TMI Blog2016 (1) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... ) TMI 1270 - ITAT BANGALORE] - Decided in favour of assessee. - ITA No. 971/Bang/2015 - - - Dated:- 10-11-2015 - Smt. Asha Vijayaraghavan, Judicial Member And Shri Inturi Rama Rao, Accountant Member For the Appellant : Shri S Venkatesan, C.A For the Respondent : Smt. Rukmani Attri, JCIT ORDER Per Smt. Asha Vijayaraghavan, Judicial Member The appeal is filed by the assessee. The appeal is directed against the order of Commissioner of Income-tax (Appeals) II dated 25/2/2015 for the assessment year 2011-12. 2. The appellant is a public charitable institution registered as a society under the Mysore Societies Registration Act and it carries on educational activities for the homeless and orphaned boys and activities for the relief of the poor. The return of income for AY 2011-12 was filed on 12.03.2012 declaring a total income of Rs. nil . The only substantive issue disputed in this appeal relates to the AO not permitting the deficit for the year to be carried forward and set off against the appellant s income of future years. 3. The assessee had shown excess expenditure of ₹ 26,23,938/- in its Income Expenditure account. The AO did not allow ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that any excess expenditure incurred by a charitable institution in earlier years cannot be allowed to be carried forward and set off against the income of subsequent years. 6. The CIT(A) held that there was no reason to interfere with the AO s conclusion in this matter. The ground raised by the appellant was dismissed by CIT(A). 7. The learned Authorised Representative submitted that the view taken by the learned CIT (Appeals) that carry forward of excess expenditure incurred is not permissible in the absence of a specific provision for the same is not correct and in this regard referred to the observations of the Hon'ble High Court of Bombay in the case of CIT V Institute of Banking (264 ITR 111) and the decision of the coordinate benches of this Tribunal in the cases of Baldwin Methodist Education Society in ITA No.523/Bang/2014 dt.31.3.2015 and St. Francis Sales Educational and Charitable Trust in ITA No.365/Bang/2014 dt.10.7.2015 in support of the proposition put forth by him. 8. Per contra, the learned Departmental Representative supported the orders of the authorities below. He submitted that the Hon'ble High Court of Delhi in the case of Indian National Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 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 s. 11 of the Act and that such adjustment will have to be excluded from the income of the trust under s. 11(1)(a) of the Act. Our view is also supported by the judgment of the Gujarat High Court in the case of CIT vs. Shri Plot Swetamber Murti Pujak Jain Mandal (1994) 119 CTR (Guj) 144 : (1995) 211 ITR 293 (Guj). Accordingly, we answer question No. 3 in the affirmative i.e., in favour of the assessee and against the Department. The co-ordinate bench of this Tribunal in the case of Baldwin Methodist Educational Society (supra), has held as under :- We also find that A bench of this Tribunal in the case of Academy of Liberal Education in ITA No.687/Bang/2014 dated 20/2/2015, to which one of us i.e. the Accountant Member is the signatory, has considered this issue and in para.8 of its order, held as under: 8. We are of the view that pendency of an appeal before the Hon'ble High Court of Karnataka cannot be the basis not to follow the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligious and charitable trust can only be achieved by incurring 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 so adjusted can only be expenditure on religious and charitable purposes and no other. The High Court relied on the decision in the case of CIT Vs. Society of Sisters of ST. Anne 146 ITR 28 (Kar). We find that the order of the CIT(A) is in consonance with the judicial precedents reproduced above. Therefore, we see no reason to interfere with the order of the CIT(A). The revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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