TaxTMI 
TaxTMI 
2016 (2) TMI 399
X X X X Extracts X X X X
X X X X Extracts X X X X
....y 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 Rs. 14,58,490/- to be set off against the income from property held under trust in the future under the facts and in the circumstances of the assessee's case. 3. The ld. CIT(A) ought to have appreciated that the carry forward of the deficit to be set off against the incomes from property held under trust in future is permissible and the same is not prohibited under the scheme of the Act and therefore, the denial of the claim made by the assessee is unjustified and the sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l 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 Institute for Liver, Renal and Digestive Diseases Vs DDIT (E) (29 SOT 316). 7. We have heard the rival submissions and perused the material on record. 7.1. The issue in appeal is whether the excess application of income during the year for charitable purposes can be carries forward and allowed to be set off in future years. The issue is no more res-integra, as it was covered by the Co-ordinate Bench of this Tribunal in the case of St. Francis De Sales (Supr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orward 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 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 s. 11 of the Act and that such adjustment will have to be excluded ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 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 income of a later year will amount to application of income of such later year. The above is the position of law as held in the case of CIT Vs. Maharana of Mewar Charitable Foundation 164 ITR 439 (Raj) CIT Vs. Shri Plot Swetamber Murti Pujak Jain Mandal 211 ITR 293 (Guj.). In CIT Vs. Institute of Banking Personnel Selection 264 ITR 110 (Bom), it was held that in case of charitable trust whose income is exempt under s. 11, excess of expenditure in the earlier years can b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 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 expenditure had been set off against the income of the subsequent year. The expenditure that can be so adjusted can only be expenditure on religious and charitable purposes and no other. The High Court relied on the decision in the case of CIT Vs. Society of Sisters of ST. Anne 146 ITR 28 (Kar)." We find that the order of the CIT(A) is in consonance with the judicial precedents reproduced above. Therefore, we see no reason to interfere with the order of the CIT(A). T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t 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 followed the view of the Hon'ble Bombay High Court (supra) in which the application has been regarded as adjustable against the income of the future years. We are, therefore, inclined to follow the view taken by the co-ordinate benches of this Tribunal, inter alia, in the case of Baldwin Methodist Educational Society (supra), based on the view/decisions of the Hon'ble Bombay High Court in the case of Institute of Banking (supra) and the Hon'ble Gujarat High Court in the c....