TaxTMI 
TaxTMI 
2019 (4) TMI 708
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....ven when the normal computation of income under respective heads as envisaged under sections 15 to 59 are not applicable to the computation of income in respect of trusts as per sections 11, 12 and 13 ? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessee is entitled to carry forward of excess application of income as claimed by the assessee even when the concept of application is only to show that the income is fully utilized rather than claiming excess expenditure either revenue or capital over and above the income so as to claim excess application/deficit/loss to be carried forward to subsequent assessment years even in the case of excess application by virtue of borrowed funds/ corpus fund donations set apart of earlier years, the income of the assessee cannot be reverted to loss but at best it can be made nil ?" 3. This court in the case of CIT v. Rajasthan and Gujarati Charitable Foundation [2018] 89 taxmann.com 127 (SC) (The quotation seems to be from CIT v. Agricultural Produce Market Committee [2018] 408 ITR 231 (Karn).) with regard to allowability and depreciation in the hands of religious and ....
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....iness and section 29 provides that income from profits and gains of business shall be computed in accordance with section 30 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 the 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 normal commercial manner although the trust may not be carrying on any....
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.... issue regarding claim of depreciation in the hands of the charitable trust is no longer res integra, we are of the opinion that no substantial question of law now arises in the present appeals filed by the Revenue." 4. With regard to carrying forward of the losses for being set off against the income of the charitable trust for the present assessment year, the controversy is covered by the judgment in CIT (Exemptions) v. Ohio University Christ College [2018] 408 ITR 352 (Karn) rendered on July 17, 2018 in ITA.No. 312/2016 and ITA No. 313/2016, in which this court held as under (page 364 of 408 ITR) : "In so far as the second question proposed by the Revenue, quoted above is concerned also, we find that the Tribunal's findings Deputy DIT (Exemptions) v. Ohio University Christ College [2015] 44 ITR (Trib) 291 (Bang). in this regard do not give rise to any substantial question of law. The said findings are quoted below for ready reference (page 306 of 44 ITR (Trib)) : 'In the course of assessment proceedings, the Assessing Officer observed that the assessee had claimed application of income on account of expenditure of earlier years, which has been brough....
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....arnataka High Court at paras 8 to 10 thereof has held as under :- Xxxxxxx ......:... Further, the CBDT Circular No. 5-P (LXX) 6 of 1968 cited by the assessee makes it clear that income should be understood in its commercial sense ; in the case of trusts also and therefore the commercial principle enunciated by the hon'ble Karnataka High Court in the above referred case of Society of the Sisters of St. Anne (supra) applies to trusts as well. In view of the factual and legal matrix of this issue in the case on hand as discussed above, we concur with the decision of the learned Commissioner of Income-tax (Appeals) in cancelling the disallowance made by the Assessing Officer and in allowing the amortization of expenses. Consequently, ground No. B (1 to 6) of the Revenue's appeal for the assessment year 2008-09 and ground No. C for the assessment year 2009-10 are dismissed.' In our opinion, the matter is squarely covered by a decision of the cognate Bench of this court in the case of CIT v. Society of the Sisters of St. Anne [1984] 146 ITR 28 (Karn) ; [1984] 16 Taxman 400 (Karn), wherein the cognate Bench of this court held that even the d....
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.... the aforesaid manner, should be not less than 75 per cent. of the latter, if the trust is to get the full benefit of the exemption under section 11(1).' In CIT v. Trustee of H. E. H. the Nizam's Supplemental Religious Endowment Trust [1981] 127 ITR 378 (AP), the Andhra Pradesh High Court has accepted the accounts maintained in respect of the trust in conformity with the principles of accountancy for the purposes of determining the income derived from the property held in trust.' In view of the aforesaid findings of the learned Tribunal, allowing any expenditure of the earlier year which has been brought forward and set off in the year under consideration, is a justified finding of fact based on the correct interpretation of law and the judgment relied upon by it rendered by the cognate Bench. Therefore, the same does not call for interference. A similar view was also taken by the Division Bench of the Bombay High Court in CIT v. Institute of Banking [2003] 264 ITR 110 (Bom), wherein the Division Bench of the Bombay High Court held that the income derived from the trust property has also got to be computed on commercial principles and if commercial pri....