Trust entitled for benefit of excess utilization of earlier years

Hapur Pilkhuwa Development Authority Vs ACIT (ITAT Delhi)

Learned CIT(A) has not allowed the benefit of excess utilization of earlier years, claimed by the assessee by raising additional ground. Ld. AR for the assessee contended that this issue is also covered in favour of the assessee by the order passed by coordinate Bench of Tribunal in assessee’s own cases for the assessment years 2009-10 to 2011-12. This factual position has also not been controverted by the ld. DR for the Revenue, but he has supported the order passed by the ld. CIT(A).

We have perused the order dated 06.06.2018 (supra) passed by coordinate Bench of Tribunal in assessee’s own case for A.Ys. 2009-10 to 2011-12 available at page No. 131 to 140 of the paper book, which is qua identical issue, by returning following findings :

“6. The last ground is against the direction of the learned CIT(A) in allowing the set off and carry forward of deficit of earlier years to the current/next years. The Assessing Officer, without any discussion in the assessment order, did not allow the benefit of set off and carry forward of deficit of earlier years. The learned CIT(A), relying on certain decisions, directed the Assessing Officer to re-compute the income/loss after allowing necessary set off and carry forward.

7. Having heard both the sides and perused the relevant material on record, we find that this issue is no more res Integra in view of several decisions discussed by the learned CIT(A) in the impugned order including the judgment of the Hon’ble Bombay High Court in CIT vs. Institute of Banking Personnel Selection 2003 264 HO (Bombay) in which it has been held that : 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 s. 11 of the Act and that such adjustment will have to be excluded from the income of the trust under s. 11(1 )(a) of the Act. In reaching this conclusion, the Hon’ble High Court drew support from the judgment of the Hon’ble Gujarat High Court in the case of CIT vs. Shri Plot Swetamber Murti Pujuk Jain Mandal (1995) 211 ITR 293 (Guj). No contrary decision has been brought to our notice by the Id. DR. Respectfully following the precedent, we uphold the impugned order on this issue.”

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