AI Drafter 
TaxTMI 
TaxTMI 
2016 (7) TMI 955
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....that the assessee trust is registered u/s 12A of the Income Tax Act, 1961 (hereinafter the Act), declared income of Rs. 66,733/- in its return filed on 29/09/2008 annexed with income and expenditure account, audited balance sheet. The ld. Assessing Officer completed the assessment vide order 15/12/2010 u/s 143(3) of the Act taxing the income and disallowing the claim of depreciation. On appeal, before the Ld. Commissioner of Income Tax (Appeal), the claim of the assessee was allowed against which the Revenue is in appeal before this Tribunal. 2.2. The sum and substance of the ground raised by the Revenue is with respect to allowing the claim of depreciation, relying upon the decision from Hon'ble jurisdictional High Court ignoring the decision from Hon'ble Apex Court (Supra). We find that Hon'ble jurisdictional High Court in the case of CIT vs Institute of Banking Personal (264 ITR 110) (Bom.) and Hon'ble Gujarat High Court in CIT vs Plot Swetamber Murti Pujak Mandal (211 ITR 293)(Gujarat) decided the issue in favour of the assessee. Before coming to any conclusion and the facts available on record, we find that the Hon'ble jurisdictional High court in the case of Institute of B....
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....tune of Rs. 49,453 at 10 per cent of the written down value which was disallowed by the Assessing Officer on the ground that the said assets have been received by the assessee on transfer from_National Institute of Bank Management That institute was also a charitable trust Its income was also exempt under section 11 of the Income-tax Act The Assessing Officer did not allow depreciation on fixtures and furnitures on the ground that full deduction had been allowed in respect of capital cost of furniture and fixtures and if the depreciation is allowed, as claimed by the assessee, it would result in double deduction Further, during the assessment year in question the assessee had carried forward the deficit of the earlier years and had adjusted the deficit of the earlier years against the surplus of the subsequent years which was disallowed by the Assessing Officer on the ground that such carry forward was applicable only to income assessable under the head "Profits and gains of business" and such carry forward and adjustment was not permissible in case of income assessable under section 11 to section 13 of the Income-tax Act as the income of the charitable trust was not assessable ....
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....d 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 manner although the trust may not be carrying on any business and the assets in respect whereof depreciation is claimed may not be business assets In all such cases, section 32 of the Income-tax Act providing for depreciation for computation of income derived from business or profession is not applicable However, the income of the trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the trust In view of the aforestated judgment of the Bombay High Court, we answer question No 1 in the affirmative, ie, in favour of the assessee and against ....
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....11 to section 13 of the Income-tax Act and that the income of the charitable trust was not assessable under the head "Profits and gains of business" under section 28 in which the provision for carry forward of losses was relevant That, in the case of a charitable trust, there was no provision for carry forward of the excess of expenditure of earlier years to be adjusted against income of the subsequent years We do not find any merit in this argument of the Department Income derived from the trust property has also got to be computed on commercial principles and if commercial principles are applied then adjustment of expenses incurred by the trust for charitable and religious purposes in the earlier years against the 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 in which adjustment has been made having regard to the benevolent provisions contained in section 11 of the Act and that such adjustment will have to be excluded from the income of the trust under section 11(1)(a) of the Act Our view is also supported by the judgment of the Gujarat High Court in the....