TaxTMI 
TaxTMI 
2018 (8) TMI 1865
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....d under Chapter-IV and as such while arriving at the income of a charitable or religious trust/institution, various heads of income as con templated under section 14 and specific provisions of computation of income under respective heads as envisaged under sections 15 to 59 are not pressed into action ? 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 claim for carry forward and set off of unabsorbed deficit without appreciating that the provisions of sections 70 to 80 of the Income-tax Act are not applicable to trusts as they only deal with carry forward and set off of loss and not excess expenditure or deficit ? 3. 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 claim depreciation on capital assets when it amounts to double deduction as the income of the assessee is already exempt and amended pro visions of the Act also denies such claim for depreciation by trust ? 4. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that mere revaluation....
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....which arose before the court for determination was : whether depreciation could be denied to the assessee, as expenditure on acquisition of the assets had been treated as application of income in the year of acquisition ? It was held by the Bombay High Court that section 11 of the Income-tax Act makes a provision in respect of computation of income of the trust from property held for charitable or religious purposes and it also provides for application and accumulation of income. On the other hand, section 28 of the Income-tax Act deals with 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 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 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 ....
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.... be taken into account. This view of the Tribunal has been confirmed by, the Bombay High Court in the above judgment. Hence, question No. 2 is covered by the decision of the Bombay High Court in the above judgment. Consequently, question No. 2 is answered in the affirmative, i. e., in favour of the assessee and against the Department." After hearing learned counsel for the parties, we are of the opinion that the aforesaid view taken by the Bombay High Court correctly states the principles of law and there is no need to interfere with the same.' Since the 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) : ....
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....was added back claiming 1/5th of the expenditure. The unamortized expenditure has been brought forward and set off as application of income in sub sequent years, including the assessment years 2008-09 and 2009-10 which are under consideration. We find that the issue before us is directly related to the issue decided by the hon'ble Karnataka High Court in the case of Society of the Sisters of St. Anne (supra) cited by the assessee. In the said case, the hon'ble Karnataka High Court at paras 8 to 10 thereof has held as under : . . . 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 ex....
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....e of the trust or otherwise, and also after adding back any debits made for capital expenditure incurred for the purposes of the trust or other wise. It should be noted, in this connection, that the amounts so added back will become chargeable to tax under section 11(3) to the extent that they represent outgoings for purposes other than those of the trust. The amounts spent or applied for the purposes of the trust from out of the income computed in 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 inter....