The Income Tax Appellate Tribunal (ITAT), Delhi Bench has held that the Charitable trust is entitled to carry forward, adjust excess expenditure in earlier years against income of subsequent years.
The assessee, Hapur Pilkhuwa Development Authority is an Authority constituted under the Uttar Pradesh Urban Planning and Development Act, 1973 to promote and secure the development of areas according to plan and for that purpose, the assessee-authority is empowered to acquire, hold, manage and dispose land and other properties, to carry out building activities, engineering, mining and other operations, to execute works in connection with the supply of electricity and water, to dispose of sewage and to provide and maintain other services and amenities and generally to do anything necessary or expedient for the purpose of such development. Assessee Authority was initially exempt under section 10(20A) of the Act till 1st April, 2003, but w.e.f. 31.03.2003, the aforesaid Act has been omitted in the statute and the Income of the Assessee Authority was subjected to tax.
The CIT(A) has not allowed the benefit of excess utilization of earlier years, claimed by the assessee by raising additional ground. 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 Revenue, but he has supported the order passed by the CIT(A).
The coram headed by the President G.S.Pannu and Judicial Member, kuldeep Singh has held that income derived from the trust property has also got computed on commercial principles and if commercial principles are applied, then the adjustment of the expenses incurred by the trust for charitable and religious purposes in the earlier year against 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”, and as such, the assessee is entitled for benefit of excess utilization of earlier years. Moreover, such benefit has already been granted to the assessee in earlier years at the level of ld. CIT(A) which has been accepted by the Revenue. So, “rule of consistency” is also applicable to this issue
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