I.P. BANSAL, J.M. ORDER This is appeal filed by assessee and is directed against order of CIT(A) dt. 12th Jan., 2000 for asst. yr. 1996-97. 2. Grounds of appeal read as under : "I. Deduction of 1/5th of income from house property under s. 24(1)(i) of Act (Rs. 2,96,702) (1) That learned CIT(A) has grievously erred in holding that appellant is not entitled to claim deduction of Rs. 2,96,702 being 1/5th of income from house property under s. 24(1)(i) of Act. (2) That, both authorities below have materially erred in following inapplicable decision of Madras High Court in case of CIT vs. Rao Bahadur Calavala Cunnan Chetty Charities (1982) 135 ITR 485 (Mad) ignoring several judgments of Gujarat High Court on aforesaid point inclusive of decision of CIT vs. Shri Plot Swetamber Murti Pujak Jain Mandal (1994) 119 CTR (Guj) 144 : (1995) 211 ITR 293 (Guj). (3) That, both authorities below have materially erred in ignoring expressed provisions of law namely, s. 14, s. 22, s. 24(1)(i), etc. coupled with Form No. 3A prescribed under r. 12(1)(c) of IT Rules, 1962. (4) That, said finding is otherwise unwarranted on facts, against expressed provisions of law and having been based on inapplicable case law, same deserves to be reversed. II. Depreciation (Rs. 6,49,856) (5) Without prejudice to immediate above grounds, learned CIT(A) ought to have taken into account Gujarat High Court judgment in case of CIT vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust (1992) 105 CTR (Guj) 303 : (1992) 198 ITR 598 (Guj), whereby it is held that depreciation is deductible in computation of total income of charitable trust. (6) Accordingly, learned CIT(A) ought to have allowed depreciation amounting to Rs. 6,49,856. (7) That learned CIT(A) has grievously erred in rejecting said alternative on judgment of Supreme Court of India in case of Addl. CIT vs. Gurjargravures (P) Ltd. 1978 CTR (SC) 1 : (1978) 111 ITR 1 (SC), even though Supreme Court itself has explained said judgment in case of Jute Corporation of India Ltd. vs. CIT (1990) 88 CTR (SC) 66 : (1991) 187 ITR 688 (SC). (8) Thus, there being claim of deduction as well as evidence on record, learned CIT(A) ought to have exercised his jurisdiction in allowing additional claim in proper perspective. (9) learned CIT(A) has grievously erred in not following latest judgment of Supreme Court of India in this regard reported in case of National Thermal Power Co. Ltd. vs. CIT (1999) 157 CTR (SC) 249 : (1998) 229 ITR 383 (SC) and ought to have entertained said alternative claim on merit. (10) That learned CIT(A) has equally erred in not taking into account statement of facts, grounds of appeal and different notes submitted from time-to-time. III. Medical Expenses (Rs. 79,346) (11) That learned CIT(A) has erred in confirming finding of learned AO in relation to disallowance of Rs. 79,346 incurred by appellant as medical expenses. (12) That, both authorities below have grievously erred in not properly appreciating and interpreting various object clauses of trust deed in question with special reference to cl. (4), cl. (12), cl. (16) and cl. (19), etc. and ought to have held that appellant was entitled to claim such expenses which were being claimed and allowed in all preceding years. (13) That reasoning given by learned CIT(A) for rejecting said claim vide para 9 of order are unwarranted on facts, bad in law and it be held that expenditure incurred in this regard was not outside scope of trust deed. (14) That learned CIT(A) ought to have held that said expenditure was incurred in accordance with trust deed and same was allowable in full as prayed for." 3 . assessee-trust is charitable trust registered with CIT, therefore, entitled to benefits under ss. 11 and 12 of Act. return of income was filed at nil by claiming exemption under s. 11 of IT Act. Apart from disallowance of exemption under s. 11 amounting to Rs. 26,08,376 following additions were made to income of assessee-trust : 1. 1/5th repairs claimed of house property income of Rs. 2,96,702 2. Medical expenses of Rs. 79,346. Exemption under s. 11 was disallowed for reasons that assessee did not produce registration under s. 12A of IT Act, 1961. However, registration was produced before CIT(A) hence, disallowance of exemption under s. 11 was deleted, therefore, only two additions of Rs. 2,96,702 and Rs. 79,346 as mentioned above, were subject-matter of dispute. 4. assessee-trust has earned income from house property amounting to Rs. 14,83,512 out of which sum of Rs. 2,96,702 was claimed in computation of income being amount equal to 1/5th of rental income on account of repairs. This claim of assessee was disallowed by AO following decision of Hon ble Madras High Court in case of CIT vs. Rao Bahadur Calawala Cunnan Chetty Charities (1982) 135 ITR 485 (Mad). 5 . In aforementioned case it has been held that s. 11(1)(a) contemplates application of income for charitable purposes. charity can accumulate 25 per cent of income. application as well as accumulation has necessarily to be income as accounted for in accounts, and not as computed under IT Act, subject of course to what is provided in and not as computed under IT Act, subject of course to what is provided in sub-s. (4) of s. 11. expression "income" has to be understood in popular or general sense and not in sense in which income is arrived at for purpose of assessment to tax by application of some artificial provisions either giving or denying deduction. Taking into account purpose for which conditions of s. 11(1)(a) are imposed, it would be clear that one has to consider income as arrived at in context of what is available in hands of assessee, subject of course