2012 (8) TMI 254

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..... or a reason that cost of acquisition of the capital asset on which the claim of depreciation was made, was earlier allowed to the assessee as a deduction, while computing its income under Section 11 of the Income-tax Act, 1961 (hereinafter called "the Act"). 2. Short facts apropos are that assessee, a Trust holding registration under Section 12A(a) of the Act, had claimed depreciation while computing its income for the respective assessment years. A.O. was of the opinion that when the cost of addition to assets was claimed by the assessee as application of income for the respective assessment years, assessee could not further claim depreciation on the very same assets. Reliance was placed on the decision of Hon'ble Apex Court in the ca .....

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..... t. It means, income in the commercial sense, without reference to the heads of income specified in Section 14 of the Act, i.e. the book income and not total income as defined in Section 2(45) of the Act. This position is confirmed in CIT v. Trustee of H.E.H. Nizam's Supplemental Religious Endowment Trust [1981] 127 ITR 378 (A.P.), CIT v. Rao Bahadur Calavala Cunnan Chetty Charities [1982] 135 ITR 485 (Mad.) and CIT v. Estate of V.L. Ethiraj [1982] 136 ITR 12 (Mad.). This position is also confirmed by the CBDT vide its Circular No.5-P (LXX-6) dated 19th June, 1968. The concept of commercial income necessarily envisages deduction of depreciation on assets of the Trust. Depreciation on assets of a Trust is to be deducted for the purpose of .....

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..... 16 Taxman 400 and Hon'ble Madhya Pradesh High Court in the case of CIT v. Rajpur Pallottine Society [1989] 180 ITR 579/[1990] 50 Taxman 233. In CIT v. Sheth Manilal Ranchhoddas Vishram Bhavan Trust [1992] 198 ITR 598/[1993] 70 Taxman 228 it was held by Hon'ble Gujarat High Court that depreciation should be allowed while computing such income under Section 11(i)(a) of the Act. Assessing Officer's stand that 'provision of computation of income under Section 11' does not contain any provision which may entitle an assessee to claim weighted deduction for any expenses incurred' is not acceptable as Section 11 provides that the income of the Trust is to be computed on commercial basis i.e. as per normal accounting principl .....

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