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TMI Blog2017 (12) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... s arise for consideration in these appeals, we heard these appeals together and disposing of the same by this common order. 2. The first issue arises for consideration is disallowance of depreciation. 3. Sh. R. Vijayaraghavan, the Ld.counsel for the assessee, submitted that the Assessing Officer disallowed the claim of the assessee on the ground that the cost of asset was allowed as application of income. The Ld.counsel further submitted that the income of the trust has to be computed in a commercial manner, therefore, depreciation is one of the items to be allowed while the income was computed commercially. Hence, both the authorities below are not justified in disallowing the claim of the assessee. 4. On the contrary, Ms. S. Vijayaprab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust itself, hence, such depreciation notionally computed cannot be deducted for the purpose of computing the trust income. According to the Ld. D.R., such notional allowance of depreciation cannot be allowed while computing the income of the trust, therefore, the Assessing Officer by placing reliance on the judgment of Kerala High Court and CBDT clarification, has disallowed the claim of the assessee which was rightly confirmed. 5. We have considered the rival submissions on either side and perused the relevant material available on record. The claim of depreciation in respect of asset which is used in charitable activity was examined by this Tribunal in Music Academy Madras v. DDIT(E) in I.T.A. No. 1098/Mds/2015 dated 22/4/2016. In fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The Income-tax Act does not provide for allowing depreciation other than the asset which was used for business or profession. There is no other provision in the Income-tax Act other than Section 32 of the Act for allowing depreciation. Therefore, the claim of the assessee that the depreciation has to be allowed on commercial principle or customary principle of computation of income is contrary to the specific provision, namely, Section 32 of the Act. 10. The next question arises for consideration is when there is a conflict between customary practice, commercial principle and provisions of Section 32, which one will prevail? The obvious answer to this question is the statutory provision, namely, Section 32 of the Act will prevail ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Chapter IV. While computing income of the business undertaking, all expenditure, including depreciation, has to be allowed and the income of such business undertaking which was held under Trust has to be allowed as exemption under Section 11 on application and accumulation. In this case, as rightly submitted by the Ld. D.R., no business undertaking was held under trust as provided under Section 11(4) & (4A) of the Act. The assessee is claiming depreciation in respect of asset which was used as tool for carrying out charitable object of the institution. When the asset was used as tool for carrying out the object of the charitable institution, such activity cannot be construed as a business or profession of the assessee. Therefore, Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of Section 2(15) of the Act. 9. The Ld.counsel for the assessee further submitted that the assessee is registered as charitable institution providing medical relief to the poor. Merely because the medical equipments which are surplus or idle were leased out and the lease amount was utilised for charitable activity, it does not mean that the assessee was carrying on any commercial activity and it has to be classified as "advancement of any other object of public utility". The assessee continues to be a charitable institution providing medical relief to the poor and needy. Therefore, according to the Ld. counsel, letting of medical equipments in the course of carrying on charitable activities has to be treated as charitabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording to the Ld. D.R., the CIT(Appeals) has rightly confirmed the same. 11. We have considered the rival submissions on either side and perused the relevant material available on record. The assesseetrust is admittedly registered as charitable institution under Section 12AA of the Act. The assessee-trust is providing medical relief to the poor. In order to carry out its object of providing medical relief to the poor, the assessee-trust procured certain medical equipments. After using the same for 2-3 years, the unused equipments, which are kept idle, were leased out to another hospital in which the trustee is a Director. The question now arises for consideration is when the assessee-trust leased out the medical equipments, which were kep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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