TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 1997
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....ts of this issue are that the assessee is a trust registered with DIT(E), Mumbai u/s 12A of the Act vide Registration No. TR/5060 dated 15.1.1976 and also with Charity Commissioner, Mumbai vide Registration No. E-1631 (Bom.). The assessee trust filed its return of income for the Asst Year 2011-12 on 11.7.2011 along with Income and Expenditure Account, Balance Sheet and Audit Report in Form 10B declaring Excess of Expenditure over Income of Rs 23,18,683/-. The ld AO observed that the assessee had derived dividend income of Rs 1,69,47,000/- and claimed the same as exempt and had not been considered for the purpose of reckoning the limit of 85% application of income for claiming exemption u/s 11 of the Act. He observed that the section which deals with income derived from property held under trust is section 11 of the Act and not section 10 of the Act. Accordingly he observed that the assessee trust cannot claim exemption u/s 10(34) /10(35) / 10(38) of the Act because section 10 does not deal with income derived from property held under trust. The ld AO accordingly held that the dividend income of Rs 1,69,47,000/- also had to be considered as revenue income eligible for application of....
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....total income whereas section 11 deals with income from property held for charitable or religious purposes. We have not found anything in the language of the two provisions nor was Mr. Malhotra able to point out as to how when certain income is not to be included in computing total income of a previous year of any person, then, that which is excluded from section 10 could be included in the total income of the previous year of the person / assessee. That may be a person who receives or derives income from property held under trust wholly for charitable or religious purposes. Thus, the income which is not to be included in computation of the total income is a matter dealt with by section 10 and by section 11 the case of an assessee who has received income derived from property held under trust only for charitable or religious purposes to the extent to which such income is applied to such property in India and that any such income is accumulated or set apart for application for such purposes in India to the extent of which the income so accumulated or set apart in computing 15% of the income of such property, is dealt with. Therefore, it is a particular assessee and who is in receipt ....
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....which we are concerned and in which year the depreciation was claimed, the entire expenditure incurred for acquisition of capital assets was treated as application of income for charitable puruposes under Section 11(1)(a) of the Act. The view taken by the Assessing Officer in disallowing the depreciation which was claimed under Section 32 of the Act was that once the capital expenditure is treated as application of income for charitable purposes, the assessees had virtually enjoyed a 100 per cent write off of the cost of assets and, therefore, the grant of depreciation would amount to giving double benefit to the assessee. Though it appears that in most of these cases, the CIT (Appeals) had affirmed the view, but the ITAT reversed the same and the High Courts have accepted the decision of the ITAT thereby dismissing the appeals of the Income Tax Department. From the judgments of the High Courts, it can be discerned that the High Courts have primarily followed the judgment of the Bombay High Court in 'Commissioner of Income Tax v. Institute of Banking Personnel Selection (IBPS)' [(2003) 131 Taxman 386 (Bombay)]. In the said judgment, the contention of the Department predicat....
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....anting benefit of deduction on account of depreciation. It was held that income of a Charitable Trust derived form building, plant and machinery and furniture was liable to be computed in 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 aforesatated judgment of the Bombay High Curt, we answer question No. 1 in the affirmative i.e., in favour of the assessee and against the Department. 4. Question No. 2 herein is identical to the question which was raised before the Bombay High Court in the case of Director of Income-tax (Exemption) v. Framjee Cawasjee Institute [1993] 109 CTR 463. In that case, the facts were as follows: The assessee was the Trust. It derived its income from depreciable ....