A Trust reg u/s 12A has gross receipt of Rs. 5,00,000/- for FY 2019-20 and Application of Income (Expenses) is Rs. 7,00,000/- (Expenses More than Receipts).
As per Section 11, 15% of Gross receipts can be accumulated and minimum 85% must be applied/expended.
Now in this case, Since Expenses is more than Gross Receipts, can we accumulate 15% of Gross Receipts i.e. Rs. 75,000/- and Balance receipts Rs. 4,25,000/- be adjusted against expenses Rs. 7,00,000/- ?
By this there is loss of Rs. 2,75,000/- which can be carried forward to next AY 2020-21.
Till last year, the c/f of losses i.e. the surplus application of funds resulting in deficit is not allowed to be set off in subsequent years resulting a dead loss for the charitable trusts
However, last year the Supreme Court has CIT(Exemptions) vs. Subros Educational Society (2018) 303 CTR 1 / 166 DTR 257 (SC) has specifically answered the question, whereby it allowed the surplus application to set off in the next financial year.
Basis, on above the answer is Yes, but I must say, to carefully study the aforesaid judgement.
Could you please elaborate ?
A Trust reg u/s 12A has gross receipt of Rs. 5,00,000/- for FY 2019-20 and Application of Income (Expenses) is Rs. 7,00,000/- (Expenses More than Receipts).
As per Section 11, 15% of Gross receipts can be accumulated and minimum 85% must be applied/expended.
Now in this case, Since Expenses is more than Gross Receipts, can we accumulate 15% of Gross Receipts i.e. Rs. 75,000/- and Balance receipts Rs. 4,25,000/- be adjusted against expenses Rs. 7,00,000/- ?
By this there is loss of Rs. 2,75,000/- which can be carried forward to next AY 2020-21.
Please suggest.
Till last year, the c/f of losses i.e. the surplus application of funds resulting in deficit is not allowed to be set off in subsequent years resulting a dead loss for the charitable trusts
However, last year the Supreme Court has CIT(Exemptions) vs. Subros Educational Society (2018) 303 CTR 1 / 166 DTR 257 (SC) has specifically answered the question, whereby it allowed the surplus application to set off in the next financial year.
Basis, on above the answer is Yes, but I must say, to carefully study the aforesaid judgement.
Thanks for Reply.
Also suggest in this case 15% of Gross receipt can be accumulated or not?
Prima Facie YES