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TMI Blog2003 (7) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... ets the cost of which has been fully allowed as application of income under section 11 in the past years? 2. Without prejudice to the ground No. 1, whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in directing the Assessing Officer to allow depreciation of Rs. 49,453 on assets received on transfer, when the assessee had not incurred the cost of acquiring the assets? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the assessee to carry forward the deficit of earlier year and set it off against the surplus of subsequent years when the same was not allowable in the case of the assessee-trust in whose case income exempted under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat institute was also a charitable trust. Its income was also exempt under section 11 of the Income-tax Act. The Assessing Officer did not allow depreciation on fixtures and furnitures on the ground that full deduction had been allowed in respect of capital cost of furniture and fixtures and if the depreciation is allowed, as claimed by the assessee, it would result in double deduction. Further, during the assessment year in question the assessee had carried forward the deficit of the earlier years and had adjusted the deficit of the earlier years against the surplus of the subsequent years which was disallowed by the Assessing Officer on the ground that such carry forward was applicable only to income assessable under the head "Profits a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld 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 the Income-tax Act makes a provision in respect of computation of income of the trust from property held for charitable or religious purposes and it also provides for application and accumulation of income. On the other hand, section 28 of the Income-tax 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, plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we answer question No. 1 in the affirmative, i.e., in favour of the assessee and against the Department. Question No. 2 herein is identical to the question which was raised before the Bombay High Court in the case of Director of Income-tax (Exemption) v. Framjee Cawasjee Institute [1993] 109 CTR 463. In that case, the facts were as follows: The assessee was the trust. It derived its income from depreciable assets. The assessee took into account depreciation on those assets in computing the income of the trust. The Income-tax Officer held that depreciation could not be taken into account because, full capital expenditure had been allowed in the year of acquisition of the assets. The assessee went in appeal before the Appellate Assistant Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer did not allow carry forward of the excess of expenditure to be set off against the surplus of the subsequent years on the ground that in the case of a charitable trust, their income was assessable under self-contained code mentioned in section 11 to section 13 of the Income-tax Act and that the income of the charitable trust was not assessable under the head "Profits and gains of business" under section 28 in which the provision for carry forward of losses was relevant. That, in the case of a charitable trust, there was no provision for carry forward of the excess of expenditure of earlier years to be adjusted against income of the subsequent years. We do not find any merit in this argument of the Department. Income derived from th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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