TMI Blog2011 (2) TMI 1587X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case the CIT(A) ought to have upheld the order of the AO. 2. Facts, in brief, as per relevant orders are that return reflecting deficit of ₹ 10,42,17,110/- filed by the assessee-trust on 15-122006, after being processed u/s 143(1) of the Income-tax Act, 1961 [hereinafter referred to as the Act ], was selected for scrutiny with the service of a notice u/s 143(2) of the Act on 14-12-2007. The assessee trust is an institute established to carry out experimental and theoretical research in plasma sciences with emphasis on the physical and magnetically confined plasmas and certain aspect of non-linear phenomena. During the course of assessment proceedings, the Assessing Officer[AO in short] noticed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws on the issue as to whether the acquisition of capital goods for the purpose of Trust having been treated as an application of income eligible for deduction u/s. 11, in the subsequent years whether the depreciation pertained to these goods is also an application for the purposes of the Trust in the relevant years. This would still be more pertinent in the situation whether the appellant's case is not covered by section 11(4), i.e. it is not deriving business income from the property held by the Trust. However, the Bombay High Court, in the case of CIT Vs. Institute of Banking Personnel Selection, 264 ITR 100, has, on similar facts, decided the issue in favour of assessee. The relevant paragraph of the decision has been reproduced in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Munisuvrat 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 2 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: whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction on account of depreciation. It was held that income of a charitable trust derived from building, plant and machinery and furniture was liable to be computed in a normal commercial manner although the trust may not be carrying on any business and the assets in respect whereof depreciation is claimed may not be business assets. In all such cases, section 32 of the Incometax Act providing for depreciation for computation of income derived from business or profession is not applicable. However, the income of the trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the trust. In view of the aforestated judgment of the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classification under the various heads set out in section 14. It held that the expression income has to be understood in the popular or general sense and not in the sense in which the income is arrived at for the purpose of assessment to tax by application of some artificial provisions either giving or denying deduction. It observed that the computation under the different categories or heads arises only for the purposes of ascertaining the total income for the purposes of charge. Those provisions cannot be introduced to find out what the income derived from the property held under trust to be excluded from the total income is, for the purpose of the exemptions under Chapter III. We are in respectful agreement with the view taken by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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