IT: While computing income of a trust, deduction under section 24 from income from

property held for charitable or religious purposes cannot be allowed

IT: Depreciation is allowable on capital assets which have to be applied for purpose
of trusts in terms of section 11

■■■

[2013] 38 taxmann.com 276 (Bangalore - Trib.)

IN THE ITAT BANGALORE BENCH 'B'
Deputy Director of Income-tax (Exemptions), Circle-17(1), Bangalore
v.
Cutchi Memon Union*
N. BARATHVAJA SANKAR VICE-PRESIDENT
AND N.V. VASUDEVAN, JUDICIAL MEMBER
IT APPEAL NO. 878 (BANG.) OF 2012
[ASSESSMENT YEAR 2007-08]
AUGUST 14, 2013

I. Section 11, read with section 24, of the Income-tax Act, 1961 - Charitable or religious trust -
Exemption of income from property held under [Application of income] - Assessment year
2007-08 - Whether where a charitable or religious trust has income from different sources
and a part of such income comes within ambit of taxation, it will not be possible to earmark
any part of such income to a particular head and such income has to be computed in a
normal commercial manner; therefore, question of allowing any statutory deductions as
contemplated by different provisions of Act dealing with different heads of income cannot
arise while deciding percentage of application or accumulation under section 11 - Whether,
thus, while computing income of a trust, deduction under section 24 from income from
property held for charitable or religious purposes cannot be allowed - Held, yes [Paras 14 &
15] [In favour of revenue]
II. Section 32, read with section 11, of the Income-tax Act, 1961 - Depreciation -
Allowance/rate of [Charitable institutions] - Assessment year 2007-08 - Whether since
income for purposes of section 11(1) has to be computed in normal commercial manner,
amount of depreciation debited in books is deductible while computing such income - Held,
yes [Para 20] [In favour of assessee]
Circulars and Notifications : CBDT Circular No. 5P (LXX-VI), dated 19-5-1998
FACTS - I

■ The assessee, a trust and filed a return of income declaring Nil income. While
computing income from house property, the assessee had claimed a deduction
under section 24(a).
■ The Assessing Officer held that the deduction claimed by the assessee under
section 24(a) was not allowable on ground that income of a trust has to be
computed in a commercial manner and not as per the Act.
■ The Commissioner (Appeals) held that since there was no prohibition under the Act
to deny said benefit to the trust, the disallowance made by the Assessing Officer
was to be deleted.
■ On second appeal:
HELD - I

■ While section 2(45) specifically defines 'total income', the expression used in section

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 11(1) is 'only income'. Accordingly, it would be incorrect to assign to the word
'income' used in section 11(1)(a), the same meaning as has been specifically
assigned to the expression 'total income' in section 2(45). The CBDT in Circular No.
5P (LXX-6), dated 19-6-1968 has also adopted the same approach. [Para 9]
■ The method of computing income of a charitable trust is different from that followed
in the case of other assessee, in that, it is the commercial concept of income which
is to be considered and not the income as computed under the various heads of
income as specified in section 14. In other words, the income for the purpose of
section 11 is the income as per the accounts of the trust. It means the income in the
commercial sense, without reference to the heads of income specified in section 14,
i.e., the book income and not the total income as defined in section 2(45).
Therefore, in computing the income of trust, income arising from property held under
trust for public charitable or religious purposes is to be first computed and thereafter,
amount applied for charitable purpose is determined. [Para 10]
■ The issue can be looked at from another angle also. Sub-section (4) of section 11
specifically lays down the mode of determination of the income of the business
undertaking of a trust. A similar provision is not to be found with regard to the other
incomes of the trust. By an inferential process it can be said that the mode of
determination by the ITO is only restricted to the income of the business
undertaking. Impliedly, the income that has to be computed with regard to a trust is
one based on the accounts of the trust where the accounts are maintained in
conformity with the principles of accounting. [Para 12]
■ There is yet another angle to the aforesaid issue. Even in interpreting the several
provisions of the Act, wherever the expression 'income' occurs, there has been
some divergence in the meaning given to that expression on account of the
particular context involved. In the context of section 11, which contemplates
application or accumulation of income for charitable or religious purpose, it has
necessarily to be the income as accounted for in the accounts and not as computed
under the Act. Hence, for the purpose of section 11(1) the expression 'income' has
to be understood in the popular or general sense, i.e., in the sense what is actually
available in the hands of the assessee subject, of course, to any adjustment for
expenses extraneous to the trust. It is only the income as available to the assessee
and, over which the assessee has power to enjoy which can be applied or
accumulated for charitable purposes. Moreover, wherever the statute contemplated
the income being computed in the manner set out in the provisions of the Act,
appropriate words are used. Such is not the case with section 11(1). Hence, income
from the properties held under trust would have to be arrived at in the normal
commercial manner without reference to the provisions which are attracted by
section 14. In other words, the application or accumulation as per section 11(1) must
be of real income only. [Para 13]
■ The income from property held for charitable or religious purposes cannot be
equated with the income which is computed under the general provisions of the Act
in respect of other assessees. In a case where an assessee-trust has income from
different sources and a part of such income comes within the ambit of taxation, it will
not be possible to earmark any part of such income to a particular head. Such
income has to be computed in a normal commercial manner. Therefore, the
question of allowing any statutory deductions as contemplated by the different
provisions of Act dealing with different heads of income cannot arise while deciding
the percentage of application or accumulation under section 11. [Para 14]
■ For the reasons given above, the Commissioner (Appeals) fell into an error in
directing the Assessing Officer to allow deduction to the assessee under section
24(a) while computing income of the trust. [Para 15]
■ While computing income of a trust, deduction under section 24 from property held
for charitable or religious purpose cannot be allowed.
CASE REVIEW

