TaxTMI 
TaxTMI 
2021 (7) TMI 6
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..... On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in law in allowing the claim of carry forward of losses disregarding the fact that set off and carry forward of losses are dealt with by the provisions of section 70 to 74 of the Income Tax Act, 1961. 2. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in law in allowing the assessee's claim of carry forward of current year loss and set-off of excess deficit pertaining to earlier years without appreciating the fact that u/s 11, 12 and 13 of the Act there is no provision for computing loss from property held under trust/institution on account of excess application of income/funds of the trust. 3. On the facts and in the ....
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....oreign countries in India. 2. To receive and accept donations, endowments and gifts of money, land, buildings, stocks funds, shares, securities and any other property whatsoever whether subject to any special trusts or conditions or not. 3. To invest money of the Society not immediately required, in such manner and upon such securities as may be determined by the Board of Governors from time to time. The activities of the assessee society/are apparently charitable in nature and within the meaning of section 2(15) of the Income Tax Act, 1961." 4. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has claimed an amount of Rs. 9.92 crores as deficit on account of ....
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....expenditure/deficit of Rs. 9.92 crores. 6. The assessee carried the matter before the ld. CIT(A) and assailed the assessment claiming that income derived from the trust should be computed from sound commercial principles and therefore, carry forward and set off of deficit should be allowed. Reliance was placed on several judicial decisions. 7. After considering the facts and circumstances of the case and relying on various decisions of the Hon'ble High Courts, the ld. CIT(A) directed the Assessing Officer to allow carry forward of net deficit of the current year. 8. Before us, the ld. DR vehemently stated that the ld. CIT(A) ought to have gone into the facts of the case and should have analysed the source of income from which t....
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....d that income derived from trust property should be computed on sound commercial principles and this included carry forward and set off of deficit in the earlier year. The relevant findings of the Hon'ble High Court read as under: " 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 provision....
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....subsequent year, the said repayment would be entitled to exemption from tax under section ll(l)(a) in view of the circular above referred to. But, if the trust instead of taking a loan inairs expenses for charitable and religious purposes out of the corpus of the trust and seeks to reimburse the said amount out of the income of the subsequent year, the trust would not be entitled to claim exemption in respect of such reimbursement under section ll(l)(a) if the contention advanced by the revenue was accepted. The construction which leads to such an anomaly has got to be avoided. There is nothing in the language of section ll (l) (a) to indicate that the expenditure incurred in the earlier year cannot be met out of the income of the subsequen....