The ITO, (Exemptions), Ward-2, Ahmedabad V. Strategic Help Alliance for Relief to Distressed Area Trust (SHARDA), Ahmedabad

ITA 2165/AHD/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2829 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 17-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Charitable institution; Revenue expenditure; Capital expenditure
• Section: 143(3); 11

Judgement Text

ITA NO.2165/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO.2165/AHD/2016 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER (EXEMPTIONS), VS. STRATEGIC HELP ALLIANCE FOR RELIEF TO WARD 2, AHMEDABAD. DISTRESSED AREA TRUST (SHAR DA), ARVIND MILLS PREMISES, NARODA ROAD, AHMEDABAD - 382 330. [PAN AAATS 6364 D] (APPELLANT) (RESPONDENT) APPELLANT BY : LALIT P. JAIN, SR. D.R. RESPONDENT BY : SHRI P.M. MEHTA, A.R. DATE OF HEARING : 31.07.2018 DATE OF PRONOUNCEMENT : 26.10.2018 O R D E R PER MADHUMITA ROY, JUDICIAL MEMBER: THE INSTANT APPEAL FILED BY THE REVENUE BEFORE US I S AGAINST THE ORDER DATED 02.06.2016 PASSED BY THE LEARNED CIT(A)-9, AHMEDABA D ARISING OUT OF THE ORDER DATED 03.03.2015 PASSED BY THE A.O., AHMEDABAD UNDER SECT ION 143(3) OF THE INCOME TAX ACT, 1961. 2. THE APPELLANT HAS PREFERRED THE APPEAL BASICALLY ON THE FOLLOWING THREE ISSUES : I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) IS JUSTIFIED IN ALLOWING THE ASSESSEES APPEAL IN D ELETING THE ADDITION OF DISALLOWANCE OF DEPRECIATION MADE BY THE ASSESSING OFFICER OF RS.5,51,186/-. II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE IS THE LD. CIT(A) JUSTIFIED IN DIRECTING THE A.O. TO TREAT THE CAPITAL EXPENDITURE OF RS.6,86,023/- AS APPLICATION OF INCOME. III) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N HOLDING THAT THE ASSESSEE IS ENTITLED TO CARRY FORWARD OF DEFICIT OF RS.38,69,327/-. ITA NO.2165/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 2 OF 7 3. GROUND NO.1 & 2 ARE INTERLINKED, THEREFORE, THE SAME ARE DEALT WITH AT A TIME. THE APPELLANT CHALLENGED THE DISALLOWANCE OF DEPREC ATION OF RS.5,51,186/- MADE BY THE ASSESSING OFFICER. DURING THE COURSE OF ASSESS MENT PROCEEDINGS IT WAS FOUND THAT THE ASSESSEE TRUST HAS DEBITED TOTAL DEPRECIATION O F RS.5,51,186/- IN THE INCOME AND EXPENDITURE ACCOUNT PREPARED FOR THE TRUST. A SHOW CAUSE NOTICE WAS ISSUED BY THE ASSESSING OFFICER UPON THE ASSESSEE AS TO WHY THE D EPRECIATION OF RS.5,51,186/- SHOULD NOT BE DISALLOWED AND ADDED BACK TO THE INCO ME OF THE ASSESSEE OR ELSE TO JUSTIFY THE SAID CLAIM AS THE SAME HAS BEEN ALLOWED AS CAPITAL EXPENDITURE IN THE PRECEDING YEAR AND FULLY ALLOWED AS APPLICATION IN TRUST, OTHERWISE FURTHER ALLOWANCE OF DEPRECIATION WOULD TANTAMOUNT TO DOUBLE DEDUCTION W HICH WOULD GO AGAINST THE NORMAL