TaxTMI 
TaxTMI 
2019 (7) TMI 1767
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....ion 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 from one source against the income from another source, set-off of loss from one head against income from another head and carry forward and set-off of loss against the income of subsequent years as envisaged u/s 70 to 79 are also not applicable to the charitable trusts/institutions. c) CIT (A) h as f ailed to discuss the issue in de tail bringing out the facts an d applying the relevant provisions of the Act, but came to a conclusion that excess expenditure/excess application shall be allowed to be carried forward an d setoff against the income of the future assessment years an d, thereby, rendering the order perverse". Brief facts of the case are as under: Assessee is a trust under section 12 A of the act and has also got approval of recognition under section 80 G (5) (vi) Vi....
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.... perused submissions advanced by both sides in the light of the records placed before us. Karnataka High Court has considered the issue in following question of law raised therein: "........ (2) whether on the facts and circumstances of the case, the tribunal is right in confirming the order of the CIT directing the assessing authority to allow the claim of assessee for set off of brought forward excess application of income/loss of income/laws of income for earlier years by relying upon the decision of this Hon'ble Court in case of ACIT vs Sisters of St.Anne (reported in 146 ITR page 28 and circular No. 5-P (lxx)-6 of 1968 when the assessing authority rightly disallowed the claim by holding that no such set of brought forward excess application of income/loss of income of earlier years are permitted under the provisions of the act in the case of educational institution? Hon'ble court considered the issue as under: 16. In so far as the second question proposed by the Revenue, quoted above is concerned also, we find that the Tribunal's findings in this regard do not give rise to any substantial question of law. The said findings are quoted below for....
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....to the issue decided by the Hon'ble Karnataka High Court in the case of Sisters of St. Anne (supra) cited by the assessee. In the said case, the Hon'ble Karnataka High Court at paras 8 to 10 thereof has held as under : 5.3.3 Further, the CBDT Circular No.5-P (LXX)-6 of 1968 cited by the assessee makes it clear that income should be understood in its commercial sense : in the case of trusts also and therefore the commercial principle enunciated by the Hon'ble Karnataka High Court in the above referred case of Sisters of St. Anne (supra) applies to trusts as well. In view of the factual and legal matrix of this issue in the case on hand as discussed above, we concur with the decision of the learned CIT (Appeals) in cancelling the disallowance made by the Assessing Officer and in allowing the amortization of expenses. Consequently, Ground No.B (1 to 6) of the Revenue's appeal for Assessment Year 2008-09 and Ground No.0 for Assessment Year 2009-10 are dismissed." 17. In our opinion, the matter is squarely covered by a decision of the cognate Bench of this Court in the case of CIT v. Society of the Sisters of St. Anne (1984) 16 Taxman 400/146 I....
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....han those of the trust. The amounts spent or applied for the purposes of the trust from out of the income, computed in the aforesaid manner, should not be less than 75 per cent of the latter, if the trust is to get the full benefit of the exemption under section 11(1)." 12. In CIT v. Trustee of H.E.H. The Nizam's Supplemental Religious Endowment Trust (1981) 127 ITR 378, the Andhra Pradesh High Court has accepted the accounts maintained in respect of the trust in conformity with the principles of accountancy for the purposes of determining the income derived from the property held in trust.' 18. In view of the aforesaid findings of the learned Tribunal, allowing any expenditure of the earlier year which has been brought forward and set off in the year under consideration, is a justified finding of fact based on the correct interpretation of law and the judgment relied upon by it rendered by the cognate Bench. Therefore, the same does not call for interference. A similar view was also taken by the Division Bench of Bombay High Court in CIT Vs Institute of Banking Personnel Selection (IBPS) 20031 264 ITR 110/131 Taxman 386 wherein the Division Bench of Bomba....