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2014 (8) TMI 686 - HC - Income TaxAllowability of depreciation to charitable organization u/s 32 – Income does not include income from business – Held that:- Where the trust derives income from house property, interest on securities, capital gains, or other sources, the word "income" should be understood in its commercial sense, i.e., book income, after adding back any appropriations or applications thereof towards the purposes of the trust or otherwise, and also after adding back any debits made for capital expenditure incurred for the purposes of the trust or otherwise - the amounts so added back will become chargeable to tax under section 11(3) to the extent that they represent outgoings for purposes other than those of the trust - the business income of the trust as disclosed by the accounts plus its other income computed will be the "income" of the trust for purposes of section 11(1) - the trust must spend at least 75 per cent, of this income and not accumulate more than 25 per cent., thereof. The excess accumulation, if any, will become taxable under section 11(1). Relying upon CIT v. Jayashree Charity Trust [1984 (12) TMI 30 - CALCUTTA High Court] and CIT v. Bhoruka Public Welfare Trust [1999 (7) TMI 50 - CALCUTTA High Court] - The object of section 11 of the Income-tax Act, 1961, is to feed the public charity - By permitting computation of income in a commercial manner, the object of feeding the public charity is achieved - The amount deducted by way of depreciation is in that case is ploughed back for user on account of charity - a building used for the purpose of charity diminishes in value over the time like any other building - providing for diminution of value would keep the corpus of the trust intact otherwise the corpus of the trust itself in course of time may get dissipated - as such , there is no reason to refer the matter to any larger Bench – Decided against Revenue.
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