ACCOUNTING PRINCIPLE. THE ASSESSEE BY AND UNDER IT S WRITTEN SUBMISSION DATED 20.02.2015 SUBMITTED THAT INCOME OF CHARITABLE TRUS T IS REQUIRED TO BE COMPUTED UNDER SECTION 11 ON COMMERCIAL PRINCIPLE AND THE CONCEPT OF COMMERCIAL INCOME NECESSARILY ENVISAGES DEDUCTION OF DEPRECIATION ON ASSETS OF TH E TRUST FROM GROSS INCOME OF THE TRUST. THUS, THE ASSESSEE ACCORDINGLY CLAIMED DEPR ECIATION ON ASSET FROM ITS TAXABLE INCOME. HOWEVER, SUCH CONTENTION OF THE ASSESSEE W AS NOT FOUND ACCEPTABLE BY THE LD. ASSESSING OFFICER AND THE CLAIM WAS REJECTED, W HEREUPON APPEAL WAS PREFERRED BY THE ASSESSEE AGAINST THE ADDITION. 4. IN APPEAL, THE LD. CIT(A) ALLOWED THE CLAIM OF T HE ASSESSEE AND HENCE THE INSTANT APPEAL BEFORE US BY THE REVENUE. 5. AT THE TIME OF HEARING OF THE MATTER, LD. COUNSE L FOR THE ASSESSEE SUBMITTED BEFORE US THAT THIS PARTICULAR ISSUE IS COVERED BY NUMBER OF JUDGEMENTS PASSED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL AND ALSO BY THE JUDGMENT AND ORDER PASSED BY JURISDICTIONAL HIGH COURT. 6. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, RELIED UPON THE ORDER PASSED BY THE LD. ASSESSING OFFICER. 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES APPEAR ING FOR THE PARTIES AND PERUSED THE RELEVANT MATERIALS ON RECORD. WHILE AL LOWING THE CLAIM OF THE APPELLANT QUASHING ORDER OF ADDITION MADE BY THE LD. ASSESSIN G OFFICER, THE LD. CIT(A) OBSERVED AS FOLLOWS :- 4.2 I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENT ION, OBSERVATION OF THE A.O AS WELL AS THE CASE LAWS RELIED UPON BY THE APPELLA NT. THE ISSUE OF ALLOWABILITY ITA NO.2165/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 3 OF 7 OF N THE CASE OF CHARITABLE TRUST HAS BEEN DECIDED BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SHETH MANILAL RANCHHOD DAS VISHRAM BHAVAN TRUST 198 ITR 598 (GUJ). HEAD NOTE AND THE MAIN FACTS ARE REPRODUCED BELOW FOR REFERENCE:- SECTION 11 OF THE INCOME-TAX ACT, 1961 - CHARITABLE OR RELIGIOUS TRUST - EXEMPTION OF INCOME FROM PROPERTY HELD UNDER - ASSE SSMENT YEARS 1971-72 AND 1972-73 -WHETHER WHILE COMPUTING INCOME UNDER SECTION 11(1)(A), DEPRECIATION HAS TO BE ALLOWED - HELD, YE S HEAD NOTES OF THE JUDGMENT IS: THE INCOME OF THE ASSESSEE-TRUST WAS MAINLY FROM IM MOVABLE PROPERTY. FOR THE ASSESSMENT YEARS 1971-72 AND 1972-73, THE A SSESSEE CLAIMED DEPRECIATION. THE ITO REJECTED THE ASSESSEE'S CLAIM ON THE GROUND THAT THE INCOME FROM HOUSE PROPERTY WAS TO BE CALCULATED ACCORDING TO SECTIONS 22 TO 27. HOWEVER, ON APPEAL, THE AAC ALLO WED THE ASSESSEE'S CLAIM. ON APPEAL BY THE REVENUE, THE TRIBUNAL UPHEL D THE ORDER OF THE AAC. ON REFERENCE : IN THE CASE OF CIT V. RAO BAHADUR CALAVALA CUNNAN C HETTY CHARITIES [1982] 135 ITR 485, THE MADRAS HIGH COURT HELD