TMI Blog2021 (7) TMI 1434X X X X Extracts X X X X X X X X Extracts X X X X ..... that excess of expenditure over income of charitable or religious nature incurred in earlier years can be adjusted against the income of the current year. This issue was debated in CIT v. Maharana of Mewar Charitable Foundation [ 1986 (7) TMI 56 - RAJASTHAN HIGH COURT] and it was opined that application could be considered to have taken place in the year of adjustment, where the earlier year's income was not adequate to absorb the actual expenditure made. It would be incorrect to view the term 'application' from a narrow perspective so as relate it with the actual movement of funds. In CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal [ 1993 (11) TMI 17 - GUJARAT HIGH COURT] held that there is nothing in section 11(l)(a) which indicates that the expenditure incurred in the earlier year cannot be met out of the income of subsequent years. The Hon'ble Bombay High Court in CIT v. Institute of Banking Personnel Selection [ 2003 (7) TMI 52 - BOMBAY HIGH COURT] held that income derived from a trust property should be computed on sound commercial principles and this included carrying forward and set-off of deficit in the earlier years. In our opinion, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing. 2. Briefly stated facts of the case are that the assessee society registered under Societies Registration Act, 1860. The society is engaged in running two schools under the name and title of Step-by-Step Nursery School at Panchsheel Park, New Delhi and Noida. The Assessing Officer in assessment order passed on 23/03/2016 under section 143(3) of the Act for year under consideration, upheld the charitable nature of the society, however, denied carry forward of the deficit/loss amounting to ₹104,623,086/-. On further appeal, the Ld. CIT(A), however, allowed the claim following various judicial decisions and decision of the Tribunal in the case of the assessee for assessment year 2008-09. Aggrieved, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above. 3. None appeared on behalf of the assessee before us. We have heard the Learned Department Representative and perused the relevant material on record. We find that the Ld. CIT(A) has allowed the appeal of the assessee of claim of carry forward of deficit/losses observing as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not amount to such income being applied for charitable or religious purposes. In our opinion the words used in section ll(l)(a) must be given their natural meaning. The word 'applied' as defined in the Chambers Dictionary means 'to put to use' or 'to turn to use'. According to Oxford Dictionary the word 'applied' means 'to make use, or 'to put to practical use'. When the income of trust is used or put to use to meet the expenses incurred for the religious or charitable purposes it is applied for charitable or religious purposes. The said application of the income for charitable or religious purposes takes place in the year in which the income is adjusted to meet the expenses incurred for charitable or religious purposes. In other words if the expenses for charitable and religious purposes have been incurred in the earlier year and the said expenses are adjusted against the income of a subsequent year, the income of that year can be said to be applied for charitable and religious purposes in the year in which the expenses incurred for charitable and religious purposes had been adjusted. 10. We are, therefore, of the opinion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the subsequent year or that utilization of such income for meeting the expenditure of the earlier year, would not amount to such income being applied for charitable or religious purposes. 4.2.4 The Hon'ble Bombay High Court in CIT v. Institute of Banking Personnel Selection [(2003) 264 ITR 110], held that income derived from a trust property should be computed on sound commercial principles and this included carrying forward and set-off of deficit in the earlier years. The relevant extracts are as under: Income derived from the trust property has also got to be computed on commercial principles and if commercial principles are applied, then 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 section 11 and such adjustment will have to be excluded from the income of the trust under section 11(1)(a). Accordingly, on the facts and in the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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