TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 2139
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....gious trust/institution, various heads of income as contemplated under Section 14 and specific provisions of computation of income under respective heads as envisaged under Section 15 to 59 are not pressed into action? 2. Whether on the facts and in the circumstances of the case, the Tribunal were justified in law in allowing assessee's claim for depreciation on assets put into use during the accounting year relevant to this assessment year, even though the entire cost of these assets have been claimed by the assessee as an application of income for charitable activities and same is exempt and allowing of depreciation on the value of such assets in the same year results in double deduction and is not admissible in the absence of clear statutory indication? 3. Whether on the facts and in the circumstances of the case, the Tribunal were justified in law in allowing assessee's claim for depreciation on assets put into use during the accounting year relevant to this assessment year, even the legislature has specifically w.e.f 1/4/2015 has conveyed its intention not to allow depreciation as well as application of income at same time which would result in double deduction and clari....
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....ld 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 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 accoun....
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....ounsel 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." 6. 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 Commissioner of Income Tax (Exemptions) and another .vs. Ohio University Christ College rendered on 17.07.2018 in ITA.No.312/2016 and ITA No.313/2016, in which this Court held as under: "16. In so far as the second question proposed by the Revenue, quoted above is concerned also, we find that the Tribunal's findings in this regard do not give rise to any substantial question of law. The said findings are quoted below for ready reference : "5.1 In the course of assessment proceedings, the Assessing Officer observed that the assessee had claimed application of income on account....
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....thereof has held as under : - Xxxxxxx ....... 5.3.3 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 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 CIT (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 Assessment Year 2008-09 and Ground No.C for Assessment Year 2009-10 are dismissed." 17. In our opinion, the matter is squarely covered by a decision of the cognate Bench of this Court in the case of CIT vs. Society of the Sisters of St. Anne (1984) 16 Taxman 400 (Kar.) and (1984) 146 ITR 28, wherein the congnate Bench of this Court held that even the depreciation not involving any cash outflow is also in the character of expenditure and therefore such depreciation....
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....fit of the exemption under section 11(1)." 13. In CIT v. Trustee of H.E.H. The Nizam's Supplemental Religious Endowment Trust (1981) 127 ITR 378, 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." 18. 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 Bombay High Court in Commissioner of Income-tax v. Institute of Banking (2003) 264 ITR 110, wherein the Division Bench of Bombay High Court held that the 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 y....