THAT THE INCOME FROM THE PROPERTIES HELD UNDER TRUST WOULD HAVE TO BE AR RIVED AT IN THE NORMAL COMMERCIAL MANNER WITHOUT CLASSIFICATION UNDER THE VARIOUS HEADS SET OUT IN SECTION 14. IT HELD THAT THE EXPRESSION 'INC OME' HAS TO BE UNDERSTOOD IN THE POPULAR OR GENERAL SENSE AND NOT IN THE SENSE IN WHICH THE INCOME IS ARRIVED AT FOR THE PURPOSE OF ASSESSM ENT TO TAX BY APPLICATION OF SOME ARTIFICIAL PROVISIONS EITHER GI VING OR DENYING DEDUCTION. IT OBSERVED THAT THE COMPUTATION UNDER T HE DIFFERENT CATEGORIES OR HEADS ARISES ONLY FOR THE PURPOSE OF ASCERTAINING THE TOTAL INCOME FOR THE PURPOSES OF CHARGE. THOSE PROVISIONS CANNOT BE INTRODUCED TO FIND OUT WHAT THE INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST TO BE EXCLUDED FROM THE TOTAL INCOME IS , FOR THE PURPOSE OF THE EXEMPTIONS UNDER CHAPTER III. FOLLOWING THE AFORESA ID DECISION IN THE INSTANT CASE THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT HAVING REGARD TO THE SCHEME OF THE ACT, 'INCOME' REFERRED TO IN SECT ION 11(1)(A) WAS NOT TO BE COMPUTED NOT IN ACCORDANCE WITH THE PROVISIONS O F THE ACT BUT IN ACCORDANCE WITH THE NORMAL RULES OF THE ACCOUNTANCY UNDER WHICH THE DEPRECIATION HAS TO BE ALLOWED WHILE COMPUTING SUCH INCOME UNDER SECTION 11(1)(A). 4.3 IN VIEW ABOVE AND RESPECTFULLY FOLLOWING THE JU DGMENTS BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF SHETH MANILAL RAN CHHODDAS VISHRAM BHAVAN TRUST, 198 ITR 598 (GUJ.) MENTIONED ABOVE, I AM OF THE VIEW THAT ADDITION OF RS.5,51,186/- ON ACCOUNT OF DISALLOWANCE OF DEPRECI ATION BE DELETED. GROUND NO.1, IS ACCORDINGLY ALLOWED. ACCORDINGLY, THE DEPR ECIATION WILL BE ALLOWED WHILE COMPUTING THE INCOME U/S.11(1)(A) OF THE ACT. THUS, GROUND OF APPEAL NO.1 IS ALLOWED. APPELLANT HAS ALSO INCURRED CAPITAL EXPEND ITURE OF RS.6,86,023/- DURING ITA NO.2165/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 4 OF 7 THE YEAR UNDER CONSIDERATION. IN LIGHT OF THE JUDGM ENTS OF CIT VS. INSTITUTION OF BANKING PERSONNEL 264 ITR 110 (BOM), SAPTAVIJAY PAT EL HINDU DHARMASHALA TRUST VS. CIT 86 ITR 683 (GUJ) AND SRM CTM TIRUPANN I TRUST VS. CIT 230 ITR 636 (SC) THE CAPITAL EXPENDITURE OF RS.6,86,023/- W ILL BE CONSIDERED AS APPLICATION OF INCOME. THIS GROUND OF APPEAL 1.1 IS ALLOWED. 8. AS IT APPEARS THAT THESE ISSUES ARE COVERED BY T HE JURISDICTIONAL HIGH COURT AS WELL AS DIFFERENT BENCHES OF THE LD. TRIBUNAL AS CI TED BY THE LD. CIT(A) WE FIND NO INFIRMITY IN THE SAID ORDER. WE THUS UPHOLD THE SA ME. IN THE RESULT THESE GROUNDS OF APPEAL PREFERRED BY THE REVENUE ARE DISMISSED. 