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
ITAT PUNE
in
DCIT (EXEMPTION) CIRCLE, PUNE VERSUS SHIVNAGAR VIDYA PRASARAK MANDAL AND DCIT (EXEMPTION) CIRCLE, PUNE VERSUS THE BISHOPS EDUCATION SOCIETY
ITA No.2548/PUN/2017 ITA No.2551/PUN/2017
Short Overview:
Assessment of trust
Claim of depreciation
Exemption u/s 11
Assessee herein is a trust duly registered under the Bombay Public Trust Act, 1950 as formed for the purpose of pursuing the educational objects. It was also duly registered u/s 12A
AO disallowed depreciation as application of income of the trust
ITAT observed as under:
The issue in the present appeal is no more res integra as the issue is already settled in favour of the assessee trust in the case of CIT vs. Rajasthan And Gujarat Charitable Foundation, [2017 (12) TMI 1067 – SUPREME COURT] wherein had followed the judgement of the Hon’ble Jurisdictional High Court in the case of CIT vs. Institute of Banking Personnel Selection [2003 (7) TMI 52 – BOMBAY HIGH COURT] wherein 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 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.
Further, it is settled position of law that the amendment brought by the Finance Act by insertion of sub-section (6) of section 11 of the I.T. Act providing that no double deduction shall be allowed in respect of the fixed assets is held to be prospective.
Further, in the case of Director of Income-tax, Exemptions vs. Al- Ameen Charitable Fund Trust [2016 (3) TMI 462 – KARNATAKA HIGH COURT] and in the case of Commissioner of Income-tax (Exemptions), Bangalore vs. Karnataka Reddy Janasangha [2016 (6) TMI 1181 – KARNATAKA HIGH COURT] took the similar view.
Present case decided in favour of assessee.
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