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DIT(Exemption) v. Giridharilal Shewnarain Tantia Trust [1993] 199 ITR 215/71 Taxman 150 (Cal.)
(para 11) and CIT v. Market Committee, Pipli [2011] 330 ITR 16/[2012] 20 taxmann.com 559 (Punj &
Har.) (para 21) followed.
CASES REFERRED TO

CIT v. Jayashree Charity Trust [1986] 159 ITR 280 (Cal.) (para 5), DIT (Exemption) v. Girdharilal
Shewnarain Tantia Trust [1993] 199 ITR 215/71 Taxman 150 (Cal.) (para 5), CIT v. Ganga Charity
Trust Fund [1986] 162 ITR 612/29 Taxman 413 (Guj.) (para 5), Lord Chetwode v. IRC [1977] 1 All
ER 638 (para 13), Escorts Ltd. v. Union of India [1993] 199 ITR 43/[1992] 65 Taxman 420 (SC)
(para 16), CIT v. Society of Sisters of St. Anne [1984] 146 ITR 28/16 Taxman 400 (Kar.) (para 20),
CIT v. Tiny Tots Education Society [2011] 330 ITR 21/11 taxmann.com 242 (Punj & Har.) (para 20)
and CIT v. Market Committee, Pipli [2011] 330 ITR 16/[2012] 20 taxmann.com 559 (Punj & Har.)
(para 20).
Smt. Jacinta Zimik Vashai for the Appellant. Sarangan for the Respondent.
ORDER

N.V. Vasudevan, Judicial Member - This appeal by the revenue is against the order dated
27.04.2012 of the CIT(Appeals)-V, Bengaluru relating to assessment year 2007-08.
2. The concise grounds of appeal raised by the revenue reads as follows:—

"(1) The learned CIT (A) ought to have considered the fact that in the case of charitable
institutions claiming exemption U/s 11 of the Act, only the provisions of section 11 to
section 13 of the Act are only applicable and not other provisions of the Act.
(2) The CIT (A) erred in not appreciating the fact that the income U/s 11 (1) refers to the
income from property held under the trust and which has to be applied for charitable
purposes. The different heads of income under section 14 of the Income Tax Act are
not applicable and hence question of allowance of deduction U/s 24 (a) of the Act
does not arise while computing income U/s 11.
(3) The learned CIT (A) has erred in not following the CBDT Circular in No.5 LXX-6
dated 19.06.1968 wherein it is clarified that the method of computing the income of
a charitable trust is different from the computation in case of other assesses. In the
case of trust, commercial concept of income has to be considered.
(4) The decisions relied on by the CIT (A) actually favours the department as the High
Courts have categorically held that the income derived from trust property must be
determined on commercial principles. In fact the Calcutta High Court in its decisions
in 159 ITR 280 and 199 ITR 215 have referred to the CBDT Circular in No.5 LXX-6
dated 19.06.1968 which is favorable to the department.
(5) The learned CIT(A) has erred in not following the decision of the Hon'ble Supreme
Court in the case of Escorts Limited & another vs. Union of India 199 ITR 43.
Without prejudice, the CIT(A) erred in not appreciating the fact that depreciation
being a notional expenditure is not allowable."
3. Grounds No.1 to 4 of the concise grounds is with regard to the action of the CIT(Appeals) in
allowing the claim of the assessee for deduction u/s. 24(a) of the Act while computing income from
house property.
4. The assessee is a trust assessed in the status of AOP. For the A.Y. 2007-08, the assessee filed a
return of income declaring Nil income. While computing income from house property, the assessee
had reduced from the actual rent received from the property a sum equal to 30% of the annual value
being a deduction u/s. 24(a) of the Act. The AO after making the following observations, refused to
allow the claim of the assessee for deduction u/s. 24(a) of the Act:—
"3. On going through the computation of income, it is seen that the assessee has claimed
deduction of Rs.43,25,983/- u/s. 24(a) of the I.T. Act, 1961 while computing income from house

