TaxTMI 
TaxTMI 
2019 (1) TMI 1340
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.... (ii) The Ld. Commissioner of Income-Tax (Appeals) has erred in law and on facts in holding that exemption available u/s.11(1)(a) i.e. 15% of income is unfettered and to be given even when no income is available." 3. When the matter was called for hearing, the learned AR for the assessee at the outset pointed out that the identical issue has cropped up in AY 2010-11 in assessee's own case and adjudicated in favour of the assessee and against the Revenue. The learned AR thus submitted that the issue is no longer res integra in the light of the decision of the Co-ordinate bench in its own case in ITA No.2208/Ahd/2013 order dated 29.09.2015. 4. Learned DR relied upon the order of the AO but could not controvert the assertions made on behalf of the assessee for the issue already covered in favour of the assessee. 5. We have carefully considered the rival submissions. The assessee Trust filed the return of income declaring deficit (excess expenditure incurred over income) to the extent of Rs. 1,52,31,341/-. The AO however denied entitlement towards general accumulations to the extent of 15% contemplated under s.11(1)(a) of the Act as the amount applied for the object of Trust....
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....v) That the courts (including Hon. Supreme Court) have held that general accumulation of 15% u/s 11(1)(a) is unfettered and not subject to any conditions (v) That in the assessee's own case, for AY: 2010-11, the Hon. CIT(A) has held that the A.O. was not justified in denying the claim of 15% u/s 11(1)(a); It is most respectfully submitted that the assessee-trust is a law abiding person engaged in educational activities and would like to adhere to the provisions of the law as elucidated by the available judicial rulings. However, without prejudice to what is stated above, if it were to be interpreted that accumulation u/s 11(1)(a) were to be restricted to the extent of income not utilized for the objects of the trust, then the computation would be as under - Gross Income including donation to corpus 7,72,02,072 Less: Exempted u/s 11(1)(d) - Donation to Corpus -11,00,000 Gross Income after deducting the donation to corpus 7,61,02,072 Less: Amount applied for the objects of the trust -On Educational Object - Revenue Exp as per I & E A/c (6,90,33,010 Less: Loss on sale of assets Rs. 15,445) 6,90,17,565 -On Educational Object - Capital Ex....
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....arry forward of excess expenses for set off in the subsequent year by the A.O. 5.1 On this issue the appellant during the appellate proceedings submitted as under :- "The Ground - 2 relates to whether the assesses is entitled to the carry forward of the excess expenses for set off in the subsequent year or not. Your honour, it is the well-settled position that income derived from the trust property has to be determined on commercial principles and if commercial principles for determining the income are applied, it is but natural that the adjustment of the expenses incurred by the trust for charitable and religious purposes in the earlier year against 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 having regard to the benevolent provisions contained in section 11 of the Act and will have to be excluded from the income of the trust under section 11(1)(a) of the Act in that subsequent year. Accordingly, the deficit / negative income determined in year- 1 will be carried forward for set off against the income of the year - 2 and so on....
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....in the year in which the income had arisen. The word "apply" means "to put to use" or "to turn to use" or "to make use" or "to put t practical use". Having regard the provisions of section 11 of the Act, it is clear that when the income of a trust is used or put to use to meet the expenses incurred for religious or charitable purposes, it is applied for charitable or religious purposes. The application of the income for charitable or religious purposes takes place in the year in which the income is adjusted to meet the expenses incurred for charitable or religious purposes. In other words, even if expenses for charitable and religious purposes have been incurred for the earlier year and the said expenses are adjusted against the income of a subsequent year, the income of that year can be said to have been applied for charitable and religious purposes in the year in which the expenses incurred for Charitable and religious purposes had been adjusted. There is nothing in the language of section 11(1)(a) of the Act to indicate that the expenditure incurred in the earlier year cannot be met out of the income of the subsequent year and utilization of such income for meeting the expenditu....
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.... view of the revenue expressed in the circular, the same being consistent with the relevant provisions of the Income-tax Act, 1961 ? 3. Whether, on the facts and in the circumstances of the case, and also considering the scope of the earlier order of the Commissioner (Appeals) dated 18-11- 1983 the Tribunal is right in law in holding that the Commissioner (Appeals) has rightly interfered with the order of the Income-tax Officer ?" 2. The answers being in favour of the assessee, the revenue is in appeal by special leave. 3. The question that really requires consideration is whether, for the purposes of section 11(1)(a) of the Income-tax Act, 1961 ('the Act'), the amount for the grant of exemption of twenty-five per cent should be the income of the trust or it should be its total income determined for the purposes of assessment to income-tax. This question has to be answered in the light of these facts: the assessee-trust received donations in the aggregate sum of Rs. 2,57,376. It applied thereout for its charitable purposes the aggregate sum of Rs. 1,70,369 leaving a balance of Rs. 87,010. The question is whether the assessee is entitled to accumul....