TMI Blog2010 (1) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... or ascertaining the 85% of the expenditure applied for charitable purposes, so that provisions of sec.11 are applied for exempting the income of the trust. Hence, the capital expenditure is considered as part of expenditure applied for charitable purposes therefore, the assessee cannot be entitled to depreciation while ascertaining the income u/s 11 of the IT Act. 3. The learned CIT(A) noticed that the issue of allowing depreciation came up in the assessment year 2005-06. The Tribunal observed that allowing of depreciation is purely academic, as the accumulation is not in excess of 15% during the year and therefore, the ground of appeal raised by the assessee was dismissed. The learned CIT(A) therefore, upheld the order of the AO in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income in the year of acquisition?. IT as held b the Bombay High Court that section 11 of the IT Act makes a provision in respect of computation of income of the trust from property held or charitable r religious purposes and it also provid4es for application and accumulation of income. On the other hand, section 28 of the IT Act deals with chargeability of income from profits and gains of business and section 29 provides that income from profits and gains of business shall be computed in accordance with section 30 to section 43C that section 32(1) of the Act provides for depreciation in respect of building, plant and machinery owned y the assessee and used for business purposes. It further provides for deduction subject to section 34. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was on the following question of law: Whether on the facts and in the circumstances of the case, the Tribunal was right in law in directing the AO to allow depreciation on the assets the cost of which has been fully allowed as application of income under section 11 in the past years? 5. The learned AR also relied on the decision of the jurisdictional High Court in the case of CIT Vs Society of the Sisters of St.Anne 146 ITR 28. The Hon ble jurisdictional High Court held that the depreciation is nothing but decrease in value of property through wear, deterioration or obsolescence and allowance is made for this purpose in book keeping, accountancy. The depreciation if it is not allowed as a necessary deduction for computing the income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haritable and religious purposes. 8. The next grievance of the assessee is that the learned CIT(A) erred in holding that the provision of sec.40(a)(ia) for computing the income u/s 11 of the IT Act. 9. We have heard both the arties. The Board vide Circular dated 26-11-1968 in para-3 mentioned as under; 3. In th In the case of business undertaking, held under trust, its income will be the income as shown in the accounts of the undertaking. Under Section 11(4), any income of the business undertaking determined by the Income-tax Officer(now Assessing Officer) in accordance with the provisions of the Act, which is in excess of the Income as sown in religious, and hence it will be charged to tax under sub-section(3). As only the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to be calculated in the commercial manner and it is not to be computed under the IT Act. Hence, we hold that the learned CIT(A), was not justified in holding that provisions of sec.40(a)(ia) can be invoked for disallowing the expenses on which tax has not been deducted at source. We have noticed from the learned DR that the assessee has made payments without deducting tax at source to the employees and other parties. The revenue has to take necessary action under the Act in case, it is felt that the assessee is not properly deducted tax at source. However, on this ground all the expenses debited in the books cannot be disallowed by invoking provisions of sec.40(a)(ia) of the IT Act. 11. In the result, the appeal filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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