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 property. Relying on the decisions of the Calcutta High Court in the ITR No.159 ITR 280,
Gujarat High Court in ITR No.162 ITR 612 and Madras High Court in the ITR No.136 ITR 120,
the income of the trust has to be computed in a commercial manner and not as per Income tax
Act. Therefore, the deduction claimed by the assessee u/s. 24(a) of the I.T. Act, is disallowed."
5. Before the CIT(Appeals), the assessee submitted that the provisions of section 24(a) of the Act
do not restrict its application to any particular assessee and therefore even a charitable trust whose
income is claimed as exempt u/s. 11 of the Act, can avail of the benefit of deduction u/s. 24(a) of the
Act. It was argued that section 11(4A) of the Act provides for the circumstances in which business
income may be subjected to tax and the circumstances in which there could be exemption. Section
11(4) expressly provides that "property held under the trust" could include "business". Therefore, it
was submitted that "income" is to be computed under the head 'house property' by applying the
provisions of Section 23 to 27 in so far as they may apply, in a manner business income is being
arrived at under the provisions of Sections 28 to 44BB. The assessee also pointed out that Form
ITR-7 which a form required to be filed by a person claiming exemption u/s. 11 of the Act contains
classification of income under the various heads. According to the assessee, this Form also gives
an indication that while computing income of a charitable trust, income under the various heads are
to be computed as per the provisions of the Act and thereafter the application of income for
charitable purposes has to be examined. Reference was also made by the assessee to the decision
of the Hon'ble Calcutta High Court in the case of CIT v. Jayashree Charity Trust [1986] 159 ITR 280,
wherein it was held that for the purpose of section 11 of the Act, it is only a real income which has
been actually received by the assessee that has to be considered and application of such real
income for charitable purpose ascertained. Reference was also made to CBDT Circular bearing
No.5-P(LXX-VI) dated 19.05.1998 which was referred to by the Hon'ble Calcutta High Court in the
case of DIT (Exemption) v. Girdharilal Shewnarain Tantia Trust [1993] 199 ITR 215/71 Taxman 150
and the Hon'ble High Court held that income in section 11(1)(a) has to be understood in a
commercial sense. Reference was also made to the decision of Gujarat High Court in the case of
CIT v. Ganga Charity Trust Fund [1986] 162 ITR 612/29 Taxman 413, wherein identical proposition
that all outgoings must be deducted and only the surplus income that remains in the hands of the
trustees should be considered as available for application. Reference was also made to the order
dated 03.07.1972 of the CIT(Appeals), Mysore in ITA No.32(SAL)71-72, wherein a view was taken
that income should be computed in terms of provisions of the Act under different heads and
thereafter it is to be seen whether the amount is applied for charitable or religious purposes.
6. The CIT(Appeals) on a consideration of the above submissions, held as follows:—
"5. ………… I have carefully considered the stand taken by the A.O and the submissions made
on behalf of the appellant. With regard to deduction u/s. 24(a) of the Act I am in agreement with
the A.R. of the appellant as there is no prohibition under the IT Act to deny this benefit to the
appellant trust. Therefore, the disallowance made by the A.O amounting to Rs.43,25,983/- is
deleted."
7. Aggrieved by the order of the CIT(Appeals), the revenue has raised grounds 1 to 4 referred to
above.
8. We have heard the submissions of the ld. DR, who relied on the order of the AO and in particular
the decision of Girdharilal Shewnarain Tantia Trust's case (supra). The ld. counsel for the assessee,
on the other hand, drew our attention to the provisions of section 2(45) of the Act which defines total
income and submitted that the aforesaid definition refers to the total amount of income referred to in
section 5 computed in the manner laid down in this Act. Attention was drawn to section 4 of the Act
which creates a charge on the total income of the previous year of every person. Emphasis was laid
on the fact that the expression "every person" used in section 4 of the Act covers a charitable trust
also. Reference was made to the provisions of section 11(1) of the Act, which lays down that
"subject to the provisions of sections 60 to 63, the following income shall not be included to the total
income of the previous year ………….". He laid emphasis on the fact that total income was also
found in section 11(1) of the Act. Our attention was also drawn to a Form of income required to be
filed by the assessee for claiming deduction u/s. 11 of the Act, in which there is a reference to
different heads of income. According to him, the Act clearly contemplates determining income of a
charitable trust by having due regard to heads of income and the manner of computation to be done

