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TMI Blog2012 (10) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... : Shri Rakes Gupta For the Respondent : Shri G.R. Kokani ORDER PER HARI OM MARATHA, JM Above captioned six appeals have been filed by Krishi Upaj Mandi Samities having different locations, raise exactly identical issue, relating to deduction of tax at source (TDS) for payments made to RSAMB. Therefore, for the sake of convenience and brevity, we proceed to decide these appeals by a common order. 2.1 At the time of hearing, at the very outset, it was mentioned that common issues involved in these appeals is regarding deduction of tax at source from payment made to Rajasthan State Agriculture Marketing Board (for short RSAMB) for the construction and repair work by the Krishi Upaj Mandi Samiti s is covered by the decision of Jodhpur Bench rendered in the similar case in ITA Nos. 249,245,246,247,248, 250, 99,101, 102 and 103/JU/2010 for the Assessment Year 2007-08, the copy of this order has been placed on record. 2.2 We have gone through the Tribunal order which has not been controverted by the ld. DR with the help of any other decision on this issue. This decision has been rendered after following the decision of Hon'ble Jurisdictional High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of Jaipur bench in the case of ITO vs KUMS, Baran (ITA No. 560 561/JP/2010 dated 06-01-2011. 6. The Hon ble Gujrat High Court in the case of Zaverchand Laxmi Chand Co. V CIT 55 ITR 486 has considered the difference between assessable profit under I.Tax act and profit based on commercial principles and observed as under :- The company has been allowed depreciation of ₹ 2,32,234 of which the normal depreciation is only ₹ 1,86,143 according to the department representative. The depreciation in excess of the normal depreciation is not strictly depreciation but an inducement to set up new machinery. We consider that normal depreciation is alone allowable in the computation of profits. In our view, the Tribunal was not correct in the way it looked at this question, and the error was in not appreciating the distinction between the depreciation calculated on the basis of the statutory provisions of the Income-tax Act for the purpose of computing assessable profits on the one hand and depreciation computed by a business concern for purpose of arriving at its true commercial profits. It is the latter which has to be taken into account for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hra Pradesh High Court in the case of CIT v Trustee of H.E.H. The Nizam Supplemental Religious endorsement trust 127 ITR 378 had an occasion to consider as to how the income of the trust is to be computed. It was stated that the commercial or amounting profits or actual profits earned by the assessee are to be calculated on commercial principles. It is not the total income as would be assessed by the A.O. is not relevant for the purpose of investing the funds of the trust or assessing the income of the trust. It is the accounts of the trust alone will have to be considered. Payment of income Tax and Wealth tax were expenses incidental to the carrying out of charitable purpose of the trust. Under normal provisions of computation of business income, income tax is to be added while computing total income. 9. The Hon ble Madras High Court in the case of CIT v Rao Bahadur Calavala Cunnan Chetly Charities 135 ITR 485 has held that in case of trust, income is to be arrived at in commercial manner without reference to section 14. Accumulation to be determined out of such income. The Hon ble Madras High Court at Page 492 observed as under :- Section 11 contemplates an applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenses necessary for earning or looking after that income. The net amount that remains would be available for distribution or application for charitable purpose. In applying the income for charitable purposes, even capital expenditure may be incurred. Therefore, the nature of the expenditure in the hands of the entity which receives the money is not the criterion. So long as the assessee disburses the amount for charitable purposes, whether the amounts are utilized for capital or revenue purposes by the charity concerned, the assessee would have complied with that part of the requirement of s. 11, namely application of the income for charitable purposes. The authorities will have to find out as to whether they are really charitable purposes or not. Subject to such examination, the application of the income for charitable purposes will have to be excluded and it is only the balance that would require examination for finding out whether the assessee has complied with the rule of accumulation to the extent of ₹ 10,000 or 25 per cent. Of the income, whichever is higher. 10. The Hon ble Madras High Court in the casse of CIT Vs.Estate of V.L.Ethiraj 136 ITR 12 had an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under the various heads enumerated in the Income-tax Act. It held that the income from the properties held under trust would have to be arrived at in the normal commercial manner without 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 provisionsd 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 the Karnataka, Madhya Prsdesh and Madras High Courts. We, therefore, answer both the questions referred to us in the affirmative and against the Revenue. 16. The Hon ble Kerala High Court in the case of CIT v Programme for community organization 228 ITR 620 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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