TMI Blog2015 (9) TMI 1005X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the sundry creditors during the earlier years, the same shall be allowed as application in the year in which such loan or sundry creditors are repaid from the income of the trust. This ground is accordingly disposed off. Tax surplus at the maximum marginal rate by denying the exemption U/s.11 of the Act - Held that:- Since this issue is linked with the denial of exemption U/s. 11 & 12 of the Act which is the first ground raised by the assessee hereinabove and the same is remitted back to the file of the Ld. CIT (A), similarly this ground raised by the assessee is also remitted back to the file of the Ld. CIT (A) to decide the matter afresh. Disallowance of foreign travel expenses invoking the provisions of section 11(1)(c) - Held that:- We do not subscribe to this view of the Ld. CIT (A). If the assessee has incurred foreign travel expenses outside India in order to comply with the objects of the assessee company which if entitled for the benefit of Section-11 & Section-12 of the Act, the same shall be treated as the application of income. - Decided partly in favour of assessee for statistical purposes. - ITA. Nos. 2168, 2169, 2170 & 2171/Mds/2014 - - - Dated:- 30-6-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification No.S.O.1246(E) dated 29.11.2002 wherein the Central Government has specified motor racing including motor cycle racing to be granted the benefit of section 80G of the Act which was not considered by the Ld. CIT (A). On perusing the order of the Ld. CIT (A) we find that these aspects were not being considered while denying the benefit of Sections 11 12 of the Act to the assessee. Therefore in the interest of justice we hereby remit back this issue to the file of the Ld. CIT (A) to consider the matter in the light of the above decisions and the activities of the assessee coupled with its affiliations to various State Government Central Government authorities which played a vital role while deciding the cases pointed out by the Ld. A.R. supra. Thus Ground No.(i) hereinabove is disposed off. 4. Ground No.(ii) The Ld. CIT (A) had erred by not allowing to set-off the earlier year's excess application viz., for the assessment year 2001-02 ₹ 42,92,803/-,for the assessment year 2003-04 ₹ 20,40,283/- as application, for the succeeding assessment years. The issue of carry forward and setoff of the excess application of income has been elaborately discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Pushpawati Singhania Research Institute for Liver, Renal Digestive Diseases Vs DDIT(E),Inv. Circle-II, New Delhi (2009) 29 SOT 316(Delhi). In the above decision, the Hon'ble ITAT analysed all the decisions which are in favour of carry forward and set off and distinguished them and arrived at the correct decisions as declared by the Income-tax Act. The Bombay High Court in the case of Ld. CIT Vs. Institute of Banking Personnel Selection (2003) 131 Taxman 386 observed that the income of the trust is to be computed on the basis of commercial principles. It is not in dispute that to arrive at the actual income, commercial principles are to be applied. This does not mean that the excess expenditure is to be carried forward and allowed in the subsequent year. The principles of set apart/accumulation of income arise only if it is real income. Otherwise, the investment U/s. 11(5) of the Act is not possible with deemed income. The intention of the legislature is to invest real income derived from property of the trust in specific assets when they are not utilized / applied. The very concept of exemption U/s. 11 of the Act is defeated if provisions of profits and gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;income derived from the property held under the Trust' and any 'voluntary contributions received by the Trust other than contributions made with specific directions that they shall form part of the corpus of the trust'. Thus, there is no reference in Section-11 of the Act with respect to application of fund from the 'corpus' of the trust, 'loan' obtained by the Trust, 'Sundry creditors' of the Trust or 'accumulate fund' of the Trust for claiming exemption U/s.11 (1) of the Act. 4.5. Application of fund by any charitable institution is possible only from the following sources:- i) Voluntary contributions received by the Trust towards its corpus, ii) Other voluntary contributions, iii) Accumulated fund, iv) Amount received by way of loan, v) Sundry creditors, vi) Income derived from the Property held under the Trust. [Hon'ble Calcutta High Court has held in the case DCIT VS. Girdharilal Shewnarain Tantia Trust reported in [1993] 199 ITR 15(Cal.) that The income contemplated by the provisions of section 11 is the real income and not the income as assessed or assessable . Further, Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us. 4.6 Now analyzing the facts of the case before us, it appears that the assessee trust's gross receipts is ₹ 5,11,60,794/- and the assessee trust have spent ₹ 5,35,57,149/- which shows that the assessee trust has spent ₹ 23,96,355/- more than its income received during the relevant year. This amount of ₹ 23,96,355/- may have been taken out from the 'corpus funds', 'accumulated funds', 'loan' obtained by the assessee trust or arising out of 'Sundry Creditors'. Therefore it is obvious that there is no excess application of income over and above the income received by the trust, hence the question of carry forward of excess application of income does not arise. However the amount applied from the 'Loan' or 'Sundry Creditors' will be allowed as application of fund in the year in which such 'Loan' or 'Sundry Creditors' are repaid. It is pertinent to mention that if the amount is applied from the 'Corpus fund' or 'accumulated fund' it will not be treated as application of fund because 'Corpus fund' and 'accumulate fund' are already exempt from the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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