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M/s. Amara Prema Charitable Society, Versus Deputy Director of Income-tax (Exemption) , Circle 17 (1) , Bangalore.

2015 (7) TMI 1119 - ITAT BANGALORE

Denial of carry forward of the excess application of income to be set off against the ‘income from property’ held under trust in the future - Held that:- Similar issue had arisen before the Tribunal in the case of Baldwin Methodist Educational Society [2015 (10) TMI 2416 - ITAT BANGALORE] wherein held that 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 f .....

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the assessee to carry forward the deficit of the income arising on account of excess application of income during the relevant financial year to the subsequent assessment years. - ITA No. 354/Bang/2015 - Dated:- 8-7-2015 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER and SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER Appellant by: Shri Suresh Muthukrishnan, CA. Respondent by: Dr. P.K.Srihari, Add.CIT (DR). O R D E R Per Smt. P.MADHAVI DEVI, JM: This appe .....

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ncome at nil . During the assessment proceedings, the Assessing Officer (AO) observed that there is excess of application of income during the relevant financial year and the assessee is seeking carry forward of the deficit to future years. The AO disallowed the same. 3. Aggrieved, the assessee preferred an appeal before the CIT(A) who confirmed the order of the AO and the assessee is in second appeal before us. 4. The learned counsel for the assessee submitted that this is .....

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the Tribunal in the case of Baldwin Methodist Educational Society in ITA No.523/Bang/2014 for assessment year 2009-10 and C bench of this Tribunal to which both of us are signatories, had considered the issue at length and at para.5 of the order had 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 i .....

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ection 11(1)(a) takes place in the year in which the income is adjusted to meet the expenses incurred for charitable or religious purposes. Hence, even if the expenses for such purposes have been incurred in the earlier years and the said expenses are adjusted against the income of a subsequent year, the income of such subsequent year can be said to be applied for charitable or religious purposes in the year in which such adjustment takes place. In other words, the set-off of excess o .....

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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 .....

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e of loss of an earlier year being set off against the profit of a subsequent year. The object of the religious 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, .....

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s 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 revenue s appeal is, accordingly, dismissed . 6. Further, we also find that the Hon ble Bombay High Court in the case of CIT vs. Institute of Banking (2003) 264 ITR 110 has he .....

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ome for meeting the expenditure of earlier years would not amount to application of income for charitable or religious purposes. In the present case, the Assessing Officer did not allow carry forward of the excess of expenditure to be set off against the surplus of the subsequent years on the ground that in the case of a charitable trust, their income was assessable under self-contained code mentioned in section 11 to section 13 of the Income-tax Act and that the income of the charita .....

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