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2019 (9) TMI 1025 - AT - Income TaxAssessment of trust u/s 11 - Carry forward excess expenditure for future years against its future income in absence of any express provision in the Act regarding the same - whether the trust has incurred deficit due to excess spending on the object of the trust during the particular year and whether excess expenditure incurred in earlier years by the trust could be allowed to be set off against the income of subsequent year by invoking Section 11 - HELD THAT:- The issue is no longer res integra. The Hon’ble Gujarat High Court in CIT vs. Shri Plot Shwetamber Murti Pujak Jain Mandal [1993 (11) TMI 17 - GUJARAT HIGH COURT] has rendered decision favourable to the assessee on the very issue. The Hon’ble Gujarat High Court has held that there is nothing in the language of Section 11(1)(a) of the Act to indicate that the income from trust property should have been applied for charitable or religious trusts only in the year in which such income has arisen. The expenditure incurred in the earlier year can be met out of the income of the subsequent year and utilization of such income for meeting the expenditure of the earlier year would amount to such income being applied for charitable or religious trusts. Income derived from Trust property has to be computed on commercial principles and consequently deficit arising out of expenditure over income for the previous year should, therefore, be set off against surplus of income over expenditure relating to the subsequent year. Similar view has been expressed in CIT vs. Maharana of Mewar Charitable Foundation [1986 (7) TMI 56 - RAJASTHAN HIGH COURT] and CIT vs. Matriseva Trust [1999 (3) TMI 34 - MADRAS HIGH COURT] . Whatever little controversy might be existing has been put to rest by the recent decision of the Hon’ble Supreme Court in the case of CIT(Exemption) vs. Subros Education Society [2018 (4) TMI 1622 - SC ORDER] . Hence, the CIT(A) in our view has correctly applied the law as evolved by the judicial precedents. In the absence of any infirmity in the order of the CIT(A), we decline to interfere therewith. - Decided against revenue.
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