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2016 (1) TMI 396 - ITAT BANGALORE

2016 (1) TMI 396 - ITAT BANGALORE - TMI - Eligibility for claim of carry forward of deficit of an earlier year to assessee registered u/s.12A - Held that:- As decided in Academy of Liberal Education [2015 (12) TMI 607 - ITAT BANGALORE ] 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 can be adjusted against the income of .....

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curring 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 purp .....

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14 - Dated:- 20-10-2015 - SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER For The Assessee : Smt. Pratibha, Advocate For The Revenue : Shri. I. P. S. Bindra, CIT-DR-I ORDER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : In this appeal filed by the Revenue its grievance is that the CIT (A) vide his order dt.25.10.2013 allowed set off of carry forward losses to the assessee. 02. Ld. DR strongly assailing the order of CIT (A) submitted that assessee was a trust .....

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ere for carry forward of losses from A Ys.2005-06 and 2006-07. As per the Ld. DR, at the most what could be allowed was set off was losses of the immediately preceding assessment year and not any earlier assessment years. As per the Ld DR, the impugned assessment year was 2010-11 and carry forward losses pertained to A. Ys.2005-06 and 2006-07. Reliance was placed on the judgment of Hon ble Madras High Court in the case of Govindu Naicker Estate v. ADIT [248 ITR 368]. 03. Per contra, Ld. AR suppo .....

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igible for claim of carry forward of deficit of an earlier year has been a subject matter which had come up before the coordinate benches of this Tribunal in various cases. In the case of Academy of Liberal Education (supra), relied on by the Ld. AR on a similar issue it was held as under at paras 4 to 8 of the order dt.20.02.2015 : 4. The issue is with regard to claim of assessee for carry forward of deficit of current year and unabsorbed deficit of earlier assessment years. The AO rejected the .....

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milar issue against the order of the Hon ble ITAT allowing excess application to be carried forward and set off. The same is pending before the jurisdictional High Court as on date. Since the matter is pending before the jurisdictional High Court, the loss declared of ₹ 3,08,66,139/- for the A.Y. 2011-12 is not allowed to be carried forward to the A.Y 2012-13 in order to keep the issue alive. 5. On appeal by the assessee, the CIT(A) directed the AO to allow claim of the assessee and in doi .....

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ndation, Manipal in ITA No. 76/UDP/CIT(A)MNG/12-13, dated 14.3.2013. Respectfully following the decision of the Jurisdictional ITAT, which is binding and following my own decisions in the above cases, I hold that, the appellant s current year s unabsorbed deficit amounting to ₹ 3,08,66,139/- along with brought forward unabsorbed deficit of ₹ 25,78,08,575/- to be carried forward to the subsequent assessment years to set off the same as application of income. Hence, the first grounds o .....

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e as contained in the grounds of appeal. 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 on the issue already rendered in identical cases. Section 11(1)(a) does not contain any words of limitation to the effect that the income should have been applied for charitable or religious purpose only in the year in which the income has arisen. The application for charitable purposes as contemplated in section 1 .....

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red over the income of earlier years against the income of a later year will amount to application of income of such later year. The above is the position of law as held in the case of CIT Vs. Maharana of Mewar Charitable Foundation 164 ITR 439 (Raj) CIT Vs. Shri Plot Swetamber Murti Pujak Jain Mandal 211 ITR 293 (Guj.). In CIT Vs. Institute of Banking 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 .....

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vision, and that the expenditure incurred on religious or charitable purposes in earlier year or years can be adjusted against the income of the subsequent year. The principle that the loss incurred under one head can only be set off against the income from the same head is not of any relevance, if the expenditure incurred was for religious or charitable purposes, and the expenditure adjusted against the income of the trust in a subsequent year, would not amount to an incidence of loss of an ear .....

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r 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 .....

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