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2016 (6) TMI 133 - HC - Income TaxExemption u/s 11(1)(a) - deficit adjusted against the surplus - Held that:- CBDT circular dated 24.01.1973 enables a trust, which had taken a loan for incurring expenditure for charitable and religious purposes, to repay the said loan from out of its income in the subsequent year; and such repayment of loan is to be treated as application of income for charitable and religious purposes under Section 11 (1) (a) of the Act. Money for charitable and religious purposes, beyond the income of a trust, can be applied, for charitable and religious purposes, either by taking a loan or utilizing a part of the corpus of the Trust. As the CBDT circular dated 24.01.1973 enables repayment of a loan for the previous year utilizing the income of the subsequent year, and for such utilization to be treated as application of income under Section 11 (1) (a) of the Act, there is no reason why excess application of money, for charitable and religious purposes, (deficit) of the earlier year should not be set off against the income for the subsequent year. In the absence of any specific prohibition in the Section 11 (1) (a) of the Act in this regard, and in the light of the CBDT circular dated 24.01.1973 we find no error in the order of the Tribunal, much less a substantial question of law, necessitating interference in this appeal.
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