Shri annai Educational Trust, CHENNAI V. DDIT, CHENNAI

ITA 3050/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8901 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 15-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset; Business income; Depreciation; Charitable institution; Earning of tax free income; Capital expenditure
• Section: 143(3); 63; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , . , # $ BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.3050/MDS/2014 ( / ASSESSMENT YEAR: 2010-11) M/S. SHRI ANNAI EDUCATIONAL TRUST, KEEZHAMOOGILADI POST CHIDAMBARAM TALUK VS . THE DEPUTY DIRECTOR OF INCOME TAX (EXEMPTIONS)-I, CHENNAI. PAN: AAGTS7576P ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR. A.V.SREEKANTH, JCIT /DATE OF HEARING : 21 ST APRIL, 2016 /DATE OF PRONOUNCEMENT : 1 ST JULY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- VII, CHENNAI DATED 10.10.2014 IN ITA NO.66/13-14 PA SSED UNDER SECTION 143(3) & 250(6) OF THE ACT. 2. THE ASSESSEE IN ITS APPEAL HAS RAISED SEVERAL G ROUNDS, HOWEVER, THE CRUXES OF THE ISSUES ARE AS FOLLOWS:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER FOR DISALLOWING DEPRECIATION AS APPLICATION OF INCOME. II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF TH E 2 ITA NO.3050/MDS/2014 LEARNED ASSESSING OFFICER REGARDING CARRY FORWARD O F EXCESS APPLICATION OF INCOME IN THE EARLIER YEARS AND TREATING IT AS INCOME FOR THE RELEVANT ASSESSMENT Y EAR. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST REGISTERED UNDER SECTION 12A(A) OF THE ACT FILED I TS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 ON 09.03.201 1 ADMITTING GROSS RECEIPTS OF ` 2,74,56,230/- AND NIL INCOME AFTER CLAIMING EXEMPTION UNDER SECTION 11 OF THE AC T. ON SCRUTINY, THE LEARNED ASSESSING OFFICER NOTICED THA T THE ASSESSEE HAD CLAIMED DEPRECIATION AND ALSO BROUGHT FORWARD EXCESS APPLICATION OF INCOME OF THE EARLIER ASSESSM ENT YEARS AND TREATED THE SAME AS APPLICATION OF INCOME FOR T HE RELEVANT ASSESSMENT YEAR WHICH HE OPINED IS NOT ALL OWABLE AS PER THE PROVISIONS OF THE ACT. THEREFORE, HE DIS ALLOWED THE CLAIM OF DEPRECIATION AND CARRY FORWARD OF EXCESS A PPLICATION OF INCOME OF THE EARLIER YEARS. AT THE OUTSET, WE ARE REMINDED OF THE RECENT DECISION OF THE CHENNAI BENC H OF THE TRIBUNAL WHEREIN BOTH THESE ISSUES ARE ELABORATELY DISCUSSED AND HELD AGAINST THE ASSESSEE IN THE CASE ANJUMAN-E - HIMAYATH-E-ISLAM VS. ADIT IN ITANO.2271/MDS/2014 VIDE ORDER DATED 02.06.2015. 