Section 11
This query is : Resolved
26 July 2010
Whether depreciation on fixed assets of a trust can be treated as application of income for the purpose of section 11? Any amendments or rulings came on this matter recently?
Can anyone give a good format of statement of computation of total income of a trust?
Can anyone give a good format of statement of computation of total income of a trust?
26 July 2010
ya depreciation on fixed assets can be claimed as application of income for the purpose of section 11
case law: institute of banking personnel selection 131 taxman 386 (bom).
case law: institute of banking personnel selection 131 taxman 386 (bom).
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27 July 2010
Is it sure that no amendment is made on this contraversial matter recently?
Also please give a good format of statement of computation of total income of a trust.
Also please give a good format of statement of computation of total income of a trust.
23 July 2025
Regarding your query on Section 11 and depreciation on fixed assets of a trust:
1. Can depreciation on fixed assets be treated as application of income under Section 11?
Yes, depreciation is allowed as application of income under Section 11 for charitable or religious trusts, provided the asset is used for charitable purposes.
This is supported by judicial precedents, notably:
Institute of Banking Personnel Selection vs CIT (131 Taxman 386 - Bombay High Court)
The court held that depreciation can be treated as application of income, as it is a legitimate expense incurred for running the trust's activities.
No recent amendment has reversed this position, so depreciation continues to be considered allowable for trust income computation under Section 11.
2. Brief Explanation
Section 11 allows trusts to claim exemption on income applied for charitable or religious purposes.
Application of income includes expenditure in the course of carrying out charitable activities.
Depreciation is a non-cash expense representing wear and tear of fixed assets used in charitable activities, so it qualifies as an application of income.
However, the depreciation should relate to assets exclusively used for trust's charitable purposes.
3. Format for Statement of Computation of Total Income of a Trust
Below is a basic format you can adapt as per your trust’s accounts:
Statement of Computation of Total Income for the Year ending ____
Particulars Amount (₹)
Income from property held under trust (Rent etc.) XXX
Income from business or other sources XXX
Gross Total Income XXX
Less: Expenditure applied for charitable purposes (XXX)
(including salaries, repairs, depreciation, etc.)
Add: Income applied for non-charitable purposes XXX
Less: Income accumulated or set apart (if any) (XXX)
Net Income applied for charitable purposes XXX
Income not applied (accumulated income) XXX
Total Income (Income chargeable to tax) XXX
Notes:
Clearly show depreciation under “Expenditure applied for charitable purposes”.
If the trust accumulates income under Section 11(2), specify separately.
Attach schedules showing detailed income and expenses.
1. Can depreciation on fixed assets be treated as application of income under Section 11?
Yes, depreciation is allowed as application of income under Section 11 for charitable or religious trusts, provided the asset is used for charitable purposes.
This is supported by judicial precedents, notably:
Institute of Banking Personnel Selection vs CIT (131 Taxman 386 - Bombay High Court)
The court held that depreciation can be treated as application of income, as it is a legitimate expense incurred for running the trust's activities.
No recent amendment has reversed this position, so depreciation continues to be considered allowable for trust income computation under Section 11.
2. Brief Explanation
Section 11 allows trusts to claim exemption on income applied for charitable or religious purposes.
Application of income includes expenditure in the course of carrying out charitable activities.
Depreciation is a non-cash expense representing wear and tear of fixed assets used in charitable activities, so it qualifies as an application of income.
However, the depreciation should relate to assets exclusively used for trust's charitable purposes.
3. Format for Statement of Computation of Total Income of a Trust
Below is a basic format you can adapt as per your trust’s accounts:
Statement of Computation of Total Income for the Year ending ____
Particulars Amount (₹)
Income from property held under trust (Rent etc.) XXX
Income from business or other sources XXX
Gross Total Income XXX
Less: Expenditure applied for charitable purposes (XXX)
(including salaries, repairs, depreciation, etc.)
Add: Income applied for non-charitable purposes XXX
Less: Income accumulated or set apart (if any) (XXX)
Net Income applied for charitable purposes XXX
Income not applied (accumulated income) XXX
Total Income (Income chargeable to tax) XXX
Notes:
Clearly show depreciation under “Expenditure applied for charitable purposes”.
If the trust accumulates income under Section 11(2), specify separately.
Attach schedules showing detailed income and expenses.
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