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2018 (12) TMI 329 - HC - Income TaxComputation of income in respect of charitable trust/institution for the purpose of claiming exemption under sections 11, 12 and 13 - applicability of normal computation of income under respective heads as envisaged under sections 15 to 59 - depreciation could not be taken into account because, full capital expenditure had been allowed in the year of acquisition of the assets - Held that:- 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. When the Income-tax Officer stated that full expenditure had been allowed in the year of acquisi tion 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. See CIT v. Rajasthan and Gujarati Charitable Foundation [2017 (12) TMI 1067 - SUPREME COURT]. Claim for depreciation on new assets put into use during the accounting year relevant to this assessment year, even though the entire cost of these assets have been claimed by the assessee as an application of income for charitable activities - Held that:- 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 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) CIT - See (Exemptions) v. Ohio University Christ College [2018 (11) TMI 1055 - KARNATAKA HIGH COURT]
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