TMI Blog2022 (4) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... ad filed Form No.10 before the completion of assessment. Setting off of the earlier year excess utilization of funds - As per Assessing Officer, accumulation of income in excess of 15% of the income is allowed subject to certain conditions noticed and AO noticed that the application of income fall short of benchmark of 85% - As in RAGHUVANSHI CHARITABLE TRUST AND OTHERS [ 2010 (7) TMI 158 - DELHI HIGH COURT] answered the question in favour of the assessee that whether a trust can be allowed to carry forward the deficit of current year and to set off of same against the income of subsequent years; in favour of the assessee and further question whether adjustment of deficit 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 in favour of the assessee. Thus we direct the AO to allow the claim of the assessee regarding set off of excess utilization of funds and accumulation of income. Thus, Ground raised by the assessee are allowed. - ITA No.8899/Del/2019 - - - Dated:- 12-4-2022 - Shri Kul Bharat, Judicial Member For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer ( AO ) noticed that the assessee is a society, engaged in religious and charitable activities. This society is running Ashrams and Medication programmes and was duly granted registration u/s 12AA of the Act by the Office of CIT, Rohtak. The AO noticed that the assessee society was required to apply 85% of its income on the objectives of the society. As per Assessing Officer, accumulation of income in excess of 15% of the income is allowed subject to certain conditions. The AO noticed that the application of income fall short of benchmark of 85% at ₹ 21,23,372/-. Therefore, he called upon the assessee to explain as to why the benefit of exemption claimed u/s 11(2) of the Act be given to assessee. The reply so filed by the assessee was not found satisfactory by the AO therefore, he proceeded to reduce the amount of ₹ 21,23,372/- and made addition of ₹ 21,23,372/- to the return of income. 3. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions, dismissed the appeal of the assessee. 4. Now, the assessee is in appeal before this Tribunal. 5. Ground Nos. 1 7 raised by the assessee are genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon ble Supreme Court rendered in the case of CIT vs Nagpur Hotel Owner s Association 247 ITR 201 (SC). Ld. Counsel for the assessee submitted that the submissions of the assessee were not appreciated by the authorities below and failed to take note of the binding precedents. 8. On the contrary, Ld. Sr. DR opposed these submissions and supported the orders of the authorities below. 9. I have heard the rival contentions and perused the material available on record and gone through the orders of the authorities below. I find that the AO did not accept the submissions of the assessee on account of set off of excess utilization of funds of earlier years against the surplus of the current year and accumulation of funds. In sofar as the question of filing of Form No.10, the Hon ble Supreme Court in the case of CIT vs Nagpur Hotel Owner s Association (supra) has held that if during the assessment proceedings the Assessing Officer does not have the necessary information, question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation rises from section 11 and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the trust for charitable purposes in the subsequent year within the meaning of section 11(1)(a) of the Act in favour of the assessee. Hon ble Delhi High Court has answered this question by observing as under:- 6. We find from the order of the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') that the Tribunal has decided the issue in favour of the assessee by placing reliance on the aforesaid judgment of the Gujarat High Court. We have gone through the judgment of Gujarat High Court in Shri Plot Swetamber Murti Pujak Jain Mandai's case (supra). It could not be disputed by the learned counsel for the Revenue that the question of law raised and answered in the said case was identical to the one raised in the present appeals. This question was decided in favour of the assessee interpreting the provisions of section 11 of the Act. The relevant discussion contained in the said judgment is in the following terms: 3. The learned DR sought to rely upon the finding of Assessing Officer. None was present on behalf of the assessee. We find that the issue is answered by Hon'ble Gujarat High Court in the case of CIT v. Shri Plot Swetamber Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns contained in Institute of Banking Personnel Selection (IBPS)'s case (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 excess of expenditure in the earlier years can be adjusted against the income of the subsequent year and whether such adjustment should be treated as application of income in the subsequent year for charitable purposes? It was argued on behalf of the Department that expenditure incurred in the earlier years cannot be met out of the income of the subsequent year and that utilization of such income 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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