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TMI Blog2017 (12) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... c utility? This Tribunal is of the considered opinion that when the assessee-trust instead of keeping medical equipments idle, leased out the same and utilised the lease amount for charitable activity, it cannot be said that the assessee was carrying on business activity. Therefore, it cannot be said that the activity of the assessee amounts to advancement of any other object of public utility. In this case, the lease amount was again applied back for providing medical relief to the poor. Therefore, this Tribunal is of the considered opinion that leasing of medical equipments in the course of carrying on charitable activity is incidental to the main activity of providing medical relief to the poor. Hence, this Tribunal is unable to uphold the orders of the authorities below. Accordingly, the orders of the authorities below are set aside and the Assessing Officer is directed to allow exemption under Section 11 of the Act of the income which is applied for charitable activity. - ITA Nos. 533, 1045 & 1046/Mds/2017 - - - Dated:- 27-10-2017 - Shri N. R. S. Ganesan, Judicial Member And Shri A. Mohan Alankamony, Accountant Member Appellant by : Sh. R. Vijayaraghavan, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction. It is not a cash expenditure. In other words, according to the Ld. D.R., depreciation is not an outgoing. The notional allowance of depreciation always remains with trust itself, hence, such depreciation notionally computed cannot be deducted for the purpose of computing the trust income. According to the Ld. D.R., such notional allowance of depreciation cannot be allowed while computing the income of the trust, therefore, the Assessing Officer by placing reliance on the judgment of Kerala High Court and CBDT clarification, has disallowed the claim of the assessee which was rightly confirmed. 5. We have considered the rival submissions on either side and perused the relevant material available on record. The claim of depreciation in respect of asset which is used in charitable activity was examined by this Tribunal in Music Academy Madras v. DDIT(E) in I.T.A. No. 1098/Mds/2015 dated 22/4/2016. In fact, this Tribunal has observed as follows:- 9. Income-tax Act provides for procedure and method for computing income under different heads. Depreciation is provided under Section 32 of the Act when computing income under the head Income from business or profession . In r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctice or commercial principle. Hence, the assessee is not eligible for depreciation in respect of building, plant, machinery, etc. which are not used for the purpose of business or profession. 11. Even assuming for argument sake that the assessee was doing business, then the assessee is not eligible for exemption under Section 11 of the Act and as rightly submitted by the Ld. Departmental Representative, the registration under Section 12AA of the Act has to be cancelled under Section 12AA(3) of the Act. Moreover, the assessee will not be eligible for exemption under Section 11 of the Act if it is carrying on any business activity. Therefore, this Tribunal is of the considered opinion that the assessee is not eligible for depreciation. 12. As rightly submitted by the Ld. Departmental Representative, in view of Section 11(4) (4A) of the Act, if the property held under trust is a business undertaking, then the income of the business undertaking, which was so held as property held under trust, has to be computed by applying the provisions of Income-tax Act under Chapter IV. While computing income of the business undertaking, all expenditure, including depreciation, has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idle were leased out and the lease amount was utilised for charitable activity, it does not mean that the assessee was carrying on any commercial activity and it has to be classified as advancement of any other object of public utility . The assessee continues to be a charitable institution providing medical relief to the poor and needy. Therefore, according to the Ld. counsel, letting of medical equipments in the course of carrying on charitable activities has to be treated as charitable activity for the purpose of providing medical relief to the poor, hence, both the authorities below are not justified in denying exemption under Section 11 of the Act. 10. On the contrary, Ms. S. Vijayaprabha, the Ld. Departmental Representative, submitted that no doubt, the assessee was registered under Section 12AA of the Act as a charitable institution providing medical relief to the poor. However, according to the Ld. D.R., in the course of its activity, the assessee-trust leased out some machines to another hospital in which the assessee-trustee is a Director. The assessee could not explain before the Assessing Officer how the leasing of equipments is incidental to the object of the trus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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