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under different heads of income under the various provisions of the Act.
9. We have considered the rival submissions. While Sec.2(45) of the Act specifically defines "total
income" the expression used in section 11(1) is only income. Accordingly, it would be incorrect to
assign to the word 'income' used in section 11(1)(a), the same meaning as has been specifically
assigned to the expression 'total income' in Sec.2(45) of the Act. The CBDT in Circular No.5P (LXX-
6), dated 19.6.1968 has also adopted the same approach. The same is as follows:
'In the case of a business undertaking held under trust, its "income" disclosed by the account
will be eligible for exemption under Section 11(1). The permitted accumulation of 25 per cent
will also be calculated with reference to this income.
Where the trust derives income from house property, interest on securities, capital gains, or
other sources, the word "income" should be understood in its commercial sense i.e., book
income, after adding back any appropriations or applications thereof towards the purposes of
the trust or otherwise, and also after adding back any debits made for capital expenditure
incurred for the purposes of the trust or otherwise. The amounts spent or applied for the
purposes of the trust from out of the income computed in the aforesaid manner, should be not
less than 75 percent of the latter, if the trust is to get the full benefit of the exemption under
Section 11(1).'
10. The method of computing income of a charitable trust is different from that followed in the case
of other assesses, in that, it is the commercial concept of income which is to be considered and not
the income as computed under the various heads of income as specified in Section 14. In other
words, the income for the purpose of section 11 is the income as per the accounts of the trust. It
means the income in the commercial sense, without reference to the heads of income specified in
section 14, i.e., the book income and not the total income as defined in Sec.2(45). Therefore in
computing the income of the trust, the income arising from property held under trust for public
charitable or religious purposes is to be first computed and thereafter, the amount applied for
charitable purpose is determined.
11. In support of the above conclusion reference may be made to the decision of the Hon'ble
Calcutta High Court in the case of Giridharilal Shewnarain Tantia Trust (supra). The facts of the
aforesaid case were the assessee was a trust. The Assessing Officer rejected the assessee's claim
for deduction under section 80T of the Income-tax Act, 1961. Section 80T provided that where the
gross total income of an assessee not being a company includes any income chargeable under the
head "Capital gains" relating to capital assets other than short-term capital assets, a straight
deduction to the extent of the prescribed percentage of such gains from the total income itself shall
be allowed. The first Rs. 5,000 of the long-term capital gains is not liable to any tax and has to be
excluded from the amount of long-term capital gains and, on the balance, the relief is allowable at
the prescribed percentage. The Tribunal allowed the claim of the Assessee for deduction u/s.80T of
the Act. The question before the Hon'ble High Court was as to "Whether, on the facts and in the
circumstances of the case and in the light of the proper interpretation of section 11 of the Income-tax
Act, 1961, the Tribunal was justified in holding that the capital gain amounting to Rs. 2,91,644 is
eligible for deduction under section 80T of the Income-tax Act, 1961?" The Hon'ble Calcutta High
Court held that under section 11 of the Income-tax Act, 1961, income derived from property held
under trust for charitable or religious purposes is exempt from income-tax to the extent such income
is actually applied to such purposes during the previous year itself or within the three months next
following. As "income" includes "capital gains", a charitable or religious trust would forfeit exemption
from income-tax in respect of its income by way of capital gains unless such income is also applied
for the purposes of the trust during the stipulated period. By sub-section (1A), it has been provided
that, in a case where a capital asset being property held under trust for charitable or religious
purposes is transferred and the whole or any part of the net consideration for the transfer (i.e., full
value of consideration as reduced by the expenditure incurred wholly and exclusively in connection
with the transfer) is utilised for acquiring another capital asset to be held as part of the corpus of the
trust, the capital gain arising from the transfer will be regarded as having been applied to charitable
or religious purposes. Where the whole of such net consideration is utilised in acquiring the new
capital asset, the entire amount of the capital gain will be regarded as having been applied to
charitable or religious purposes while, in a case where only a part of the net consideration is utilised