9. THE REVENUE HAS FURTHER CHALLENGED THE ORDER ALL OWING THE ASSESSEES CLAIM FOR GRANT OF CARRY FORWARD THE DEFICIT OF RS.38,69,327/ - BEING EXCESS OF REVENUE EXPENDITURE OVER INCOME OF THE PRESENT ASSESSMENT Y EAR FOR BEING SET OFF AGAINST INCOME OF SUBSEQUENT ASSESSMENT YEARS. IN THE IMPU GNED ORDER THE LD. CIT(A) OBSERVED AS FOLLOWS : 6.1 ON THIS ISSUE THE APPELLANT DURING THE COURSE OF HEARING SUBMITTED AS UNDER :- 9 THE ASSESSING OFFICER AT PAGE 5 OF HIS ORDER HAS COMPUTED TOTAL INCOME OF THE APPELLANT TRUST AT RS.33,18,141141 AF TER MAKING DISALLOWANCE OF DEPRECIATION OF RS.5,51,846 AND OBS ERVED THAT APPELLANT TRUST IS NOT ALLOWED TO CARRY FORWARD THE DEFICIT A S THE INCOME IS ASSESSED AT NIL. THE ASSESSING OFFICER HAS NOT GIVEN ANY RE ASONS FOR MAKING SUCH OBSERVATION. 9.1 IN THIS CONNECTION, THE APPELLANT BEGS TO REPRO DUCE RELEVANT EXTRACTS FROM THE HEAD NOTES OF THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. SHRI PLOT SWETAMBER MUR TI PUJAK JAIN MANDAL [1995] 211 ITR 293 COURT WITH A VIEW TO SHOWING HOW DIRECT AND CATEGORICAL THAT DECISION HAS BEEN (EMPHASIS SUPPLI ED): 'A BARE PERUSAL OF SECTION 11 OF THE INCOME-TAX ACT , 1961, SHOWS THAT THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST W HOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT TO WHICH SUCH INCO ME IS APPLIED TO SUCH PURPOSES IN INDIA IS TO BE EXCLUDED FOR THE PURPOSE S OF COMPUTING THE INCOME OF THE TRUST FOR THE PURPOSE OF ASSESSMENT. THERE ARE NO WORDS OF LIMITATION IN THIS SECTION PROVIDING THAT THE IN COME SHOULD HAVE BEEN APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES ONLY I N THE YEAR IN WHICH THE INCOME HAD ARISEN. THE WORD 'APPLY' MEANS 'TO PUT T O 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 TH AT WHEN THE INCOME OF A TRUST IS USED OR PUT TO USE TO MEET THE EXPENSES IN CURRED FOR RELIGIOUS OR CHARITABLE PURPOSES, IT IS APPLIED FOR CHARITABLE O R RELIGIOUS PURPOSES. THE APPLICATION OF THE INCOME FOR CHARITABLE OR RELIGIO US PURPOSES TAKES PLACE IN THE YEAR IN WHICH THE INCOME IS ADJUSTED TO MEET THE EXPENSES INCURRED FOR CHARITABLE OR RELIGIOUS PURPOSES. IN O THER WORDS, EVEN IF EXPENSES FOR CHARITABLE AND RELIGIOUS PURPOSES ITA NO.2165/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 5 OF 7 HAVE BEEN INCURRED FOR THE EARLIER YEAR AND THE SAI D EXPENSES ARE ADJUSTED AGAINST THE INCOME OF A SUBSEQUENT YEAR, THE INCOME OF THAT YEAR CAN BE SAI D 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. THERE IS NOTHING IN THE LANGUAGE OF SECTI ON 11(1)(A) OF THE ACT TO INDICATE THAT THE EXPENDITURE INCURRED IN TH E EARLIER YEAR CANNOT BE MET OUT OF THE INCOME OF THE SUBSEQUENT YEAR AND UT ILIZATION OF SUCH INCOME FOR MEETING THE EXPENDITURE OF THE EARLIER Y EAR, WOULD NOT AMOUNT TO SUCH INCOME BEING APPLIED FOR CHARITABLE OR RELI GIOUS PURPOSES. INCOME DERIVED FROM TRUST PROPERTY HAS TO BE DETERM INED ON COMMERCIAL PRINCIPLES AND IF COMMERCIAL