COMMISSIONER OF INCOME TAX (EXEMPTIONS) vs. OLIVE INTERNATIONAL EDUCATION FOUNDATION

Revenue is in appeal against the judgment of the Income   Tax   Appellate   Tribunal   dated   18.12.2017 raising following questions for our consideration. “[A] Whether   on   the   facts   and   in   the circumstances   of   the   case   and   in   law,   the Appellate Tribunal was right in allowing for set­off of brought forward excess expenditure incurred   over   and   above   the   income   i.   e. deficit in earlier year against the income of the subsequent year though there is no such provision to claim such deficit in the case of trust claiming exemption u/s.11 & 12 of the Act? [B] Whether   on   the   facts   and   in   the circumstances   of   the   case   and   in   law,   the Appellate Tribunal was right in allowing the claim of the assessee for carry forward of the said deficit by relying upon the judgment of Hon'ble Delhi High Court in the case of Raghuvanshi   Charitable   Trust,   ignoring   the C/TAXAP/484/2018 ORDER facts   that   the   Department   has   not   accepted the said decision of the High Court and hence the issue has not yet attained finally? [C] Whether   on   the   facts   and   in   the circumstances   of   the   case   and   in   law,   the Appellate Tribunal was right in allowing the claim of the assessee for carry forward of the   said   deficit,   ignoring   the   fact   that there   was   no   express   provision   in   the  the Income Tax Act, 1961 permitting allowance of such claim ?”

Though   three   questions   are   raised,   issue   is common and covered by judgment of this Court in case of Commissioner of Income­Tax v. Shri Plot Swetamber Murti Pujak Jain Mandal  reported in  [1995] 211 ITR 293 (Guj), in which, similar question was considered in following manner. “A   bare   perusal   of   the   above­referred provisions of the Act shows that the income derived   from   property   held   under   trust wholly for charitable or religious purposes to   the   extent   to   which   such   income   is applied to such purposes in India is to be excluded   for  the  purposes  of  computing  the income   of   the   trust   for   the   purpose   of assessment. There are no words of limitation in   this   section   providing   that   the   income should  have  been   applied   for  charitable  or religious purposes only in the year in which the   income   had   arisen.   The   word   "applied" means "to put to use" or "to turn to use" or "to make use" or "to put to practical use". Having  regard  to  the  provisions  of  Section 11  of   the   Act,   it   is   clear   that   when   the income of a trust is used or put to use to meet the expenses incurred for religious or charitable   purposes,   it   is   applied   for charitable   or   religious   purposes.   The   said C/TAXAP/484/2018 ORDER 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, even if expenses   for   charitable   and   religious purposes have been incurred for 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 have been applied   for   charitable   and   religious purposes in the year in which the expenses incurred   for   charitable   and   religious purposes had been adjusted.”

In the result, Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH