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2021 (7) TMI 1434 - AT - Income TaxCarry forward of the deficit/loss for trust - assessment of trust - as per AO CIT(A) has erred in law in allowing the assessee’s claim of carry forward of current year’s loss and set-off of excess deficit pertaining to earlier years without appreciating the fact that 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 - HELD THAT:- In the case of DIT v. Raghuvanshi Charitable Trust [2010 (7) TMI 158 - DELHI HIGH COURT] held that a trust can be allowed to carry forward deficit of current year and to set of same against income of subsequent years. It was further held that adjustment of deficit of current year against income of subsequent year would amount of application of income of trust for charitable purposes in subsequent year within meaning of section ll(l)(a). It has been held that excess of expenditure over income of charitable or religious nature incurred in earlier years can be adjusted against the income of the current year. This issue was debated in CIT v. Maharana of Mewar Charitable Foundation [1986 (7) TMI 56 - RAJASTHAN HIGH COURT] and it was opined that application could be considered to have taken place in the year of adjustment, where the earlier year's income was not adequate to absorb the actual expenditure made. It would be incorrect to view the term 'application' from a narrow perspective so as relate it with the actual movement of funds. In CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal [1993 (11) TMI 17 - GUJARAT HIGH COURT] held that there is nothing in section 11(l)(a) which indicates that the expenditure incurred in the earlier year cannot be met out of the income of subsequent years. The Hon'ble Bombay High Court in CIT v. Institute of Banking Personnel Selection [2003 (7) TMI 52 - BOMBAY HIGH COURT] held that income derived from a trust property should be computed on sound commercial principles and this included carrying forward and set-off of deficit in the earlier years. In our opinion, there is no infirmity in the order of the Ld. CIT(A) on the issue in dispute in following binding judgments of Hon’ble High Court and judgment of the Tribunal in the case of the assessee itself for assessment year 2008-09 - Accordingly, we uphold the order of the Learned CIT(A) on the issue in dispute and the grounds raised by the Revenue are dismissed.
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