Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (4) TMI 319 - AT - Income TaxExemption u/s 11 - Assessee has failed to explain the amount of investment made out of set apart funds in the income tax return as well as in the audit report and in Form 10 - HELD THAT:- Admittedly, the appellant assessee society has filed Form 10 during the course of assessment proceedings [Page 9, CIT(A) order]. It is seen that the amount of accumulated funds for the year under appeal itself were invested in the modes specified u/s. 11(5) of the Act as evident from the Balance Sheet which were on record with both Ld. AO and Hon'ble CIT(A) and further CIT(A) itself stated that ₹ 1.70 cr has been invested in various banks. It is well settled that income derived from trust property has to be determined on commercial principles where adjustment of the expenses incurred by the trust for charitable and religious purposes in the earlier year against income earned by the trust in the subsequent year may be regarded as application of income of the trust for charitable and religious purposes in the subsequent year. Such an adjustment made having regard to the benevolent provisions contained in s. 11 of the Act will have to be excluded from the income of the trust u/s 11(1)(a) Contention of the Ld. AR that 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 purposes is as per law. Thus, the excess expenditure incurred by the Assessee society in earlier assessment years amounting to ₹ 58,78,070/- [Pg 6 of CIT(A) order] could be allowed to be set off against income of subsequent years by invoking s. 11 of Income Tax Act. CIT (Appeal) has failed to appreciate the facts of the case and the contentions raised by the appellant before him regarding determination of income on commercial principles by invoking provisions of section 11 of the act in the case of trust and charitable institutions. The addition sustained in mechanical manner merely on conjectures and surmises without consideration of law is not is illegal and unjustified. Proposition of law has been decided in favour of the assessee in the case of "CIT(E) vs. Subros Educational Society"[2018 (4) TMI 1622 - SC ORDER] where it was held that any excess expenditure incurred by the trust/charitable institution in earlier assessment year could be allowed to be set off against income of subsequent years by invoking s. 11 of the act. - Appeal of assessee allowed.
|