TMI Blog2018 (9) TMI 1554X X X X Extracts X X X X X X X X Extracts X X X X ..... hen adjustment of expenses incurred by the trust for charitable and religious purposes in the earlier years against the income earned by the trust in the subsequent year 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 the section 11 of the Act and that such adjustment will have to be excluded from the income of the trust under section 11(1)(a) of the Act. Our view is also supported by the judgment of the Gujarat High Court in the case of CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal [1993 (11) TMI 17 - GUJARAT HIGH COURT]. - Decided against revenue - ITA No. 4132/DEL/2015 - - - Dated:- 20-9-2018 - Shri N.K. Billaiya Accountant Member, And Shri N.K. Choudhary, Judicial Member For the Assessee : Shri Hiren Mehta, CA For the Revenue : Ms. Asima Neb, Sr. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, This appeal by the assessee is preferred against the order of the CIT(Exemptions) - 40, New Delhi dated 22.04.2015 pertaining to A.Y 2011-12. 2. The grievance of the Revenue is two-fold f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed as application of income under section 11 in the past years? In the case of CIT v. Munisuvrat Jain 1994 Tax Law Reporter, 1084 the facts were as follows. The assessee was a Charitable Trust. It was registered as a Public Charitable Trust. It was also registered with the Commissioner of Income Tax, Pune. The assessee derived income from the temple property which was a Trust property. During the course of assessment proceedings for assessment years 1977-78, 1978-79 and 1979-80, the assessee claimed depreciation on the value of the building @2 % and they also claimed depreciation on furniture @ 5%. The question which arose before the Court for determination was : whether depreciation could be denied to the assessee, as expenditure on acquisition of the assets had been treated as application of income in the year of acquisition? It was held by the Bombay High Court that section 11 of the Income Tax Act makes provision in respect of computation of income of the Trust from the property held for charitable or religious purposes and it also provides for application and accumulation of income. On the other hand, section 28 of the Income Tax Act deals with chargeability of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Hon'ble jurisdictional High Court of Delhi in the case of Raghuvanshi Charitable Trust 197 Taxman 170 wherein the Hon'ble High Court was seized with the following questions of law: a) Whether the Income Tax Appellate Tribunal was correct in law in allowing the assessee to carry forward deficit of the current year and to set off the same against the income of subsequent years? b) Whether the Income Tax Appellate Tribunal was correct in law in allowing the assessee to carry forward and set off the losses against the income of subsequent year ignoring that the determination of income under Sections 11 to 13 is a separate code and does not contain such provisions as contained in Chapter-VI of the Act? c) Whether adjustment of deficit (excess of expenditure over income) of current year against the income of subsequent year would amount to application of income of the Trust for charitable purposes in the subsequent year within the meaning of Section 11(1)(a) of the Act? 9. The relevant findings of the Hon'ble High Court of Delhi [supra] read as under: 6. We find from the order of the Income Tax Appellate Tribunal (hereinafter referred to as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table or religious purposes only‟ in the year in which it has arisen. However, we find that the Gujarat High Court has discussed this issue in greater detail and relying upon the Circular No. 100 dated 24.01.1973 issued by the Central Board of Direct Taxes and the judgment of the Rajasthan High Court in the case of Commissioner of Income Tax vs. Maharana of Mewar Charitable Foundation [164 ITR 439 (Raj.)]. We may also point out at this state that the aforesaid view of Rajasthan High Court and Gujarat High Court has been consistently followed by other High Courts in the following judgments: (i) Commissioner of Income Tax vs. Institute of Banking [264 ITR 110 (Bom.)]; (ii) Commissioner of Income Tax vs. Siddaramanna Charities Trust [96 ITR 275 (Mys); and (iii) Commissioner of Income Tax vs. Matriseva Trust [242 ITR 20 (Mad.)]. 8. It would be fruitful to refer to the discussions contained in Institute of Banking (supra), Per. Hon'ble Mr. Justice S.H. Kapadia, which is advanced before us by the learned counsel for the Revenue to repel the same in the following words: Now coming to question No.3, the point which arises for consideration is: whether e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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