3 ITA NO.3050/MDS/2014 GROUND NO.1: DISALLOWANCE OF DEPRECIATION AS APPLICATION OF INCOME:- 4.1 THE ASSESSEE HAD CLAIMED DEPRECIATION BY REDUCI NG THE SAME FROM THE INCOME OF THE ASSESSEE FOR THE RELEVA NT ASSESSMENT YEAR, ON ITS CAPITAL ASSETS WHICH WAS TR EATED AS APPLICATION OF INCOME IN THE EARLIER YEARS. THE LEA RNED ASSESSING OFFICER OPINED THAT THE PROVISIONS OF SEC TION 11 ARE DIFFERENT FROM THOSE OF SECTIONS 14 TO 59 OF THE AC T AND FURTHER BY RELYING ON THE VARIOUS JUDICIAL DECISIONS WHEREI N IT WAS HELD THAT ONLY THE ACTUAL OUTGOINGS OUGHT TO BE TAK EN INTO ACCOUNT WHILE DETERMINING THE INCOME OF THE TRUST U NDER SECTION 11 OF THE ACT DISALLOWED THE CLAIM OF DEPRE CIATION. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) ALSO CONFIRMED THE ORDER OF THE LEARNED ASSESSING O FFICER ON THIS ISSUE. 4.2 AT THE OUTSET, THE LEARNED DEPARTMENTAL REPRESE NTATIVE BROUGHT TO OUR NOTICE THAT THIS ISSUE HAS BEEN ALR EADY DECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF THE ANJUMAN-E-HIMAYATH-E-ISLAM VS. ADIT IN ITA NO.2271/MDS/2014 VIDE ORDER DATED 02.06.2015 AGAINS T THE 4 ITA NO.3050/MDS/2014 ASSESSEE, WHEREIN THE CHENNAI CO-ORDINATE BENCH OF THE TRIBUNAL HELD AS FOLLOWS:- 5.2 WE FIND THIS ISSUE IS ELABORATELY DISCUSSED IN THE CASE OF LISSIE MEDICAL INSTITUTION VS. CIT REPORTED IN [201 2] 348 ITR 344(KER.) AND HELD THE ISSUE AGAINST THE ASSESSEE. WHILE DOIN G SO, THE HONBLE KERALA HIGH COURT HAD CONSIDERED TH E CIRCULAR NO.5P(LLX-6) DATED 19.06.1968 WHICH HAS NOT BEEN CONSIDERED BY THE OTHER DECISIONS. THE CIRCULAR NO. 5P(LLX-6) IS REPRODUCED HEREIN BELOW FOR REFERENCE:- 1. CIRCULAR NO. 5-P (LXX-6) OF 1968, DATED 19-6-196 8. SUBJECT : SECTION 11CHARITABLE TRUSTSINCOME REQUI RED TO BE APPLIED FOR CHARITABLE PURPOSEINSTRUCTIONS REGARDI NG. IN BOARD'S CIRCULAR NO. 2-P(LXX-5) OF 1963, DATED T HE 15TH MAY, 1963, IT WAS EXPLAINED THAT A RELIGIOUS OR CHARITAB LE TRUST CLAIMING EXEMPTION UNDER SECTION 11(1) OF THE INCOME- TAX AC T, 1961, MUST SPEND AT LEAST 75 PER CENT OF ITS TOTAL INCOME, FOR RELIGIOUS OR CHARITABLE PURPOSES. IN OTHER WORDS, IT WAS NOT PER MITTED TO ACCUMULATE MORE THAN 25 PER CENT OF ITS TOTAL INCOM E. THE QUESTION HAS BEEN RECONSIDERED BY THE BOARD AND THE CORRECT LEGAL POSITION IS EXPLAINED BELOW. 2. SECTION 11(1) PROVIDES THAT SUBJECT TO THE PROVI SIONS OF SECTIONS 60 TO 63 'THE FOLLOWING INCOME SHALL NOT BE INCLUDE D IN THE TOTAL INCOME OF THE PREVIOUS YEAR . . . '. THE REFERENCE IN SUB-SECTION (A) IS INVARIABLY TO 'INCOME' AND NOT TO 'TOTAL INCOME'. THE EXPRESSION 'TOTAL INCOME' HAS BEEN SPECIFICALLY DEFINED IN SECTION 2(45) OF THE ACT AS 'THE TOTAL AMOUNT OF INCOME . . . COMPUTED IN THE MANNER LAID DOWN IN THIS ACT'. IT WOULD ACCORDINGLY BE INCORRECT TO ASSIGN TO THE WORD 'INCOME' USED IN SECTION 11(1 )(A), THE SAME MEANING AS HAS BEEN SPECIFICALLY ASSIGNED TO T HE EXPRESSION 'TOTAL INCOME' VIDE SECTION 2(45). 