136 total views
Section 11. Income of Trust: 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 subsequent year for charitable purposes?
In the following cases, Courts have held that the excess application of income in a year can be set off against the income of the subsequent assessment year for the purpose of application of income u/s 11:
1.ITAT, ‘B” BANGALORE BENCH Dy. CIT (E) v. Childrens Education Society ITA No. 697 to 699/Bang/2020 1 September, 2021
2.CIT V Gujarati Samaj (R).2012 349 ITR 559 M.P.
3.CIT V Maharana of Mewar Charitable Foundation 1987 164 ITR 439 (Raj).
4.CIT V Sisters of ST Anne, (1984) 146 ITR 28. High Court of Karnataka.
5.CIT V Shri PLOT Svetambara Murti Pujak Jain Man, 1995,211 ITR GUJ.
6.CIT v. Institute of Banking Personnel (264 ITR 110) (Hon.).
7.DIT (Exemptions) v. Aditya Birla Vikram Memorial trust (ITA No. 1087 of 2014) (Bom.).
8.DIT(E) v. M/s. Aditya Birla Foundation (ITA No. 1497 of 2014) (Bom.).
9.Income-tax Officer vs. Trustees of Sri Sathya Sai Trust (33 ITO 320).
10.DDIT (E) V Ohio University, T. A. Nos.1075 & 1076/Bang/2014.
In the case of CIT v. Institute of Banking Personnel (264 ITR 110) (Hon.) the high court hold as under:-
“We do not find any merit in this argument of the department. 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 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 (1995) 211 1TR 293 (Guj).Accordingly, we answer question No. 3 in the affirmative i.e., in favour of the assessee and against the department.”
The Courts in the following cases have upheld the determination of income on commercial or business principle which is binding on the department.
CIT vs Sisters of ST Anne, (1984) 146 ITR 28. High Court of Karnataka.
CIT vs Jayashree Charitable Trust (1986) 159 ITR 280 Cal.
CIT vs Programme foe community Organisation (1997)228 ITR 620 and subsequently affirmed by SC in (2001) 248 ITR 1.
CIT vs Rao Bahadur Calavala Cunnan Charities1982 135 ITR 485 (Mad).
CIT V Bhoruka Public Welfare Trust (1999) 240 ITR 513 Cal.
CIT V Institute of Banking 264 ITR 110 (Bom).
DIT V Viswa Jagruthi Mission ITA no 140/2012 dt 29/3/2012 Delhi High Court.