COMMISSIONER OF INCOME TAX (EXEMPTIONS) vs. RAMANBHAI FOUNDATION

C/TAXAP/431/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 431 of 2018 ========================================================== COMMISSIONER OF INCOME TAX (EXEMPTIONS) Versus RAMANBHAI FOUNDATION ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 02/05/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue   has   filed   this   appeal   against   the judgment of the Income Tax Appellate Tribunal dated 18.12.2017 raising following substantial question for our consideration. “Whether the 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?” 2. The   question   itself   is   elaborate   and   brings about controversy between the parties.  The Tribunal relied   on   the   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, such a question was considered Page 1 of 2

C/TAXAP/431/2018 ORDER 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 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.” 3. In the result, Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH Page 2 of 2