3. IN THE CASE OF A BUSINESS UNDERTAKING HELD UNDER TRUST, ITS 'INCOME' WILL BE THE INCOME AS SHOWN IN THE ACCOUNT S OF THE UNDERTAKING. UNDER SECTION 11(4), ANY INCOME OF THE BUSINESS UNDERTAKING DETERMINED BY THE INCOME-TAX OFFICER IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, WHICH IS IN EXCESS OF THE INCOME AS SHOWN IN ITS ACCOUNTS, IS TO BE DEEMED TO HAVE BEEN APPLIED TO PURPOSES OTHER THAN CHARITABLE OR RELIGIOUS, AND HE NCE IT WILL BE CHARGED TO TAX UNDER SUB-SECTION (3). AS ONLY THE I NCOME DISCLOSED BY THE ACCOUNT WILL BE ELIGIBLE FOR EXEMPTION UNDER SECTION 11(1), THE PERMITTED ACCUMULATION OF 25 PER CENT WILL ALSO BE CALCULATED WITH REFERENCE TO THIS INCOME. 4. WHERE THE TRUST DERIVES INCOME FROM HOUSE PROPER TY, INTEREST ON SECURITIES, CAPITAL GAINS, OR OTHER SOURCES, THE WO RD 'INCOME' SHOULD 5 ITA NO.3050/MDS/2014 BE UNDERSTOOD IN ITS COMMERCIAL SENSE, I.E., BOOK INCOME , AFTER ADDING BACK ANY APPROPRIATIONS OR APPLICATIONS THER EOF TOWARDS THE PURPOSES OF THE TRUST OR OTHERWISE, AND ALSO AFTER ADDING BACK ANY DEBITS MADE FOR CAPITAL EXPENDITURE INCURRED FOR TH E PURPOSES OF THE TRUST OR OTHERWISE. IT SHOULD BE NOTED, IN THIS CON NECTION, THAT THE AMOUNTS SO ADDED BACK WILL BECOME CHARGEABLE TO TAX UNDER SECTION 11(3) TO THE EXTENT THAT THEY REPRESENT OUT GOINGS FOR PURPOSES OTHER THAN THOSE OF THE TRUST. THE AMOUNTS SPENT OR APPLIED FOR THE PURPOSES OF THE TRUST FROM OUT OF T HE INCOME COMPUTED IN THE AFORESAID MANNER, SHOULD BE NOT LES S THAN 75 PER CENT OF THE LATTER, IF THE TRUST IS TO GET THE FULL BENEFIT OF THE EXEMPTION UNDER SECTION 11(1). 5. TO SUM UP, THE BUSINESS INCOME OF THE TRUST AS DISC LOSED BY THE ACCOUNTS PLUS ITS OTHER INCOME COMPUTED ABOVE, WILL BE THE 'INCOME' OF THE TRUST FOR PURPOSES OF SECTION 11(1) . FURTHER, THE TRUST MUST SPEND AT LEAST 75 PER CENT OF THIS INCOM E AND NOT ACCUMULATE MORE THAN 25 PER CENT THEREOF. THE EXCES S ACCUMULATION, IF ANY, WILL BECOME TAXABLE UNDER SEC TION 11(1). AFTER CONSIDERING THE CIRCULAR, THE HONBLE KERALA HIGH COURT HELD AS FOLLOWS:- HELD, THAT AFTER WRITING OFF THE FULL VALUE OF THE CAPITAL EXPENDITURE ON ACQUISITION OF ASSETS AS APPLICATION OF INCOME F OR CHARITABLE PURPOSES AND WHEN THE ASSESSEE AGAIN CLAIMED THE SA ME AMOUNT IN THE FORM OF DEPRECIATION, SUCH NOTIONAL C LAIM BECAME A CASH SURPLUS AVAILABLE WITH THE ASSESSEE, WHICH W AS OUTSIDE THE BOOKS OF ACCOUNT OF THE TRUST UNLESS IT WAS WRI TTEN BACK WHICH WAS NOT DONE BY THE ASSESSEE. IT WAS NOT PERMISSIBL E FOR A CHARITABLE INSTITUTION TO GENERATE INCOME OUTSIDE T HE BOOKS IN THIS FASHION AND THERE WOULD BE VIOLATION OF SECTION 11( 1)(A). IT WAS FOR THE ASSESSEE TO WRITE BACK THE DEPRECIATION AND IF THAT WAS DONE, THE ASSESSING OFFICER WOULD MODIFY THE ASSESS MENT DETERMINING HIGHER INCOME AND ALLOW RECOMPUTED INCO ME WITH THE DEPRECIATION WRITTEN BACK BY THE ASSESSEE TO BE CARRIED FORWARD FOR SUBSEQUENT YEARS FOR APPLICATION FOR CH ARITABLE PURPOSES . FURTHER HONBLE CALCUTTA HIGH COURT HAS HELD IN THE CASE DCIT VS. GIRDHARILAL SHEWNARAIN TANTIA TRUST REPORTED IN [1993] 199 ITR 15(CAL.) THAT THE INCOME CONTEMPLATED BY THE PROVISIONS OF SECTION 11 IS THE REAL INCOME AND NOT THE INCOME AS ASSESSED OR ASSESSABLE. