2018 (10) TMI 1498

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....as to whether the CIT(Appeals) was justified in holding that assessee, a trust, is entitled to claim set off of brought forward expenses of Rs. 1,78,15,835 and carry forward of current year expenditure of Rs. 1,30,33,485/-incurred in excess of its income for setting off against income of the succeeding years and claim it as application of income in the succeeding years? 3. The assessee is a trust registered u/s. 12A of the Act. For the A.Y. 2012-13, the assessee filed a return of income claiming set off of brought forward expenses of Rs. 1,78,15,835 and carry forward of current year expenditure of Rs. 1,30,33,485/- incurred in excess of its income for setting off against income of the succeeding years and claim it as application of incom....

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....plication pertaining to current asst. year and earlier years against the income of the future asst. year without appreciating the fact that as per the scheme of taxation of charitable or religious trust/institution as codified u/s.11,12 and 13, there is no provision for computing loss from property held under trust/institution on account of excess application of income/funds of the trust. b) The CIT (A) has failed to appreciate the fact that the normal computation of income 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 sec.11, 12 and 13 and, therefore, the provisions relating to set-off of loss f....

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....oses. Hence, even if the expenses for such purposes have been incurred in the earlier years and the said expenses are adjusted against the income of 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 2....