TMI Blog1998 (10) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that in the absence of any specific enabling provisions in the Act, there could be no carry over of deficits of earlier years for being adjusted in those arrears. The deficits so claimed by the assessee were by reason of the payment of interest, and part of the principal to the Indian Bank from which it had obtained a substantial loan for putting up a new building in place of the old building that was owned by it, the new building so put up being a multi-storeyed commercial complex, from which it derived rental income. Though the Director of Exemptions has observed that the repayment of the principal would not qualify for being regarded as expenditure on religious or charitable purposes, there is no finding that the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputing the income available for application to charitable and religious purposes by a charitable trust, the depreciation debited to the accounts of the trust were required to be deducted. It was held that the income derived from the property held under a trust cannot be the total income, but the net receipt after deducting all the necessary expenditure of the trust, and the depreciation debited to the accounts of the trust must be regarded as expenditure. In the case of CIT v. Maharana of Mewar Charitable Foundation [1987] 164 ITR 439 (Raj), it was held that there are no words of limitation in section 11 of the Income-tax Act that the income should have been applied for charitable or religious purposes only in the year in which the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the application of such commercial principles also warrants the conclusion that the expenditure incurred in an earlier year can be set off against the income of the subsequent year. The provisions of section 11 of the Act were characterised by the court as benevolent. This court in CIT v. Rao Bahadur Calavala Cunnan Chetty Charities [1982] 135 ITR 485, 495 observed that the income from the properties held under trust would have to be arrived at in the normal commercial manner without reference to the provisions, which are attracted by section 14 of the Act. It is thus clear that the income of the trust has to be arrived at having due regard to commercial principles, that section 11 of the Act is a benevolent provision, and that the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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