CIT v. Shri Gujrati Samaj (Regd)

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The Tax Publishers2012 TaxPub(DT) 1218 (MP-HC) : (2012) 045 (I) ITCL 0206 : (2012) 349 ITR 0559 : (2013) 257 CTR 0397 Income Tax Act, 1961 --Charitable trust--Allowability depreciation For purpose of computation of income--Assessee, a charitable trust formed with main object to run educational institutions for benefit of public, claimed depreciation which was disallowed by assessing officer. Commissioner (Appeals) allowed assessee's appeal so also Tribunal. Held: If depreciation is not allowed as a necessary deduction in computingy income of charitable trust then there would be no way to preserve corpus of trust. Having regard to aforesaid legal position, Tribunal has rightly decided issue about disallowance of depreciation claim while computing income of charitable trust and has rightly held that assessee being charitable trust is entitled for claim of depreciation on assets owned by it. The court affirmed the view taken by Tribunal. Income Tax Act, 1961 Section 11(1)(a) Income Tax Act, 1961 Section 32(1)iii Income Tax Act, 1961 --Depreciation--AllowabilityClaim of depreciation by trust for assets owned by it. --Assessee, a charitable trust formed with main object to run educational institutions for benefit of public claimed depreciation which was disallowed by assessing officer. Commissioner (Appeals) allowed assessee's appeal so also Tribunal. Held: If depreciation is not allowed as a necessary deduction in computingy income of charitable trust then there would be no way to preserve corpus of trust. Having regard to aforesaid legal position, Tribunal has rightly decided issue about disallowance of depreciation claim while computing income of charitable trust and has rightly held that assessee being charitable trust is entitled for claim of depreciation on assets owned by it. The court affirmed the view taken by Tribunal (Para 7) Income Tax Act, 1961 Section 32(1)(ii) Income Tax Act, 1961 Section 11(1)(a) Income Tax Act, 1961 --Charitable trust --Application of incomeCarry forward of deficit--AO disallowed assessee's claim for carry forward of deficit which order was affirmed by Commissioner (Appeals) but Tribunal allowed assessee's appeal. In view or section 11(1)(a) it cannot be said that expenditure incurred in earlier year cannot be met out of income of subsequent year and utilization of such income for meeting expenditure of earlier year would not amount to such income being applied for charitable and religious purpose. There are no words of limitation in section 11(1)(a) explaining that the income should have been applied for charitable or religious purposes only in the year in which the income had arisen. (See CIT v. Maharana of Mewar Charitable Foundation: (1987) 164 ITR 439 (Raj.)].Held : In court's considered view the Tribunal has rightly applied the ratio of the judgment and order passed by the Division Bench of Rajasthan High Court in CIT v. Maharana of Mewar Charitable Foundation (supra) and has committed no error in holding this issue in favour of assessee. and no case is made out to interfere into the order passed by the Tribunal. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1218 (MP-HC) : (2012) 045 (I) ITCL 0206 : (2012) 349 ITR 0559 : (2013) 257 CTR 0397

Income Tax Act, 1961

--Charitable trust--Allowability depreciation For purpose of computation of income--Assessee, a charitable trust formed with main object to run educational institutions for benefit of public, claimed depreciation which was disallowed by assessing officer. Commissioner (Appeals) allowed assessee's appeal so also Tribunal. Held: If depreciation is not allowed as a necessary deduction in computingy income of charitable trust then there would be no way to preserve corpus of trust. Having regard to aforesaid legal position, Tribunal has rightly decided issue about disallowance of depreciation claim while computing income of charitable trust and has rightly held that assessee being charitable trust is entitled for claim of depreciation on assets owned by it. The court affirmed the view taken by Tribunal.

Income Tax Act, 1961 Section 11(1)(a)

Income Tax Act, 1961 Section 32(1)iii

Income Tax Act, 1961

--Depreciation--AllowabilityClaim of depreciation by trust for assets owned by it. --Assessee, a charitable trust formed with main object to run educational institutions for benefit of public claimed depreciation which was disallowed by assessing officer. Commissioner (Appeals) allowed assessee's appeal so also Tribunal. Held: If depreciation is not allowed as a necessary deduction in computingy income of charitable trust then there would be no way to preserve corpus of trust. Having regard to aforesaid legal position, Tribunal has rightly decided issue about disallowance of depreciation claim while computing income of charitable trust and has rightly held that assessee being charitable trust is entitled for claim of depreciation on assets owned by it. The court affirmed the view taken by Tribunal (Para 7)

Income Tax Act, 1961 Section 32(1)(ii)

Income Tax Act, 1961 Section 11(1)(a)

Income Tax Act, 1961

--Charitable trust --Application of incomeCarry forward of deficit--AO disallowed assessee's claim for carry forward of deficit which order was affirmed by Commissioner (Appeals) but Tribunal allowed assessee's appeal. In view or section 11(1)(a) it cannot be said that expenditure incurred in earlier year cannot be met out of income of subsequent year and utilization of such income for meeting expenditure of earlier year would not amount to such income being applied for charitable and religious purpose. There are no words of limitation in section 11(1)(a) explaining that the income should have been applied for charitable or religious purposes only in the year in which the income had arisen. (See CIT v. Maharana of Mewar Charitable Foundation: (1987) 164 ITR 439 (Raj.)].Held : In court's considered view the Tribunal has rightly applied the ratio of the judgment and order passed by the Division Bench of Rajasthan High Court in CIT v. Maharana of Mewar Charitable Foundation (supra) and has committed no error in holding this issue in favour of assessee. and no case is made out to interfere into the order passed by the Tribunal.