TMI Blog2016 (6) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... CBDT circular dated 24.01.1973 enables repayment of a loan for the previous year utilizing the income of the subsequent year, and for such utilization to be treated as application of income under Section 11 (1) (a) of the Act, there is no reason why excess application of money, for charitable and religious purposes, (deficit) of the earlier year should not be set off against the income for the subsequent year. In the absence of any specific prohibition in the Section 11 (1) (a) of the Act in this regard, and in the light of the CBDT circular dated 24.01.1973 we find no error in the order of the Tribunal, much less a substantial question of law, necessitating interference in this appeal. - I.T.T.A.No.258 of 2015 - - - Dated:- 12-11-2015 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax. Aggrieved thereby, the assessee carried the matter in appeal. Before the Commissioner it was contended that the assessee had a deficit of ₹ 46,42,125/- for the financial year 2003-04 which had been adjusted against the surplus for the financial year 2004-05; such adjustment of deficit amounted to application of money; after such adjustment, the surplus was below 15% of the income; the excess expenditure of earlier year should be considered as application of income during the current year; there is nothing in the language of Section 11 (1) (a) of the Act which lends support to the contention that the expenditure incurred in the earlier year cannot be met out of the income of the subsequent year; and utilization of such income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the Income Tax Department, would submit that Section 11 (1) (a) of the Act does not permit set off of the deficit for the previous financial year with the surplus for the current financial year; and, in the absence of any such provision, the assessee was not entitled to claim that the deficit of the earlier financial year should be set off against the surplus for the current year. As held by the Madras and Gujarat High Courts, in the aforesaid judgments, Sections 11 (2) and (3) of the Act provide that the income derived from the property held under trust, wholly for charitable or religious purposes, to the extent to which such income is applied for such purposes in India, is to be excluded for the purposes of computing the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of loan is to be treated as application of income for charitable and religious purposes under Section 11 (1) (a) of the Act. Money for charitable and religious purposes, beyond the income of a trust, can be applied, for charitable and religious purposes, either by taking a loan or utilizing a part of the corpus of the Trust. As the CBDT circular dated 24.01.1973 enables repayment of a loan for the previous year utilizing the income of the subsequent year, and for such utilization to be treated as application of income under Section 11 (1) (a) of the Act, there is no reason why excess application of money, for charitable and religious purposes, (deficit) of the earlier year should not be set off against the income for the subsequent year. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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