PRINCIPLES FOR DETERMI NING THE INCOME ARE APPLIED, IT IS BUT NATURAL THAT THE ADJUSTMENT OF T HE EXPENSES INCURRED BY THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE EARLIER YEAR AGAINST INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR W ILL HAVE TO BE REGARDED AS APPLICATION OF INCOME OF THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE SUBSEQUENT YEAR IN WHICH SUCH ADJUS TMENT HAS BEEN MADE HAVING REGARD TO THE BENEVOLENT PROVISIONS CON TAINED IN SECTION 11 OF THE ACT AND WILL HAVE TO BE EXCLUDED FROM THE IN COME OF THE TRUST UNDER SECTION 11(1)(A). CIT V. MAHARANA OF MEWAR CHARITABLE FOUNDATION [198 7] 164 ITR 439 (RAJ) FOLLOWED.' 9.2 IN THE APPELLANT'S HUMBLE SUBMISSION, BY MAKIN G OBSERVATION IN CONTRAVENTION OF THE DECISION OF THE JURISDICTIONAL GUJARAT HIGH COURT, THE LEARNED ASSESSING OFFICER HAS CLEARLY COMMITTED CON TEMPT OF THE HIGH COURT. PERTINENTLY, IT IS NOT AS IF THERE WAS ANY B INDING AUTHORITY DECIDING THIS PARTICULAR ISSUE DIFFERENTLY. THE APPELLANT AL SO RELIES OF FOLLOWING DECISIONS: (1) CIT V. MAHARANA OF MEWAR CHARITABLE FOUNDATION {[1986] 29 TAXMAN 476 (RAJ.)} (2) GONVINDU NAICKER ESTATE V. ADIT ([1999} 105 TA XMAN 719 (MAD)) 9.3 CONSIDERING THE ABOVE STATED LEGAL DECISIONS, ASSESSING OFFICER MAY BE DIRECTED TO ALLOW CARRY FORWARD OF CURRENT Y EAR DEPRECIATION IN SUBSEQUENT ASSESSMENT YEAR.' 5.2 I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ON AS WELL AS THE CASE LAWS RELIED UPON BY THE APPELLANT. IT IS OBSERVED THAT THE A.O HAS NOT ALLOWED THE SET OFF OF EXCESS EXPENDITURE INCURRED IN EARLIER YEARS AGAINST THE INCOME OF THE RELEVANT ASSESSMENT YEARS. THE APPELLANT HAS RELIED UPON THE ORDER OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS SHR I PLOT SHWETAMBAR MURTIPUJAK JAIN MANDAL 211 ITR 293(GUJ.), CIT VS. MAHARANA OF MEWAR CHARITABLE FOUNDATION 29 TAXMAN 476 (RAJ) AND GOVINDU NAICKER ESTATE V. ASSTT.DIT [2001] 248 ITR 368 (MAD). HON'BLE GUJARAT HIGH COUR T IN THE CASE OF SHRI PLOT SHWETAMBAR MURTIPUJAK JAIN MANDAL HAS HELD AS FOLLO WS :- ITA NO.2165/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 6 OF 7 'A BARE PERUSAL OF SECTION 11 OF THE INCOME-TAX ACT , 1961, SHOWS THAT THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST W HOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT TO WHICH SUCH INCO ME IS APPLIED TO SUCH PURPOSES IN INDIA IS TO BE EXCLUDED FOR THE PURPOSE S OF COMPUTING THE INCOME OF THE TRUST FOR THE PURPOSE OF ASSESSMENT. THERE ARE NO WORDS OF LIMITATION IN THIS SECTION PROVIDING THAT THE IN COME SHOULD HAVE BEEN APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES ONLY I N THE YEAR IN WHICH THE INCOME HAD ARISEN. THE WORD 'APPLY' MEANS 'TO PUT T O USE' OR 'TO TURN TO USE' OR 'TO MAKE USE' OR 'TO PUT T PRACTICAL USE'. HAVING REGARD T THE PROVISIONS OF SECTION 11 OF THE ACT, IT IS CLEAR TH AT WHEN THE INCOME OF A TRUST IS USED OR PUT TO USE TO MEET THE EXPENSES IN CURRED FOR RELIGIOUS OR CHARITABLE PURPOSES, IT IS APPLIED FOR CHARITABLE O R RELIGIOUS PURPOSES. THE APPLICATION OF THE INCOME FOR CHARITABLE OR RELIGIO US PURPOSES TAKES PLACE IN THE YEAR IN WHICH THE INCOME IS ADJUSTED TO MEET THE EXPENSES INCURRED FOR CHARITABLE OR RELIGIOUS PURPOSES. IN O THER 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 B E SAID TO HAVE BEEN APPLIED FOR CHARITABLE AND RELIGIOUS PURPOSES IN TH E YEAR IN WHICH THE EXPENSES INCURRED FOR CHARITABLE AND RELIGIOUS PURP OSES HAD BEEN ADJUSTED. THERE IS NOTHING IN THE LANGUAGE OF SECTI ON 11(1)(A) OF THE ACT TO INDICATE THAT THE EXPENDITURE INCURRED IN THE EA RLIER YEAR CANNOT BE MET OUT OF THE INCOME OF THE SUBSEQUENT YEAR AND UTILIZ ATION OF SUCH INCOME FOR MEETING THE EXPENDITURE OF THE EARLIER YEAR, WO ULD NOT AMOUNT TO SUCH INCOME BEING APPLIED FOR CHARITABLE OR RELIGIOUS PU RPOSES. INCOME DERIVED FROM TRUST PROPERTY HAS TO BE DETERMINED ON COMMERCIAL PRINCIPLES AND IF COMMERCIAL PRINCIPLES FOR DETERMI NING THE INCOME ARE APPLIED, IT IS BUT NATURAL THAT THE ADJUSTMENT OF T HE EXPENSES INCURRED BY THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE EARLIER YEAR AGAINST INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR W ILL HAVE TO BE REGARDED AS APPLICATION OF INCOME OF THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE SUBSEQUENT YEAR IN WHICH SUCH ADJUS TMENT HAS BEEN MADE HAVING REGARD TO THE BENEVOLENT PROVISIONS CON TAINED IN SECTION 11 OF THE ACT AND WILL HAVE TO BE EXCLUDED FROM THE IN COME OF THE TRUST UNDER SECTION 11(1)(A).' 5.3 I AGREE WITH THE CONTENTION OF THE APPELLANT AS WELL AS THE RELIANCE PLACED ON THE DECISION OF JURISDICTIONAL GUJARAT HIGH COUR T AND HEREBY DIRECT THE A.O. TO ALLOW THE BENEFIT OF THE DEFICIT OF EARLIER YEAR S AGAINST THE FUTURE INCOMES. ACCORDINGLY, GROUND OF APPEAL NO.3 IS ALLOWED. 10. WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNE D CIT(A), SINCE THE JUDGEMENT RELIED UPON BY HIM HAS ALREADY CONSIDERED THE ISSUE BROADLY IN ITS PRINCIPAL CASE IN FAVOUR OF THE ASSESSEE. WE, THEREFORE, CONFIRM THE ORDER PASSED BY THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL PREFERRED BY THE REVE NUE. ITA NO.2165/AHD/2016 ASSESSMENT YEAR: 2012-13 PAGE 7 OF 7 11. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF OCTOBER, 2018. SD/- SD/- PRAMOD KUMAR MS. MADHUMITA ROY (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD, THE 26 TH DAY OF OCTOBER, 2018 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER UE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD