| The Tax Publishers2020 TaxPub(DT) 0006 (Bang-Trib) INCOME TAX ACT, 1961
Section 11
The object of religious and charitable trust could only be achieved by incurring expenditure and in order to incur that expenditure, trust should have an income. Expenditure, if incurred in an earlier year was adjusted against the income of a later year, it had to be held that trust had incurred expenditure for religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years. Therefore, appeal of Revenue was dismissed.
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Charitable trust - Excess expenditure incurred in earlier year - Entitlement to carry forward expenditure incurred in excess of its income for setting off against income of the succeeding years -
Assessee-trust was registered under section 12A and filed a return of income claiming set off of an amount on account of brought forward loss. Assessee sought to carry forward the excess application for setting off as application of income in the subsequent assessment years. According to AO, there was no provision in the Act for carry forward of excess expenditure of earlier year to be adjusted against income of the subsequent year and he therefore denied the claim of assessee. Held: The object of religious and charitable trust could only be achieved by incurring expenditure and in order to incur that expenditure, trust should have an income. So long as the expenditure incurred was on religious or charitable purposes, it was expenditure properly incurred by trust, and income from out of which that expenditure was incurred, would not be liable to tax. Expenditure, if incurred in an earlier year was adjusted against the income of a later year, it had to be held that the trust had incurred expenditure for religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years. The expenditure that can be so adjusted can only be expenditure incurred on religious and charitable purposes and no other. Therefore, appeal of Revenue was dismissed.
REFERRED : Jhaver, Panchmahal Steel Ltd., I.D.L. Chemicals Ltd., Deepak Nitrite Ltd. & Anr. v. Union of India & Ors. (1993) 199 ITR 43 (SC) : 1993 TaxPub(DT) 0785 (SC) Lissie Medical Institutions v. CIT (2012) 348 ITR 344 (Ker) : 2012 TaxPub(DT) 2440 (Ker-HC) CIT v. Tiny Tots Education Society (2011) 330 ITR 21 (P&H) : 2011 TaxPub(DT) 0369 (P&H-HC) CIT v. Market Committee, Pipli (2011) 330 ITR 16 (P&H) : 2011 TaxPub(DT) 0331 (P&H-HC) CIT v. Institute of Banking Personnel Selection (2003) 264 ITR 110 (Bom) : 2003 TaxPub(DT) 1343 (Bom-HC) Gonvindu Naicker Estate v. Asstt. DIT & Anr. (2001) 248 ITR 368 (Mad) : 2001 TaxPub(DT) 0106 (Mad-HC) CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal (1995) 211 ITR 293 (Guj.) : 1995 TaxPub(DT) 0204 (Guj-HC) and CIT v. Maharana of Mewar Charitable Foundation (1987) 164 ITR 439 (Raj) : 1987 TaxPub(DT) 0670 (Raj-HC)
FAVOUR : In assessee's favour
A.Y. :
IN THE ITAT, BANGALORE BENCH
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