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2014 (10) TMI 967

ere also before the lower authorities. The assessee is running a hospital. The assets which have outlived their lives cannot be sold as scrap as per the rules governing the hospital, the assessee was left with no choice but to claim the same as additional depreciation. The Hon’ble High Court of Bombay in the case of Institute of Banking Personnel Selection (2003 (7) TMI 52 - BOMBAY High Court) has laid down the ratio that the income of the Trust is required to be computed u/s. 11 on commercial principles. - Claim of carry forward of deficit to be set off against the income of the subsequent years - Held that:- As the income has to be computed on commercial principles like business loss which is allowed to be carried forward and set off .....

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llowing set off against the income of the subsequent years, as allowing the deficit will tantamount to double deduction on account of expenditure out of exempt income 3. The assessee is a charitable trust running a hospital. During the course of the scrutiny assessment proceedings, the Assessing Officer observed that the assessee has claimed the additional depreciation of ₹ 83,15,310/- in addition to the normal depreciation of ₹ 2,14,29,366/-. The assessee was asked to justify its claim. It was explained that during the year, the assessee has claimed additional depreciation of ₹ 83,15,310/- on hospital equipment , furniture & fixture which has completed 10 years of useful life and computer which has completed 3 years o .....

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ing exemption in the successive year. 4. Aggrieved by these two findings, the assessee carried the matter before the Ld. CIT(A) 4.1. After considering the facts and the submissions, the Ld. CIT(A) transmitted the additional evidences to the AO calling for a remand report. The AO filed the report dt. 4.1.2011 which is placed at page-87 to 89 of the paper book. The additional evidences were in the form of certificates certifying that the assets have outlived their useful life. These certificates are at page-21, 35 and 42 of the paper book. In his remand report, the AO instead of verifying the veracity of the certificates questioned the admission of additional evidences by the Ld. CIT(A). The Ld. CIT(A) while deciding the issue drew support fr .....

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1 on commercial principles. As the Ld. CIT(A) has allowed the claim drawing support from this decision of the Hon ble Bombay High Court, no interference is called for. Ground No. 1 is accordingly dismissed. 9. Ground No. 2 relates to the claim of carry forward of deficit to be set off against the income of the subsequent years. 10. As we have mentioned elsewhere that the income has to be computed on commercial principles like business loss which is allowed to be carried forward and set off with the profit of subsequent years. Similarly, the deficit in the case of a trust is allowed to be carried forward to be set off in subsequent years. That being so, findings of the Ld. CIT(A) need no interference. 11. In the result, the appeal filed by t .....

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