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2016 (2) TMI 188 - AT - Income TaxDenial of the benefit of Section-11 of the Act and thereby taxing the corpus donation received - Held that:- The assessee trust engaged in running of hospitals would be entitled for the benefit of Section-11 of the Act even though it is incidentally generating surplus, since it is running a hospital and thereby providing medical relief, however subject to the compliance of the other provisions of the Act. Thus this issue is decided in favour of the assessee. Since we have held that the assessee trust would be eligible for the benefit of Section-11 of the Act, consequently we hereby hold that the Corpus donations received by the assessee trust shall not be included in the total income of the previous year in which such donation is received by the trust, as provided U/s.11 (1)(d) of the Act. Further we make it clear that the Ld.CIT(A) has powers to enhance an assessment and travel beyond the subject matter of the appeal as per Section 251(2) of the Act after providing an opportunity of being heard. Disallowance of the carry forward and set off of excess application of income - Held that:- The claim of the assessee for carry forward of excess application of fund to subsequent years is not permissible as per the provisions of the Act. See case of The Anjuman-E-Himayath-E-Islam [2015 (7) TMI 594 - ITAT CHENNAI] - Decided against assessee Denial of treating the loss on sale of assets as application of income - Held that:- We are in agreement with the view taken by the Ld. Assessing Officer. The purchase cost of these assets would have been already allowed as application of funds in the year in which the assets were purchased. Therefore, the loss on sale of these assets cannot be treated as application of funds once again. It would amount to double deduction. Further the facts remain that the sale proceeds of ₹ 5,81,000/- is the income of the assessee because there is a cash inflow to that extend which has to be applied for the objects of the trust as provided under the provisions of the Act. Therefore the action of Ld. Assessing Officer is justified - Decided against assessee Disallowance of the depreciation while computing the income of the assessee trust - Held that:- The claim of depreciation made by the assessee cannot be entertained as per the provisions of the Act. See case of The Anjuman-E-Himayath-E-Islam [2015 (7) TMI 594 - ITAT CHENNAI] - Decided against assessee. Disallowance of claim of bad debts as application of income - Held that:- We are of the view that if the receivables on which such claim of bad debts is made was earlier treated as the income of the assessee trust for the purpose of Section-11(1) of the Act, by applying the accruing concept and following the mercantile system of accounting, then the same should be allowed as application of fund when such receivables have become bad and written off in the books of accounts during the relevant assessment year. It is ordered accordingly.
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