Charitable trust income application permits verified capital expenditure but rejects deferred pre-operative claims and requires reconsideration of consequential penalty.

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....Where depreciation is unavailable to a charitable trust under the amended provisions, actual capital expenditure disclosed in the return must be considered as application of income, subject to factual verification and exemption conditions; the matter was remanded for this purpose. Pre-operative expenditure cannot be deferred and claimed in later years using commercial accounting principles, because trust income must be applied for charitable purposes in the relevant year, subject to statutory accumulation conditions. However, eligible expenditure actually incurred during the year may be allowed on verification. The consequential under-reporting penalty requires fresh adjudication after recomputation of the quantum assessment.....