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2018 (8) TMI 1894 - HC - Income TaxAllowability and depreciation in the hands of religious and charitable trust - HELD THAT:- Income-tax Officer held that depreciation could not be taken into account because, full capital expenditure had been allowed in the year of acquisition of the assets. The assessee went in appeal before the Assistant Appellate Commissioner. The appeal was rejected. The Tribunal, however, took the view that when the Income-tax Officer stated that full expenditure had been allowed in the year of acquisition of the assets, what he really meant was that the amount spent on acquiring those assets had been treated as 'application of income' of the trust in the year in which the income was spent in acquiring those assets. This did not mean that in computing income from those assets in subsequent years, depreciation in respect of those assets cannot be taken into account. Carrying forward of the losses for being set off against the income of the charitable trust for the present assessment year, the controversy is covered by the judgment in CIT (Exemptions) v. Ohio University Christ College [2018 (11) TMI 1055 - KARNATAKA HIGH COURT] Income derived from the trust property has also got to be com puted on commercial principles and if commercial principles are applied, then adjustment of expenses incurred by the trust for char itable 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 pur poses in the subsequent year in which adjustment had been made having regard to the benevolent provisions contained in section 11 of the Act and such adjustment will have to be excluded from the income of the trust under section 11(1)(a)
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