-off of brought forward excess expenditure from earlier years.

Conclusion: The assessee was entitled to the benefit of set-off of brought forward excess expenditure for the relevant years.

Issue (ii): whether donations treated as corpus receipts were liable to be assessed as income in the absence of a clear specific direction from the donor.

Analysis: Under section 11(1)(d), voluntary contributions are excluded from income only when they are made with a specific direction that they form part of the corpus. The receipts and records produced showed directions in some cases, while the Assessing Officer had treated the amounts as revenue receipts on the footing that the word corpus was not always stated. The Tribunal found that the matter required fresh factual examination of the donor's direction and the supporting receipts and accounts.

Conclusion: The issue relating to corpus donations was remitted to the Assessing Officer for fresh consideration in accordance with law.

Final Conclusion: The assessee succeeded on the belated-return set-off issue, while the corpus-donation issue was sent back for reconsideration, leaving the appeals partly allowed for statistical purposes.

Ratio Decidendi: A later statutory restriction on set-off of excess application cannot be applied to prior assessment years, and corpus exclusion under section 11(1)(d) depends on proof of a specific donor direction.

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