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for acquiring the new capital asset, so much of such capital gains as is equal to the amount, if any,
by which the amount so utilised exceeds the aggregate of the cost of acquisition of the capital asset
transferred and the cost of any improvements made to such asset, will be regarded as having been
applied to such purposes. From a combined reading of sections 11 (1)(a), 11(1 )(b) and section 11(1
A), it is clear that the income of a trust including capital gains is treated on a separate footing and
the assessee-trust has to fulfil the conditions laid down therein for the purpose of availing of
exemptions from taxation. The income from property held for charitable or religious purposes
cannot, therefore, be equated with the income which is computed under the general provisions of
the Act in respect of other assessees who are not entitled to the benefit of the aforesaid provisions.
In a case where an assessee-trust has income from different sources and has applied such income
and a part of such income comes within the ambit of taxation, it will not be possible to earmark any
part of such income to a particular head. Therefore, the question of allowing any statutory
deductions as contemplated by the different provisions of the Act dealing with different heads of
income in computing the income accumulated will not arise when the trust loses the benefit of
accumulation. Hence, a charitable trust is not entitled to deduction under section 80T in respect of
its long-term capital gains.
12. The issue can be looked at from another angle. Sub-section (4) of section 11 specifically lays
down the mode of determination of the income of the business undertaking of a trust. A similar
provision is not to be found with regard to the other incomes of the trust. By an inferential process it
can be said that the mode of determination by the ITO is only restricted to the income of the
business undertaking. Impliedly, the income that has to be computed with regard to a trust is one
based on the accounts of the trust where the accounts are maintained in conformity with the
principles of accounting.
13. There is yet another angle to the aforesaid issue. Even in interpreting the several provisions of
the I.T. Act, wherever the expression "income" occurs, there has been some divergence in the
meaning given to that expression on account of the particular context involved. In the context of
section 11, which contemplates application or accumulation of income for charitable or religious
purpose, it has necessarily to be the income as accounted for in the accounts and not as computed
under the I.T. Act. Hence, for the purpose of section 11(1) the expression "income" has to be
understood in the popular or general sense, i.e., in the sense what is actually available in the hands
of the assessee subject, of course, to any adjustment for expenses extraneous to the trust. It is only
the income as available to the assessee and, as stated in Lord Chetwode v. IRC [1977] 1 All ER
638, over which the assessee has power to enjoy which can be applied or accumulated for
charitable purposes. Moreover, wherever the statute contemplated the income being computed in
the manner set out in the provisions of the Act, appropriate words are used. Such is not the case
with section 11(1). Hence, income from the properties held under trust would have to be arrived at in
the normal commercial manner without reference to the provisions which are attracted by Section
14. In other words, the application or accumulation as per section 11(1) must be of real income only.
Jayashree Charity Trust's case (supra).
14. The income from property held for charitable or religious purposes cannot be equated with the
income which is computed under the general provisions of the IT Act in respect of other assessees.
In a case where an assessee-trust has income from different sources and a part of such income
comes within the ambit of taxation, it will not be possible to earmark any part of such income to a
particular head. Such income has to be computed in a normal commercial manner. Therefore, the
question of allowing any statutory deductions as contemplated by the different provisions of the IT
Act dealing with different heads of income cannot arise while deciding the percentage of application
or accumulation under section 11 Girdharilal Shewnarain Tantia Trust's case (supra).
15. For the reasons given above, we are of the view that the CIT(Appeals) fell into an error in
directing the AO to allow deduction to the assessee u/s. 24(a) of the Act while computing income of
the trust. Thus, grounds 1 to 4 raised by the revenue are allowed.
16. In ground No.5, the revenue has raised the issue with regard to allowing depreciation while
computing income of the trust. The assessee had claimed depreciation of Rs.1,95,082. The AO
found that the expenditure incurred at the time of acquiring these capital assets was claimed, had
been considered as application of income in the year of its acquisition. According to the AO, on the

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very same asset, if depreciation is allowed, it would be conferring double deduction on the
assessee. The AO referred to the decision of the Hon'ble Supreme Court in the case of Escorts Ltd.
v. Union of India [1993] 199 ITR 43/[1992] 65 Taxman 420. In the aforesaid case, the assessee had
claimed deduction on account of an asset which is used in the business. The assessee also claimed
deduction u/s. 35(1)(iv) of the Act on the very same assets on the ground that they were capital
expenditure incurred on scientific research relating to the business carried on by the assessee
which was to be allowed at 1/5th of capital expenditure in five assessment years. The question
before the Hon'ble Court was as to whether the assessee could get double deduction on the very
same expenditure. The Hon'ble Court held that legislature could not have envisaged double
deduction qua same expenditure. Relying on the aforesaid decision, the AO disallowed the claim of
the assessee for deduction on account of depreciation. Aggrieved by the order of the AO, the
assessee preferred appeal before the CIT(Appeals).
17. Before the CIT(Appeals), the assessee submitted that there was no double deduction claimed
on the same expenditure and that the decision of the Hon'ble Supreme Court in the case of Escorts
Ltd. (supra)will not be applicable to the case of the assessee.
18. The CIT(Appeals) accepted the contention of the assessee and held that the assessee was
entitled to depreciation. Aggrieved by the order of the CIT(A), the revenue has raised ground No.5
before the Tribunal.
19. We have heard the rival submissions. The learned DR relied on the order of the AO. The
learned counsel for the Assessee reiterated submissions made before CIT(A) and the order of the
CIT(A).
20. We have considered the rival submissions. If depreciation is not allowed as a necessary
deduction for computing income of charitable institutions, then there is no way to preserve the
corpus of the trust for deriving the income as it is nothing but a decrease in the value of property
through wear, deterioration, or obsolescence. Since income for the purposes of section 11(1) has to
be computed in normal commercial manner, the amount of depreciation debited in the books is
deductible while computing such income. It was so held by the Hon'ble Karnataka High Court in the
case of CIT v. Society of Sisters of St. Anne [1984] 146 ITR 28/16 Taxman 400. It was held in CIT v.
Tiny Tots Education Society [2011] 330 ITR 21/11 taxmann.com 242 (Punj & Har.), following CIT v.
Market Committee, Pipli [2011] 330 ITR 16/[2012] 20 taxmann.com 559 (Punj & Har.) that
depreciation can be claimed by a charitable institution in determining percentage of funds applied
for the purpose of charitable objects. Claim for depreciation will not amount to double benefit. The
decision of the Hon'ble Supreme Court in the case of Escorts Ltd. (supra) have been referred to and
distinguished by the Hon'ble Court in the aforesaid decisions.
21. The issue raised by the revenue in the ground of appeal is thus no longer res integra and has
been decided by the Hon'ble Punjab & Haryana High Court in the case of Market Committee, Pipli
(supra). The Hon'ble Punjab & Haryana High Court after considering several decisions on that issue
and also the decision of the Hon'ble Supreme Court in the case of Escorts Ltd. (supra), came to the
conclusion that depreciation is allowable on capital assets on the income of the charitable trust for
determining the quantum of funds which have to be applied for the purpose of trusts in terms of
section 11 of the Act. The Hon'ble Punjab & Haryana High Court made a reference to the decision of
the Hon'ble Supreme Court in the case of Escorts Ltd. (supra)and observed that the Hon'ble
Supreme Court was dealing with a case of two deductions under different provisions of the Act, one
u/s. 32 for depreciation and the other on account of expenditure of a capital nature incurred on
scientific research u/s. 35(1)(iv) of the Act. The Hon'ble Court thereafter held that a trust claiming
depreciation cannot be equated with a claim for double deduction. The Hon'ble Punjab & Haryana
High Court has also made a reference to the decision of the Hon'ble Karnataka High Court in the
case of Society of Sisters of St. Anne (supra) wherein it was held that u/s. 11(1) of the Act, income
has to be computed in normal commercial manner and the amount of depreciation debited in the
books is deductible while computing such income. In view of the aforesaid decision on the issue, we
are of the view that the order of the CIT(A) on the above issue does not call for any interference.
22. Consequently, ground No.5 raised by the revenue is dismissed.
23. In the result, the appeal by the revenue is partly allowed.

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POOJA

*Partly in favour of revenue.

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