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2018 (9) TMI 1891 - KARNATAKA HIGH COURTExemption u/s 11 - allowing of depreciation to a trust and accumulation of income under section 11(2) - HELD THAT:- Issues stand settled by the decision of the hon'ble Supreme Court reported in CIT v. Rajasthan and Gujarati Charitable Foundation [2017 (12) TMI 1067 - SUPREME COURT] and Principal CIT (Exemptions) v. Manipal Academy of Higher Education [2018 (8) TMI 1865 - KARNATAKA HIGH COURT] Income of a charitable trust derived from building, plant and machinery and furniture was liable to be computed in a 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 Carry forward of income or loss of charitable trust - HELD THAT:- 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 the Bombay High Court in CIT v. Institute of Banking [2003 (7) TMI 52 - BOMBAY HIGH COURT] wherein 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 years against the income earned by the trust in the subsequent year will have to be regarded as application of income of the trust for charitable and religious purposes in the subsequent year.
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