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBL E KERALA HIGH COURT AND TAKING CUE FROM THE DECISION OF THE HONBLE CALCUTTA HIGH COURT , WE DO NOT FIND ANY HESITATION TO CONFIRM THE ORDER OF THE LD. CIT(A) AND ALSO THE VI EWS EXPRESSED BY HIM IN HIS ORDER. ACCORDINGLY THIS APPEAL IS HEL D IN FAVOUR OF THE REVENUE. 6 ITA NO.3050/MDS/2014 4.3 SINCE THE CHENNAI BENCH OF THE TRIBUNAL HAS CONSIDERED THE ISSUE OF DEPRECIATION IN THE CASE OF A TRUST UNDER SECTION 11 OF THE ACT AGAINST THE ASSESSEE AF TER ELABORATE DELIBERATION, THE RATIO OF WHICH HAS BEEN FOLLOWED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND THE LEARNED ASSESSING OFFICER, WE DO NOT FIND IT NE CESSARY TO INTERFERE WITH THE ORDERS OF THE REVENUE. ACCORDING LY, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) IS CONFIRMED ON THIS ISSUE. GROUND NO.2: C ARRY FORWARD OF EXCESS APPLICATION OF INCOME IN THE EARLIER YEARS AND TREATING IT AS INCOME FOR THE RELEVANT ASSESSMENT YEAR: 5.1 THE ASSESSEE HAD BROUGHT FORWARD THE EXCESS APPLICATION OF INCOME OF THE EARLIER YEARS AND CLAI MED TO HAVE BEEN APPLIED FOR THE RELEVANT ASSESSMENT YEAR. THE LEARNED ASSESSING OFFICER DISALLOWED THE SAME BY OBSERVING AS UNDER:- IT IS SEEN IN THE DECISION OF THE HONBLE ITAT, D ELHI IN THE CASE OF PUSHPAWATI SINGHANIA RESEARCH INSTITUTE OF LIVER, RENAL & DIGESTIVE DISEASES VS. DDIT REPORTED IN 29 SOPT 316 WHEREIN THE TRIBUNAL RELYING UPON THE DECI SION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF C IT VS. INDIAN NATIONAL THEATRE TRUST REPORTED IN 305 ITR 149 (DEL) HELD THAT EXCESS INCOME APPLIED IN EARLIER YE AR COULD 7 ITA NO.3050/MDS/2014 NOT BE TREATED AS APPLICATION OF THE CURRENT YEAR. THE TRUST INCOME WAS EXEMPT U/S.11 OF THE ACT. THE ONLY CRITE RION IS 85% APPLICATION OF INCOME BY CHARITABLE INSTITUTION /TRUST. HOWEVER, IF THERE WAS EXCESS EXPENDITURE IT WAS DELIBERATE AND COULD NOT BE CARRIED FORWARD BEING R ELATED TO EARLIER YEARS APPLICATION OF INCOME. THE EXCESS APPLICATION OF FUNDS IN EARLIER YEAR AMOUNTED TO DO UBLE BENEFIT , ONE BEING EXEMPT INCOME AND OTHER BEING C ARRY FORWARD OF LOSS. IN VIEW OF THE ABOVE, THE ASSESSEE IS NOT ENTITLED TO CARRY FORWARD THE AMOUNT OF EXPENDITURE OVER THE INCOME, TO THE NEXT YEAR. 5.2 ON APPEAL, THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER AGREEING WITH HIS FINDINGS AGGRIEVED BY WHI CH THE ASSESSEE IS IN APPEAL BEFORE US. 5.3 AT THE OUTSET, THE LEARNED DEPARTMENTAL REPRESE NTATIVE BROUGHT TO OUR NOTICE THAT THIS ISSUE HAS BEEN ALR EADY DECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF THE ANJUMAN-E-HIMAYATH-E-ISLAM VS. ADIT IN ITA NO.2271/MDS/2014 VIDE ORDER DATED 02.06.2015 AGAINS T THE ASSESSEE, WHEREIN THE CHENNAI CO-ORDINATE BENCH OF THE TRIBUNAL HELD AS FOLLOWS:- 4.4 WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PERUSED THE MATERIALS AVAILABLE ON RECORD. SECTION-11(1)(A) OF THE ACT PROVIDES THAT INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSE SHALL N OT BE INCLUDED IN THE TOTAL INCOME TO THE EXTENT SUCH INCOME IS APPLIED FOR 8 ITA NO.3050/MDS/2014 CHARITABLE OR RELIGIOUS PURPOSE IN INDIA. THE ACT A LSO PROVIDES THAT UPTO 15% OF SUCH INCOME IS ACCUMULATED OR SET APART, THEN THAT SHALL ALSO NOT BE INCLUDED IN THE TOTAL INCOME . FURTHER SECTION-11(1)(D) OF THE ACT PROVIDES THAT INCOME IN THE FORM OF VOLUNTARY CONTRIBUTION MADE WITH SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTI TUTION WILL ALSO NOT BE INCLUDED IN THE TOTAL INCOME. BY VIRTUE OF SECTION- 2(24) OF THE ACT THE DEFINITION OF INCOME INCLUDES ANY VOLUNTARY CONTRIBUTION RECEIVED BY THE TRUST CREAT ED WHOLLY OR PARTLY OF CHARITABLE OR RELIGIOUS PURPOSES . FURTHER EXPLANATION TO SECTION-11(1)(A)(B) R.W.S 12(1) OF T HE ACT PROVIDES THAT ANY VOLUNTARY CONTRIBUTION RECEIVED OTHER THAN WITH SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION CREATED WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSE SHALL BE DEEMED TO BE THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST . FROM THE ABOVE IT IS CLEAR THAT, WHEN THE ASSESSEE TRUST APPLIES 85% OF ITS INCOME R ECEIVED BY WAY OF VOLUNTARY CONTRIBUTIONS OTHER THAN THE VOLU NTARY CONTRIBUTIONS RECEIVED WITH SPECIFIC DIRECTIONS AN D THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST, THEN SUCH INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE TRUST. F URTHER THE BALANCE 15% OF SUCH INCOME EVEN IF ACCUMULATED OR S ET APART SHALL ALSO NOT BE INCLUDED IN THE TOTAL INCOME OF T HE TRUST. THEREFORE, WHAT IS PROVIDED UNDER THE ACT IS WITH R ESPECT TO APPLICATION OF INCOME FROM THE INCOME DERIVED FROM THE PROPERTY HELD UNDER THE TRUS T AND ANY VOLUNTARY CONTRIBUTIONS RECEIVED BY THE TRUST OTHER THAN CONT RIBUTIONS MADE WITH SPECIFIC DIRECTIONS THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUS T . THUS, THERE IS NO REFERENCE IN SECTION-11 OF THE ACT WITH RESPECT TO APPLICATION OF FUND FROM THE CORPUS OF THE TRUST, LOAN OBTAINED BY THE TRUST, SUNDRY CR EDITORS OF THE TRUST OR ACCUMULATE FUND OF THE TRUST FOR CLAIMIN G EXEMPTION U/S.11 (1) OF THE ACT. 4.5. APPLICATION OF FUND BY ANY CHARITABLE INSTITU TION IS POSSIBLE ONLY FROM THE FOLLOWING SOURCES:- I) VOLUNTARY CONTRIBUTIONS RECEIVED BY THE TRUST T OWARDS ITS CORPUS, II) OTHER VOLUNTARY CONTRIBUTIONS, III) ACCUMULATED FUND, IV) AMOUNT RECEIVED BY WAY OF LOAN, V) SUNDRY