TaxTMI 
TaxTMI 
2016 (7) TMI 707
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....le Trust. Indisputably, the income derived during the previous year relevant to assessment year 2008-09, was applied by the assessees for charitable purposes, however, the expenditure incurred by the assessees towards the charitable aims and objects, were found to be in excess of the income earned in the previous year, relevant to the assessment year in question. It was also not in dispute that the excess expenditure was incurred by the assessees for charitable purposes out of surplus in Public Deposit Account (PD Account). Keeping in view a Bench decision of this court in "Shri Akhey Ram Ishwari Prasad Trust vs. CIT", (2004) 266 ITR 281, the A.O. issued notices to the assessees under Section 143(2) of the Act, to justify their claim for deduction under Section 11 (1)(a) of the Act. 3. In reply, the assessees pleaded that the issue stands decided in their favour by ITAT, Jodhpur Bench, in ITA No.385/JU/2009. The assessees also placed reliance upon a decision of this court in the matter of "CIT vs. Maharana Mewar Charitable Foundation" (164 ITR 439) and a decision of the Gujarat High Court in case of "CIT vs. Shri Plot Swetamber Murti Poojak Jain Mandal", (1995) 211 ITR 263. 4. Th....
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....O.48/13 "Whether on the facts and in the circumstances of the case, the ITAT has been justified in allowing the claim of Rs. 1,57,89,828/- as application of income under section 11 (1)(a) of the Income Tax Act, 1961?" D.B.INCOME TAX APPEAL NO.50/13 "Whether on the facts and in the circumstances of the case, the ITAT has been justified in allowing the claim of Rs. 8,86,27,401/- as application of income under section 11 (1)(a) of the Income Tax Act, 1961?" D.B.INCOME TAX APPEAL NO.51/13 "Whether on the facts and in the circumstances of the case, the ITAT has been justified in allowing the claim of Rs. 2,45,20,984/- as application of income under section 11 (1)(a) of the Income Tax Act, 1961?" 7. Learned counsel appearing for the Revenue contended that the ITAT has seriously erred in allowing the appeal relying upon its earlier decision dated 1.9.09 rendered in ITA No.385/JU/2009. Learned counsel would submit that the said decision of the ITAT was based on decision of this Court in the Maharana Mewar Charitable Foundation's case (supra), wherein the assessees had claimed set off of expenditure incurred in the previous year relating to the assessment year 1970-71 against....
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....tion's case (supra), which is a binding precedent, has not even been taken note of. Learned counsel would submit that the decision rendered by this court in Shri Akhey Ram Ishwari Prasad Trust's case (supra), taking into consideration the facts of that particular case, is not applicable to the facts of the present cases. 9. We have considered the rival submissions and gone through the decisions relied upon by the learned counsel appearing for the parties. 10. Indisputably, the assessees have incurred expenditure for charitable purposes during the previous year relevant to the assessment year 2008-09 in excess of the income derived during the relevant period. It is also not in dispute that the expenditure in excess of the income of the previous year relevant to the assessment year was incurred by the assessees by transferring the fund from interest bearing PD account to non interest bearing PD account. But then, merely because, the assessees have incurred the expenditure in excess of the income in the previous year relevant to the assessment year for the charitable purposes, out of the accumulated charity fund, they cannot be denied benefits of exemption under Section 11(1....
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.... would amount to an application of income for the purposes of the trust. In the said circular, the Central Board of Direct Taxes has expressed the view that the repayment of the loan originally taken to fulfill one of the objects of the trust will amount to an application of the income for charitable and religious purposes. In other words, according to the said circular, if the trust wants to spend more money on charitable and religious purposes, then, in a particular year, it can take a loan and the said loan can be repaid out of the income of the subsequent year and the repayment of the said loan out of the income of the subsequent year would amount to application of income for charitable and religious purposes under Section 11(1)(a) of the Act. 10. If the contention of Shri Arora is accepted, it would lead to an anomalous situation, namely, if the trust takes a loan for the purposes of incurring expenses for charitable and religious purposes in a particular year and the said loan is repaid out of the income of the subsequent year, the said repayment would be entitled to exemption from tax under Section 11(1)(a) of the Act. But if the trust, instead of taking a loan incurs expe....
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....income in the earlier years against the income of subsequent year, merely because the assessees have incurred the expenses in excess of income, may be out of accumulated fund, the question of denying the benefits of exemption to the assessees under Section 11 (1)(a) of the Act, in respect of the income in previous year relevant to the assessment year, which was admittedly applied for charitable purposes, does not arise. 15. Coming to the decision of Shri Akhey Ram Ishwari Prasad Trust's case (supra), heavily relied upon by the Revenue, it is to be noticed that the said decision of a coordinate Bench of this court, affirming the finding of the ITAT, is not preceded by the consideration of the provisions of Section 11(1)(a) of the Act and earlier decision of this court in Maharana of Mewar Charitable Foundation's case (supra) having direct bearing on the facts of the case, was not even brought to the notice of the court. With ustmost respect, in our considered opinion, the decision rendered by a Bench of this court in Shri Akhey Ram Ishwari Prasad Trust's case (supra), taking into consideration the facts of the particular case, in no manner lays down the law that in all ....