TaxTMI 
TaxTMI 
2014 (8) TMI 686
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....h Court in the case of Bhorukha Public Welfare Trust referred to supra the Assessing Officer is directed to grant the assessee the benefit of depreciation in respect of the investment in the fixed assets". Aggrieved by the order of the learned Tribunal, the Revenue has come up in appeal. The following questions of law were suggested by the Revenue : "(i) Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in law in allowing depreciation under section 32 of the Income-tax Act, 1961, to the assessee being a charitable organization and whose income does not include income from business and profession.without considering the fact that depreciation as a deduction is allowable against income from business and profession ? (ii) Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in law in allowing depreciation on assets without considering the facts that the cost of which has already been treated as application of income for charitable purpose and hence allowing depreciation on such inve....
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....lated and quoted above should be answered in favour of the Revenue. We requested Mr. Khaitan, learned senior advocate to assist us in resolving the issue. Mr. Khaitan drew our attention to a judgment of the Punjab and Haryana High Court in the case of CIT v. Market Committee, Pipli reported in [2011] 330 ITR 16 (P&H) wherein the second question formulated above was considered and answered in favour of the assessee. To be precise, the Punjab and Haryana High Court opined as follows (page 20) : "In the present case, the assessee is not claiming double deduction on account of depreciation as has been suggested by learned counsel for the Revenue. The income of the assessee being exempt, the assessee is only claiming that depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purposes of the trust. There is no double deduction claimed by the assessee as canvassed by the Revenue. The judgment of the hon'ble Supreme Court in Escorts Ltd. case [1993] 199 ITR 43 (SC) is distinguishable for the above reasons. It cannot be held that do....
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....chargeability of income from profits and gains of business and section 29 provides that income from profits and gains of business shall be computed in accordance with section 32 to section 43C. That section 32(1) of the Act provides for depreciation in respect of building, plant and machinery owned by the assessee and used for business purposes. It further provides for deduction subject to section 34. In that matter also a similar argument, as in the present case was advanced on behalf of the Revenue, namely, that depreciation can be allowed as deduction only under section 32 of the Income-tax Act and not under general principles. The court rejected this argument. It was held that normal depreciation can be considered as a legitimate deduction in computing the real income of the assessee on general principles or under section 11(1)(a) of the Income tax Act. The court rejected the argument on behalf of the Revenue that section 32 of the Income-tax Act was the only section granting benefit of deduction on account of depreciation. It was held that income of a charitable trust derived from building, plant and machinery and furniture was liable to be computed in a normal commercial mann....
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....969] Indian Tax Laws, Appx. II, p. Ixxxv) : "2. Section 11(1) provides that subject to the provisions of sections 60 to 63 the following income shall not be included in the total income of the previous year . . . The reference in sub-section (1)(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 the expression "total income", vide section 2(45) . . . 4. Where the trust derives income from house property, interest on securities, capital gains, or other sources, the word "income" should be understood in its commercial sense, i.e., book income, after adding back any appropriations or applications thereof towards the purposes of the trust or otherwise, and also after adding back any debits made for capital expenditure incurred for the purposes of the trust or otherw....