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TMI Blog2021 (4) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal. The Tribunal dismissed the appeal preferred by the revenue on the ground that the issue involved in the matter stood concluded on account of the judgment delivered by the Division Bench of this Court in the case of CIT (E) vs. Ohio University Christ College reported in (2018) 99 taxman.com 377. 3. There is a delay of 65 days in filing the appeal. After hearing the learned counsel for the parties, I.A.No.1/2020 stands allowed for the reasons mentioned in the application for condonation of delay. 4. The following substantial question of law is framed for consideration: "Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that assessee is entitled for claiming brought forward of excess application and carry forward of excess application of income of current years to subsequent years when it amounts to double deduction as the income of the assessee is already exempt and amended provisions of the Act also denies such claim for depreciation by a Trust and when there are no provisions in the Act to grant such relief"? 5. This Court has carefully gone through the judgment delivered by the Tribunal. Paragraphs 4 to 7 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: 16. In so far as the second question proposed by the Revenue, quoted above is concerned also, we find that the Tribunal's findings in this regard do not give rise to any substantial question of law. The said findings are quoted below for ready reference : "5.1 In the course of assessment proceedings, the Assessing Officer observed that the assessee had claimed application of income on account of expenditure of earlier years, which has been brought forward and set off in the year under consideration. The Assessing Officer disallowed the same on the ground that there is no express provision in the Act permitting the adjustment of earlier years brought forward expenses as application of income in the current year. According to the Assessing Officer, the application of income for charitable purposes must be during the relevant previous year. Since the income of the trust is exempt from tax, the question of deficit does not arise and also the trust is required to utilize 85% of the income of the previous year for charitable purposes during the year. In this view of the matter and for the above reasons, the Assessing Officer disallowed the assessee's claim of expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed." 17. In our opinion, the matter is squarely covered by a decision of the cognate Bench of this Court in the case of CIT v. Society of the Sisters of St. Anne (1984) 16 Taxman 400/146 ITR 28 (Kar.) wherein the congnate Bench of this Court held that even the depreciation not involving any cash outflow is also in the character of expenditure and therefore such depreciation is nothing but decrease in the value of property through wear and tear, deterioration or obsolescence and the allowance made for that purpose in the books of account were deemed to be the application of funds for the purpose of Sec. 11 of the Act. The relevant portion of the said judgment is also quoted below for ready reference: '11. Mr. Srinivasan, however, urged that there are enough indications in Section 11 to exclude the mercantile system of accounting. The learned counsel relied upon sections 11(1)(a) and 11(4) in support of his contention. We do not think that there is anything in these sub-sections to support the contention of Mr. Srinivasan. Explanation to section 11(1)(a) on the contrary takes note of the income not received in a particular year. It lends support to the contention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also taken by the Division Bench of Bombay High Court in CIT Vs Institute of Banking Personnel Selection (IBPS) 20031 264 ITR 110/131 Taxman 386 wherein the Division Bench of Bombay High Court held that the income derived from the trust property has also got to be computed on commercial principles and if commercial principles are applied, then adjustment of expenses incurred by the trust for charitable and religious purposes in the earlier years against the income earned by the trust in the subsequent year will have to be regarded as application of income of the trust for charitable and religious purposes in the subsequent year. The relevant portion of the said judgment of Bombay High Court is also quoted below for ready reference : "Normal depreciation can be considered as a legitimate I.T.A. NO.245 OF 2020 deduction in computing the real income of the assessee on general principles or under section 11(1)(a) of the Income-tax Act, 1961. Income of a charitable trust derived from building, plant and machinery and furniture is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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