CREDITORS, VI) INCOME DERIVED FROM THE PROPERTY HELD UNDER THE TRUST. [HONBLE CALCUTTA HIGH COURT HAS HELD IN THE CAS E DCIT VS. GIRDHARILAL SHEWNARAIN TANTIA TRUST REPORTED IN [1993] 199 ITR 15(CAL.) THAT THE INCOME CONTEMPLATED BY THE PROVISIONS OF SECT ION 11 IS THE REAL INCOME AND NOT THE INCOME AS ASSESSE D OR ASSESSABLE . FURTHER, HONBLE APEX HIGH COURT HAS HELD IN TH E CASE OF J.K.TRUST VS. LD. CIT /CEPT REPORTED IN [1957] 32 ITR 535(SC) THAT 9 ITA NO.3050/MDS/2014 PROPERTY IS A TERM OF THE WIDEST IMPORT, AND SUBJ ECT ANY LIMITATION OR QUALIFICATION WHICH THE CONTEXT MIGHT REQUIRE, IT S IGNIFIES EVERY POSSIBLE INTEREST WHICH A PERSON CAN ACQUIRE, HOLD AND ENJOY . BUSINESS WOULD UNDOUBTEDLY BE PROPERTY UNLESS THERE IS SOMETHING T O THE CONTRARY IN THE ENACTMENT . ] WHEN THE TRUST APPLIES ITS FUNDS FROM ITS CORPUS , ACCUMULATED FUND, SUNDRY CREDITORS OR FROM THE LOAN OBTAINED BY THE TRUST, THEN SUCH FUNDS WHICH ARE APPLIED CANNOT BE SAID TO BE FUNDS APPLIED FROM THE INCOME OF THE TRUST. THEREFORE, THERE CANNOT BE A CASE WHERE THE TRUST CAN APPLY ITS INCOME MORE TH AN THE INCOME RECEIVED BY IT FOR THE PURPOSE OF SECTION-11 (1)(A)&(B) OF THE ACT . THUS EXCESS APPLICATION OF FUND OVER AND ABOVE TH E INCOME OF THE TRUST CAN ARISE ONLY WHEN FUNDS ARE A PPLIED FROM THE CORPUS OF THE TRUST, ACCUMULATED FUND, LOAN OBT AINED BY THE TRUST OR GOODS AND SERVICES RECEIVED FROM SUNDRY CR EDITORS. IT CAN BE LOGICAL TO DEDUCE THAT WHEN FUNDS ARE APPLIED FR OM BORROWED FUNDS OR BY WAY OF SUNDRY CREDITORS THE SAME CAN BE TREATED AS APPLICATION OF FUND IN THE YEAR IN WHICH SUCH LOAN/ SUNDRY CREDITORS ARE REPAID FROM THE INCOME OF THE TRUST. HOWEVER WHEN AMOUNT IS APPLIED FROM THE CORPUS FUND OR ACCUMULATED FUND TH E SAME CANNOT BE TREATED AS APPLICATION OF FUND FOR THE PU RPOSE OF SECTION 11 OF THE ACT, BECAUSE SUCH FUND HAVE ALREADY BEEN EXEMPT FROM THE INCOME OF THE TRUST IN THE YEAR IN WHICH IT IS RECEIVED OR SUCH AMOUNT IS SET ASIDE AND THEREFORE ONCE AGAIN TREATI NG THE SAME AS APPLICATION OF FUND WILL AMOUNT TO DOUBLE DEDUCTION . SIMILARLY VOLUNTARY CONTRIBUTION RECEIVED TOWARD CORPUS IS EX EMPT FROM INCOME OF THE TRUST IN THE YEAR IN WHICH IT IS RECE IVED AND THEREFORE WHEN IT IS UTILIZED FOR THE OBJECTS OF THE TRUST IT CANNOT BE CONSIDERED AS APPLICATION OF FUND OTHERWISE IT WILL AMOUNT TO DOUBLE DEDUCTION. FROM THE ABOVE FACTUAL AND MATHEM ATICAL MATRIX IT IS EVIDENT THAT CARRY FORWARD OF EXCESS A PPLICATION OF FUND IN THE COMMERCIAL PRINCIPLES CANNOT BE ALLOWED AS P ER THE PROVISIONS OF THE ACT BECAUSE IT WOULD RESULT IN NO TIONAL APPLICATION OF INCOME IN THE SUBSEQUENT YEAR. THESE ASPECTS HAV E NOT BEEN CONSIDERED BY THE MUMBAI BENCH OF THE TRIBUNAL, AND THE UNREPORTED DECISION OF THE HONBLE BOMBAY HIGH COUR T IS ALSO