TMI Blog2014 (8) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... pon CIT v. Jayashree Charity Trust [1984 (12) TMI 30 - CALCUTTA High Court] and CIT v. Bhoruka Public Welfare Trust [1999 (7) TMI 50 - CALCUTTA High Court] - The object of section 11 of the Income-tax Act, 1961, is to feed the public charity - By permitting computation of income in a commercial manner, the object of feeding the public charity is achieved - The amount deducted by way of depreciation is in that case is ploughed back for user on account of charity - a building used for the purpose of charity diminishes in value over the time like any other building - providing for diminution of value would keep the corpus of the trust intact otherwise the corpus of the trust itself in course of time may get dissipated - as such , there is no reason to refer the matter to any larger Bench – Decided against Revenue. - ITAT No. 172 of2013/GA No. 3199 of 2013, - - - Dated:- 13-2-2014 - GIRISH CHANDRA GUPTA AND TAPASH MOOKHERJEE JJ,. JUDGEMENT The appeal is directed against a judgment and order dated June 19, 2013, by which the learned Tribunal held that The hon'ble Jurisdictional High Court of Calcutta as in the case of Bhorukha Public Welfare Trust categorically held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived at in the commercial manner but nowhere in the Act it prohibits to calculate or compute the income as per the provisions of the Act. Section 11(1) refers to income and not total income defined in section 2(45) but income, itself has been defined in the Act in section 2(24) why the meaning of income given in section 2(24) should not be taken for income referred in section 11(1) of the Act. Therefore the decision referred to also requires reconsideration. But in the case in hand the assessment year involved is 1983-84, even if we differ from the view taken by this court it will take another five years to conclude. The tax effect is only ₹ 7,000. Therefore, no purpose will be served to differ on. this issue with the view taken by this court in Jayashree Charity Trust's case [1986] 159 ITR 280 (Cal) and we leave the issue open to consider this issue in the appropriate case in future. He contended that, the Division Bench in that case expressed reservations and the claim for depreciation was allowed only because the amount involved was a meagre sum of ₹ 7, 000. He contended that on the basis of the said judgment, the Tribunal was not justified in allowing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid question was answered in favour of the assessee holding as follows (page 113) : As stated above the first question which requires consideration by this court is : whether depreciation was allowable on the assets, the cost of which has been fully allowed as application of income under section 11 in the past years ? In the case of CIT v. Munisuvarat Jain [1994] Tax LR 1084 (Bom), the facts were as follows : The assessee was a charitable trust. It was registered as a public charitable trust. It was also registered with the Commissioner of Income-tax, Pune. The assessee derived income from temple property which was a trust property. During the course of assessment proceedings for the assessment years 1977-78, 1978-79 and 1979-80, the assessee claimed depreciation on the value of the building at 1/2 per cent. and they also claimed depreciation on furniture at 5 per cent. The question which arose before the court for determination was : whether depreciation could be denied to the assessee, as expenditure on acquisition of the assets had been treated as application of income in the year of acquisition ? It was held by the Bombay High Court that section 11 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, in the case of CIT v. Rao Bahadur Calavala Cunnan Chetty Charities [1982] 135 ITR 485 (Mad) held that taking into account the purposes for which the conditions of section 11(1)(a) were imposed, it would be clear that the income to be considered will be that which is arrived at in the context of what is available in the hands of the assessee subject to an adjustment of any expenses extraneous to the trust. It was held that the income from properties held under trust would have to be calculated in the commercial manner. It was observed that section 11 contemplates an application of the income for charitable purposes. The charity can accumulate 25 per cent. of the income. The application as well as the accumulation has necessarily to be of the income as accounted for in the accounts and not as computed under the Income-tax Act, subject, of course, to what is provided in sub-section (4) of section 11. We are in respectful agreement with the view expressed by the Madras High Court. This judgment is also in consonance with the view taken by the Andhra Pradesh High Court in the case of CIT v. Nizam's Suppl. Religious Endowment Trust (Trustees of HEH) [1981] 127 ITR 378 (AP). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no reason to deny the benefit of exemption granted by section 11 to that portion of the income which has been taken away by deduction at source on the ground that the amount has not been spent or accumulated for the purpose of charity. Mr. Khaitan submitted that this court has already expressed the opinion that the income from properties held under a trust would have to be calculated in the commercial manner. He submitted that once the aforesaid process of computation is permitted, the claim for depreciation has to be allowed. Mr. Bhowmick, learned advocate replied by stating, that in the case of CIT v. Bhoruka Public Welfare Trust, a Division Bench of this court has expressed some reservations with regard to the aforesaid view as regards computation of income in a commercial manner, and, therefore, the matter should be referred to a larger Bench. We have considered the submissions and perused the judgments of the Punjab and Haryana High Court and the Bombay High Court as also the judgment of this court in the case of CIT v. Jayashree Charity Trust and in the case of CIT v. Bhoruka Public Welfare Trust. We are of the opinion that the views expressed in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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