Section 11 (1) prescribes carry forwards of surplus for general purposes, and it is to be utilized in next one financial year to fulfill the exemption requirements.
As per the amendment applicable from FY 2022-23,Cash basis of accounting for consideration of any expenditure as application is mandatory under Explanation to section 11. It provides that for the purposes of this section, any sum payable by any trust or institution shall be considered as application of income in the previous year in which such sum is actually paid by it (irrespective of the previous year in which the liability to pay such sum was incurred by the trust or institution according to the method of accounting regularly employed by it)
Now the question is ,whether bad debts written off in the books of accounts can be considered as application of Income, even though they are eligible expenditure u/s 36 but this amendment provides for actual payment and writing off bad debts do not entail actual payment.
CAclubindia