NOT PLACED BEFORE US. 4.6 NOW ANALYZING THE FACTS OF THE CASE BEFORE US, IT APPEARS THAT THE ASSESSEE TRUSTS GROSS RECEIPTS IS ` 5,11,60,794/- AND THE ASSESSEE TRUST HAVE SPENT ` 5,35,57,149/- WHICH SHOWS THAT THE ASSESSEE TRUST HAS SPENT ` 23,96,355/- MORE THAN ITS INCOME RECEIVED DURING THE RELEVANT YEAR. THIS AMOUNT OF ` 23,96,355/- MAY HAVE BEEN TAKEN OUT FROM THE CORPUS FUNDS, A CCUMULATED FUNDS, LOAN OBTAINED BY THE ASSESSEE TRUST OR AR ISING OUT OF SUNDRY CREDITORS. THEREFORE IT IS OBVIOUS THAT T HERE IS NO EXCESS APPLICATION OF INCOME OVER AND ABOVE THE INCOME RECEIVED BY 10 ITA NO.3050/MDS/2014 THE TRUST , HENCE THE QUESTION OF CARRY FORWARD OF EXCESS APPLICATION OF INCOME DOES NOT ARISE . HOWEVER THE AMOUNT APPLIED FROM THE LOAN OR SUNDRY CREDITORS WILL BE ALLOWED AS APPLICATION OF FUND IN THE YEAR IN WHICH SUCH LOAN OR SUNDRY CREDITORS ARE REPAID. IT IS PERTINENT TO MENTION T HAT IF THE AMOUNT IS APPLIED FROM THE CORPUS FUND OR ACCUMULATED FUND IT WILL NOT BE TREATED AS APPLICATION OF FUND BECAUSE CORPUS FUND AND ACCUMULATE FUND ARE ALREADY EXEMPT FROM THE INCOM E OF THE TRUST AND ONCE AGAIN IF IT IS TREATED AS APPLICATION OF F UND IT WOULD AMOUNT TO DOUBLE DEDUCTION. THEREFORE THE CLAIM OF THE ASSESSEE TO CARRY FORWARD THE EXCESS APPLICATION OF FUND CAN NOT BE ENTERTAINED APPLYING THE COMMERCIAL PRINCIPLES. HOW EVER IF THE EXCESS AMOUNT OF ` 23,96,355/- IS APPLIED FROM THE BORROWED FUND OR FROM SUNDRY CREDITORS, THE SAME SHALL BE ALLOWED AS APPLICATION IN THE YEAR IN WHICH SUCH LOAN OR SUNDRY CREDITORS ARE REPAID FROM THE INCOME OF THE TRUST AS DISCUSSED HEREIN ABOVE. NEEDLESS T O MENTION THAT THE INCOME OF THE TRUST REFERS TO INCOME DERIVED FROM THE PROPERTY HELD UNDER THE TRUS T AND ANY VOLUNTARY CONTRIBUTIONS RECEIVED BY THE TRUST OTHER THAN CONT RIBUTIONS MADE WITH SPECIFIC DIRECTIONS THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUS T I.E., ITEM NOS.(II) AND (VI) MENTIONED HEREINABOVE. THIS GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY DISPOSED OFF. 5.4 SINCE THE CHENNAI BENCH OF THE TRIBUNAL HAS CONSIDERED THE ISSUE OF EXCESS APPLICATION OF INCOM E IN EARLIER YEARS TO BE CARRIED FORWARD AGAINST THE ASS ESSEE AFTER ELABORATE DELIBERATION, THE RATIO OF WHICH HAS BEEN FOLLOWED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND THE LEARNED ASSESSING OFFICER, WE DO NOT FIND IT NE CESSARY TO INTERFERE WITH THE ORDERS OF THE REVENUE. ACCORDING LY, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) IS CONFIRMED ON THIS ISSUE. 11 ITA NO.3050/MDS/2014 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 1 ST JULY, 2016 SD/- SD/- ( . ) ( . ) (G.PAVAN KUMAR) ( A.MOHAN ALANKAM ONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 1 ST JULY, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF