Date Of Order 21-08-2018 I.t.a v. Shushrutha Educational Trust

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 21 DAY OF AUGUST 2018. PRESENT THR HON'BLE Dr.JUSTICK VINBET KOTHARI| ANT) THR HON’BLE Mrs.JUSTICE S.SUJATHA| 1.T.A.No.862 OF 2017 BETWEEN: Ll.Pr. COMMISSIONER OF INCOME TAX (EXEMPTIONS), MISSION ROAD, BENGALURU. iaINCOME TAX OFFICER (EXEMPTIONS) WARD-3, BANGALORE.| .. APPBLLANTS (BY MR. SANMATHI.E.I, ADVOCATE) AND: SHUSHRUITHA BKDUCATIONAL TRUSGURUKRUPA, 12 MAIN,NO.23606/27, ‘A’ BLOCK,RAJAJINAGAR,BRENGALURU-560 O10.PAN: _ RESPONDENT. (BY MR. A.SHANKAR AND MR. M.LAVA, ADVOCATES) THIS I[.T.A IS FILED UNDER SBKCTION 2QO0-A INCOME TAX ACT 1961, ARISING OUT OF ORDER) Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 2/27 DATED 23.6.2017 PASSED IN I.T.A.No.852/BANG/2016, |KORTHE.ASSESSMENTYRKEA2011-2012VIDE,ANNEXURE-A PRAYING THIS HONBLE COURT! TO:|DECIDE THE FOREGOING QUESTION OF LAW AND/OR-SUCH OTHER QUESTIONS OF LAW AS MAY BE)KHORMULATBED BY THE HON'BLE COURT AS DEEMEFIT AND SBT ASIDE THR APPBELLATKE ORDER DATED"23.06.2017 PASSED BY THR INCOME TAX APPELLATETRIBUNAL, 'A' BENCH, BANGALORE AS SOUGHT FOR,|IN THE RESPONDENT-ASSESSEE’S CASE, IN APPEAL|PROCHKBBDINGNO.|ITA.NO.852/BANG/2016FOR|ASSESSMENT YEAR 2011-2012, AND GRANT SUCH|OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF|JUSTICE. THIS I.T.A. COMING ON FOR ADMISSION THISDAY,Dr. VINE ET KOTHARJT MADE THR FOLLOWING : ORDER Mr.Sanmathi.E.I9Advocate for Appellants-_|Revenue The learned counsel for the appellants submitsthat the questions raised in the present appeal iscovered by the decisions of this Court. | 2. The proposed substantial questions of law in the memo of appeal of Revenue are quoted hereinbelow for ready reference:-_ “1.Whether on the facts and in thecircumstances of the case and in law, Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 3/27 theTribunal1S rightin.not.appreciating the fact that the normalcomputationof|income|underrespective heads as envisaged under|sections 15 to 59 are not applicable|to the computation of income in)respect of charitable trust/ institutionfor the purpose of claiming exemption |under Sections 11, 12 and 13 and,therefore, the provisions relating to)set-off of loss from one source againstthe income from another source, set-off of loss from one head againstincome from another head and carryforward and set-off of loss againstthe income of subsequent years as)envisages under Sections 70 to 79arealsonot.applicable|tothecharitable trusts/ institutions? 2. Whether on the facts and in thecircumstances of the case and in law,the Tribunal is right in setting aside|disallowanceof|accumulation/ setapartof|incomeunderSection 4/27 11(1})(a) without appreciating the factthat the issue of application of income|more than the income computed doesnot arise, except in a case where the|assessee has incurred huge amountof capital expenditure sourced out ofborrowed or corpus donations or 15%of income set apart over a period oftime and even otherwise expenditure|incurred out of the above sourcescannot be termed as application offunds out of the income earned in aparticular assessment year inasmuchas loan borrowed does not fall underthe category of income earned by theassessee? 3. Whether on the facts and in thecircumstancesof|theCase,the|Tribunal were justified in law in)allowingassessee’s.claimfordepreciation on new assets put intoUuSeduringtheaccountingYear|relevant to this asst. year, even)though the entire cost of these assets| Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 5/27 3. Whether on the facts and in thecircumstancesof|theCase,the|Tribunal were justified in law in)allowingassessee’s.claimfordepreciation on new assets put intoUuSeduringtheaccountingYear|relevant to this asst. year, even)though the entire cost of these assets| Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 5/27 have been claimed by the assesseeas an application of income forcharitable activities and has failed totake cognizance of the fact thatallowing of total cost of the asset asan applicable of income and allowingof depreciation on the value of suchassets in the same year results indoubledeductionand.1S|notadmissible in the absence of clearStatutory indication?” 3. The learned counsel for the Revenue submitsthat he does not press question No.2. He furthersubmitted that question No.1 is covered by a decisionoft this Court in the case of‘Commisstoner of.Income Tax-III, Pune v. Rajasthan & GujaratiCharitableFoundationPoona’[2018]|89|taxmann.com 127 [SC| with regard to allowabilityand Depreciation in the hands of Religious andCharitable Trust held as under: Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 6/27 65Learned Counsel at the Barsubmitted that so far as the issueregarding claim of Depreciation undersection 32 of the Act is concerned, thecontroversy is no longer res integra,having been settled by the HonbleoupremeCourtin|the|CaASEof‘Commissioner of Income Tax-Ill,|PuneDvDRajasthan&|GujaratiCharitableFoundationPoona’[2018] 89 taxmann.com 127 [SC, DYwhich the Hon’ble Supreme Court hasaffirmed the view taken by the BombayHighCourtin.“CommissionerofIncome Tax v. Institute of BanktingPersonnel Selection (IBPS)’ [2003]I31 Taxman 386 [Bom.|| The relevant|portion of the said Judgment of BombayHigh Court as quoted by the Hon'bleSupreme Court and affirmed is quotedbelowfor ready reference. “TntheSaid.judgment,[BombayHighCourt}the|contention of the Department Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 7/27 predicated on double benefitwas turned down in thefollowing manner: 3. As stated above, the firstquestionwhichrequiresconsideration by this court ts :whether|depreciationWasallowable on the assets, thecost of which has been fullyallowedas|applicationofincome under section 11 inthe past years? In the case ofCIT v. Muntsuvrat Jain 1994Tax Law Reporter, 1084 thefacts were as follows. Theassessee was qa CharitableTrust. It was registered as aPublic Charitable Trust. Itwas also registered with theCommiussioner,Pune.The|derivedincomefrom the temple propertywhichWASaTrustproperty.During the course 8/27 of assessment proceedings forassessment years 1977-75,1978-79 and 1979-80,|the aSSCSSCCclaimeddepreciation on the valueof the building at the rateof 2.5 per cent' and theyalso claimed depreciation onfurniture at the rate of 5 percent.Thequestionwhicharose before the court fordetermination was: whetherdepreciation could be denied tothe|ASSESSEE,|as|expenditure on acquisition ofthe assets had been treatedas application of income inthe year of acquisition? It washeld by the Bombay HighCourt that section 11 of theIncomeTaxActmakes|provisionin|respectofcomputation of income of theTrust from the properly heldforcharitableOLrreligious Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 9/27 purposes and it also provides of assessment proceedings forassessment years 1977-75,1978-79 and 1979-80,|the aSSCSSCCclaimeddepreciation on the valueof the building at the rateof 2.5 per cent' and theyalso claimed depreciation onfurniture at the rate of 5 percent.Thequestionwhicharose before the court fordetermination was: whetherdepreciation could be denied tothe|ASSESSEE,|as|expenditure on acquisition ofthe assets had been treatedas application of income inthe year of acquisition? It washeld by the Bombay HighCourt that section 11 of theIncomeTaxActmakes|provisionin|respectofcomputation of income of theTrust from the properly heldforcharitableOLrreligious Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 9/27 purposes and it also provides forapplicationand|accumulation of income. Onthe other hand, section 28 ofthe Income Tax Act deals withchargeability of income fromprofits and gains of businessand section 29 provides thatincome from profits and gainsof business shall be computedin accordance with section 30to section 43C, That, section32(1) of the Act provides fordepreciationin.respectof|building, plant and machineryowned by the assessee andused|forthebusinesspurposes. It further providesfordeduction|subjectTo section 34. [In that matteralso, a similar argument, asin the present case, wasadvanced on behalf of therevenue,namely,thatdepreciation can be allowed Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 10/27 as|deductiononlyundersection 32 of the Income TaxAct and not under generalprinciples. The court rejectedthis argument. It was heldthat normal depreciation canbe considered as a legitimatededuction in computing thereal income of the assesseeon general principles or undersection 11(1)(a) of the IncomeTax Act. The court rejected theargument on behalf of therevenue that section 32 of theIncome Tax Act was the onlysection granting benefit ofdeductionOnaccountof|depreciation. It was held thatincome of a Charitable Trustderived from building, plantand machinery and furniturewas liable to be computed innormal commercial manneralthough the Trust may not becarrying on any business and 11/27 the assets in respect whereofdepreciation is claimed maynot be business assets. In allsuch cases, section 32 of theIncome Tax Act providing fordepreciation for computationof|incomederivedfrombusiness or profession 1s notapplicable.However,|the|income of the Trust is requiredto be computed under section11 on commercial principlesafter providing for allowancefor normal depreciation anddeduction thereof from grossincome of the Trust. In view ofthe aforestated Judgment ofthe Bombay High Court, weanswer question No. I in theaffirmative te., in favour ofthe assessee and against thedepartment. 4Question No. 2 hereinis identical to the question 12/27 which was raised before theBombay High Court in thecase of Director of Income Tax(Exemption)Vv.FramjeeCawasjee Institute (1993) 109CTR 463 (Bom). In that case,the facts were as follows: Theassessee was the Trust. Itderiveditsincomefrom)depreciableassets.Theassessee took into accountdepreciation on those assetsin computing the income ofthe Trust.The Income Tax Officerheldthat|depreciation could not be’takenintoaCcCCOuUbecause,fullcapitalexpenditurehadbeen|allowed in the year ofacquisition of the assets.The assessee went in appealbefore the Assistant AppellateCommissioner. Theappealwas rejected. The Tribunal, Date of Order 21-08-2018 I.T.A.No.862/2017 13/27 4Question No. 2 hereinis identical to the question 12/27 which was raised before theBombay High Court in thecase of Director of Income Tax(Exemption)Vv.FramjeeCawasjee Institute (1993) 109CTR 463 (Bom). In that case,the facts were as follows: Theassessee was the Trust. Itderiveditsincomefrom)depreciableassets.Theassessee took into accountdepreciation on those assetsin computing the income ofthe Trust.The Income Tax Officerheldthat|depreciation could not be’takenintoaCcCCOuUbecause,fullcapitalexpenditurehadbeen|allowed in the year ofacquisition of the assets.The assessee went in appealbefore the Assistant AppellateCommissioner. Theappealwas rejected. The Tribunal, Date of Order 21-08-2018 I.T.A.No.862/2017 13/27 however, took the view thatwhen the Income Tax OfficerStated that full expenditurehad been allowed in the yearof acquisition of the assets,whathe really meant wasthat the amount spent onacquiring those assets hadbeentreatedaS|‘application of income’ ofthe Trust in the year in'whichtheincomeWasSpent in acquiring those.assets. This did not meanthat in computing income|fromthoseassetsin|subsequentyears,depreciation in respect of.thoseassetscannotbe.taken into account.Thisview of the Tribunal has beenconfirmed by, the BombayHighCourtin|theabove|judgment.Hence,QuestionNo. 2 ts covered by_ the Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 14/27 decision of the Bombay HighCourt in the above judgment.Consequently, Question No. 2is answered in the affirmativeLe., In favour of the assesseeand against, the department. After hearing learned counsel for theparties,we are of the opinion thatthe aforesaid view taken by theBombay High Court correctly states|the principles of law and there is noneed to interfere with the same7 < 6. Since the issue regarding claim ofDepreciationin|the|hands|of|theCharitable Trust is no longer res integra,We.areof|the|opinion|thatTlLsubstantial question of law now arisesin the present Appeals filed by theRevenue.” 4. The third suggested question is also covered|by another decision of this Court in the case ofCommissioner of Income Tax (Exemptions) and Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 15/27 another .vs. Ohio University Christ College rendered on17.07.2018InITA.No.312/2016 and ITA No.313/2016, 1n which this Court held as. under: “16. In so far as the second question|proposed by the Revenue, quoted aboveis concerned also, we find that _ thTribunal’s findings in this regard do not|give rise to any substantial question oflaw. The said findings are quoted below|for ready reference : “5 1In.the|COUTSECof|assessment.proceedings,the|Assessing Officer observed that)theaSSCSSCEChadclaimedapplication of income on account|of|expenditure of earlier years, whichhasbeenbroughtforward and set off in the yearunderconsideration.TheAssessing Officer disallowed thesame on the ground that there ts|no express provision in the Actpermittingthe|adjustmentof| Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 16/27 earlierYears,broughtforwardexpenses as application of income|in the current year. According to|theAssessingOfficer,theapplicationof|income|forcharitable.PUFPOSEesMUST|be|during the relevant previous year. |Since the income of the trust 1s|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 yearfor|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 ofearlieryearsbeingbroughtforward and set off during the|year.| 5.2 On appeal, the learnedCIT|(Appeals) allowedthe|amortization of the expenditure as claimed by the assessee and| 16/27 earlierYears,broughtforwardexpenses as application of income|in the current year. According to|theAssessingOfficer,theapplicationof|income|forcharitable.PUFPOSEesMUST|be|during the relevant previous year. |Since the income of the trust 1s|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 yearfor|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 ofearlieryearsbeingbroughtforward and set off during the|year.| 5.2 On appeal, the learnedCIT|(Appeals) allowedthe|amortization of the expenditure as claimed by the assessee and| Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 17/27 deleted the disallowance madeby |the Assessing Officer by placing|reliance on the decision of the|Hon’ble Karnataka High Courtin the case of CIT Vs. Societyof the Sisters of St. Annereported in 146 ITR 28 (1984)and CBDT Circular No.5-P(LXX)-6 of 1968. 5.3.1 We have heard therivalcontentionsof|both|the|learnedDepartmentalRepresentatives for Revenue and|the|learnedAuthorisedRepresentative for the assessee|andperusedandcarefullyconsidered the material on record,includingthejudicialpronouncements cited. The facts|of the issue before us 1s that theassessee had incurred certain|preliminary expenditure in theyear of setting up of the trust.The same is amortised by the 18/27 assessee trust over a pertod of5 years from the year ofincurring of expenditure.The.factof|amortizationWas not.disputed by the Assessing Officer|in the assessment proceedings for|Assessment Year 2OO7-O8 where|the entire amount was added|backclaiming1/5[th]of|the|expenditure. The wun-amortizedexpenditure has been _ broughforward and set off as application|of income in subsequent years,|including the assessment years|2OO8-O09 and POOYI-10 which arunder consideration. 0.3.2 We find that the issuebefore us ts directly related to the|issue decided by the Hon’ble|Karnataka High Court in the case|of Sisters of St. Anne (supra) cited|by the assessee. In the said case,the Hon’ble Karnataka High Court| 19/27 at paras 8 to 10 thereof has held|as under: - 5.3.3 Further,the CBDTCircular No.5-P (LXX)-6 of 1968]cited by the assessee makes it|clearthatincomeShouldbe|understoodin|itscommercial sense : in the case of trusts also|andthereforethe|commercial principle|enunciatedby|the|Hon’ble Karnataka High Court in|the above referred case of Sisters|of St. Anne (supra) applies to|trusts as well. In view of the|factual and legal matrix of this|issue in the case on hand asdiscussed above, we concur with|the decision of the learned CIT(Appeals)in|cancellingthe|disallowancemadeby|the|Assessing Officer and in allowing|theamortizationof|EXPENSES. |Consequently, Ground No.B (1 to| Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 20/27 6) of the Revenue’s appeal forAssessment Year 2YOOS-O9 andGround No.C for Assessment Year|2009-10 are dismissed.” 17. In our opinion, the matter is squarelycovered by a decision of the cognate Benchof this Court in the case ofCIT vs. Soctetyof the Sisters of St. Anne (1984) 16|Taxman 400 (Kar.) and (1984) 146 ITR28,wherein the congnate Bench of thisCourt held that even the depreciation notinvolving any cash outflow is also in thecharacter of expenditure and therefore suchdepreciation is nothing but decrease in thevalue of property through wear and tear,deteriorationOrobsolescence.andtheallowance made for that purpose in thebooks of accounts were deemed to be theapplication offunds for the purpose of Sec.ll of the Act. The relevant portion of thesaid judgment is also quoted below forready reference: “11.IMF.Srinivasan,however, urged that there are| 21/27 17. In our opinion, the matter is squarelycovered by a decision of the cognate Benchof this Court in the case ofCIT vs. Soctetyof the Sisters of St. Anne (1984) 16|Taxman 400 (Kar.) and (1984) 146 ITR28,wherein the congnate Bench of thisCourt held that even the depreciation notinvolving any cash outflow is also in thecharacter of expenditure and therefore suchdepreciation is nothing but decrease in thevalue of property through wear and tear,deteriorationOrobsolescence.andtheallowance made for that purpose in thebooks of accounts were deemed to be theapplication offunds for the purpose of Sec.ll of the Act. The relevant portion of thesaid judgment is also quoted below forready reference: “11.IMF.Srinivasan,however, urged that there are| 21/27 enough indications in Section 11|to exclude the mercantile system|of|accounting.ThelearnedcounselreliedUpPOrsections11(1)(a) and 11(4) in support of hts|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 notreceived in a particular year. It|lends support to the contention ofthe assessee that accounting need|not only be on cash basis. Section|11(4) ts not intended to explain|how the accounts of the business|undertakingshouldbemaintained. It is intended only to|bring to tax the excess income|computed under the provisions ofthe Act in respect of business|undertaking. Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 22/27 12.The depreciation tf itt isnotallowedadsnecessarydeduction for computing theincome from the _ charitablinstitutions, then there is noway to preserve the corpus ofthetrustforderivingtheincome.The Board also appearsto have understood the ‘income’|undersection.1T1(1)in|its.commercial sense. The relevant|portion of the Circular No.5XX-6 of 1968,dated1] 9-6-196(SeeTaxmann’s Direct Taxes Circulars, Vol. 1, 1980 edn. P.85) reads: | “WheretheCrust.derivesincome.fromhouseproperty,interestOrlsecurities,capitalgains, or other sources, the word|‘Income’ should be understood in|its commercial sense, t1.e., bookincome, after adding back any|appropriationsOLrapplications|thereof towards the purposes of Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 23/27 the trust or otherwise, and alsoafter adding back any _ debitmade.forcapitalexpenditureincurred for the purposes of the|trust or otherwise. It should be!noted, in this connection, that theamounts so added back willbecome chargeable to tax under'section 11(3) to the extent thattheyrepresentoutgoings|forpurposes other than those of the|trust. The amounts spent or|applied for the purposes of the|trust from out of the income,|computedin|the|aforesaidmanner, should not be less than7O per cent of the latter, if the|trust is to get the full benefit of the|exemption under section 11(1).” 13. In CIT v. Trustee of H.E.H.TheNizam’s|SupplementalReligious Endowment Trust (1981) 127 ITR 378, the Andhra Pradesh|High Court has accepted _ th 24/27 accounts maintained in respect ofthe trust in conformity with the|principles of accountancy for the|Purposes,of|determining|the|income derived from the property|held in trust.” 1&. In view of the aforesaid findings|of the learned Tribunal, allowing anyexpenditure of the earlier year which hasbeen brought forward and set off in the yearunder consideration, is a Justified finding offact based on the correct interpretation oflaw and the judgment relied upon by itrendered by the cognate Bench. Therefore,the same does not call for interference. Asimilar view was also taken by the DivisionBenchof|BombayHighCourtinCommissioner of Income-tax v. Institute|of Banking (2003) 264 ITR 110,whereinthe Division Bench of Bombay High Courtheld that the income derived from the trustproperty has also got to be computed oncommercial principles and tf commercialprinciples are applied, then adjustment of 1&. In view of the aforesaid findings|of the learned Tribunal, allowing anyexpenditure of the earlier year which hasbeen brought forward and set off in the yearunder consideration, is a Justified finding offact based on the correct interpretation oflaw and the judgment relied upon by itrendered by the cognate Bench. Therefore,the same does not call for interference. Asimilar view was also taken by the DivisionBenchof|BombayHighCourtinCommissioner of Income-tax v. Institute|of Banking (2003) 264 ITR 110,whereinthe Division Bench of Bombay High Courtheld that the income derived from the trustproperty has also got to be computed oncommercial principles and tf commercialprinciples are applied, then adjustment of Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 25/27 expenses incurred by the trust for charitableand religious purposes in the earlier yearsagainst the income earned by the trust inthe subsequent year will have to beregarded as application of income of thetrust for charitable and religious purposes inthe subsequent year. The relevant portionof the said judgment of Bombay High Courtis also quoted below for ready reference: | “Normal depreciation can beconsideredas|FTlegitimatededuction in computing the real|income of the assessee ongeneral principles or under section|l1(1)(a) of the Inome-tax Act,|1961. Income of a charitable trust|derived from building, plant and|machinery and furniture is liableto be computed in a _ normacommercial manner although the|trust may not be carrying on any.businessand.theassetsIn|respect whereof depreciation isclaimed may not be _ businesassets. In all such cases, section Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 26/27 OD?of|the|Actprovidingfordepreciation, for computation of|income derived from business or|profession1S not.applicable. ©However, the income of the trustis required to be computed under|sectionIT]Orlcommercialprinciplesafterprovidingforallowance for normal depreciation|and deduction thereof from the|gross income of the trust.Income derived from thetrust property has also got to be|computedOncommercialprinciplesand.ifcommercialprinciplesareapplied,thenadjustment 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|forcharitableandreligious Date of Order 21-08-2018 I.T.A.No.862/2017 Pr.Commissioner of Income Tax (Exemptions) & Anr. Vs. Shushrutha Educational Trust 27/27 purposes in the subsequent year|in which adjustment had been|made.havingregardtothebenevolent provisions contained in|section 11 of the Act and such|adjustmentwillhavetobeexcluded from the income of the|trust under section 11(1)(a).” SD. since all the proposed questions are covered by the aforesaid two decisions of this Court, we do not think that any substantial questions of law arises for our further consideration in the present appealfiled by the Revenue and therefore, the presentappeal is dismissed~ No costs. | Sd/-. JUDGE Sd/-| JUDGE| PB