TMI Blog2015 (10) TMI 2416X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure and in order to incur that expenditure, the trust should have an income. So long as the expenditure incurred is on religious or charitable purposes, it is the expenditure properly incurred by the trust, and the income from out of which that expenditure is incurred, would not be liable to tax. The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year. The expenditure that can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was claimed to relate to academic year 2008- 09 though this amount was received in the financial year 2007- 08. The AO further observed that the assessee has claimed expenditure of earlier year as brought forward expenditure in the return of income amounting to ₹ 6,63,12,628/- in the revised computation and claimed it as application of income during the current year. The AO, however, held that there is no express provision in the Act permitting adjustment of earlier year s brought forward expenditure as application of income during the current year. He held that the current year s expenditure only must be considered as application of income. He accordingly disallowed the claim of the assessee of treating earlier years brought forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this case the Tribunal held the deficit arising as a result of excess spending for charitable purposes will not form part of the income and the same cannot be carried forward. With regard to the point whether excess spending will form or not form part of the total income and, therefore, it could be carried forward or not is decided by the Hon'ble Bombay High Court in the case Institute of Banking (supra) in assessee's favour. In that case, however, it was a regular assessment and not 154 order as in the instant case of the assessee. There was no specific claim as such by the assessee in the instant case. Therefore, the facts are distinguishable. We also find that A bench of this Tribunal in the case of Academy of Liberal E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Personnel Selection 264 ITR 110 (Bom), it was held that in case of charitable trust whose income is exempt under s. 11, excess of expenditure in the earlier years can be adjusted against income of subsequent years and such adjustment would be application of income for subsequent years and that depreciation is allowable on the assets the cost of which has been fully allowed as application of income under s. 11 in past years. In Govindu Naicker Estate VS. ADIT 248 ITR 368 (Mad), the Hon ble Madras High Court held that the income of the trust has to be arrived at having due regard to the commercial principles, that s. 11 is a benevolent provision, and that the expenditure incurred on religious or charitable purposes in earlier year or years c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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