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2015 (3) TMI 1419 - AT - Income TaxExemption u/s. 11 - charitable activity u/s 2(15) - Whether CIT(A) erred in directing the AO to allow benefit of exemption u/s. 11 to the assessee when the activities of assessee are akin to those of a mutual association and do not fall within the definition of “charitable purpose” as per section 2(15)? - HELD THAT:- As held that the assessee is a charitable institution and duly recognized u/s. 12A therefore, the income has to be computed in accordance with the provisions of Sec. 11 of the Act. Respectfully following the earlier years order [2014 (11) TMI 379 - ITAT MUMBAI] we direct the AO to compute the total income of the assessee in terms of Sec. 11 to 13 of the Act. This ground of the Revenue is dismissed. Set off and carry forward of deficit of earlier years - We find that this issue was considered by the Hon’ble Bombay High Court in the case of Institute of Banking [2003 (7) TMI 52 - BOMBAY HIGH COURT] held that 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 provisions contained in Se. 11 of the Act and that such adjustment will have to be excluded from the income of the Trust u/s. 11(1)(a) of the Act. Our view is also supported by the judgement of the Gujarat High Court in the case of CIT Vs Shri Plot Swetamber Murti Pujak Jain Mandal [1993 (11) TMI 17 - GUJARAT HIGH COURT] Revenue appeal dismissed.
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