to any adjustment for expenses extraneous to trust. If expression "income" is so understood, then one has to take accounts of assessee with reference to receipts and deduct therefrom expenses necessary for earning or looking after that income. net amount that remains would be available for distribution or application for charitable purpose. In applying income for charitable purposes, even capital expenditure may be incurred. Therefore, nature of expenditure in hands of entity which receives money is not criterion. So long as assessee disburses amount for charitable purposes, whether amounts are utilized for capital or revenue purposes by charity concerned, assessee would have complied with that part of requirement of s. 11, namely, application of income for charitable purposes. authorities will have to find out as to whether they are really for charitable purposes or not. Subject to such examination, application of income for charitable purposes will have to be excluded and it is only balance that would require examination for finding out whether assessee has complied with rule of accumulation to extent of Rs. 10,000 or 25 per cent of income, whichever is higher. In fact, wherever statute contemplated income being computed in manner set out in provisions of Act, appropriate words are used. Wherever Parliament considered that computation should be in accordance with provisions of Act, it introduced concept by using appropriate language. In absence of any such language in s. 11(1), computation as envisaged by other provisions of Act cannot be imported into s. 11(1). income from properties held under trust would have to be arrived at in normal commercial manner without reference to provisions which are attracted by s. 14. 6 . disallowance of Rs. 79,346 was made by AO on account that said sum represents medical expenses. On scrutiny of objects of trust he observed that according to object No. 4 of trust deed, object was to construct hospital and it was not for medical help to poor people. AO observed that there being no provision in trust deed, claim of such expenditure, therefore, is not admissible. 7 . Both disallowances were agitated in appeal filed before CIT(A). Before CIT(A) it was pleaded that sum of Rs. 2,96,702 being 1/5th of income from house property is allowable as per provisions of s. 24(1)(i) of IT Act, 1961. Reference was made to s. 5 of IT Act, 1961 which defines scope of total income and is subject to provisions of Act. Referring to wording of s. 5 it was pleaded that s. 20(1)(i) includes scope of s. 5 and, therefore, assessee is entitled to get 1/5th deduction out of house property income as per s. 24(1)(i). In alternative, it was submitted that depreciation amounting to Rs. 4,41,530 should be allowed being depreciation of immovable property as per normal commercial principles as per aforementioned decision of Hon ble Madras High Court in case of CIT vs. Rao Bahadur Calawala Cunnan Chetty Charities (supra). 8. With respect to other disallowance of Rs. 79,346 it was pleaded that AO has construed objects of medical relief in narrower manner. It was pleaded that establishing of hospital will include in itself provisions for medical help and disallowance has wrongly been made. 9 . Learned CIT(A) did not accept any such submissions of assessee. He rejected first contention of regarding allowance of Rs. 2,96,702 on ground that said disallowance is as per aforementioned decision of Hon ble Madras High Court in case of CIT vs. Rao Bahadur Calawala Cunnan Chetty Charities (supra). He rejected alternative claim of assessee regarding depreciation on ground that said claim was not made by assessee before AO and if such deduction is not claimed before AO same could not be claimed before CIT(A) as per decision in case of Addl. CIT vs. Gurjargravures (P) Ltd. 1978 CTR (SC) 1 : (1978) 111 ITR 1 (SC). disallowance of Rs. 79,346 was sustained on ground that same was not incurred as per objects of trust. Thus assessee is aggrieved hence in appeal. 10. Before us, arguments raised before AO as well as before CIT(A) were reiterated. Reference was made to scheme of Act. It was pleaded that "income" has been defined as per s. 2(24) of IT Act and s. 2(45) defines total income which means total amount of income referred to in s. 5 computed in manner laid down in Act. It was pleaded that house property income earned by assessee falls within scope of "income" as defined in s. 2(24) and total income has to be considered as per s. 2(45) and s. 5 which defines scope of total income, is subject to provisions of IT Act which includes s. 22. If income of assessee is assessable under IT Act under head "Income from house property" as per heads described in s. 14 of Act, deduction necessarily has to be granted as prescribed in s. 24(1)(i) of Act. It was pleaded that income of assessee is taxable, thus there is no basis on which deduction as provided under s. 24(1)(i) could be denied to assessee. Reliance in this regard was placed on decision in case of CIT vs. Shri Plot Swetamber Murti Pujak Jain Mandal (1994) 119 CTR (Guj) 144 : (1995) 211 ITR 293 (Guj). 11. So far as it relates to claim of depreciation, reliance was placed on decision of Hon ble Gujarat High Court in case of CIT vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust (1992) 105 CTR (Guj) 303 : (1992) 198 ITR 598 (Guj) wherein it has been held that income for purpose of s. 11 has to be computed not in accordance with provisions of Act but in accordance with normal rule of accountancy under which depreciation on house property has to be allowed. 1 2 . In respect of expenses incurred with regard to medical help, he pleaded that though it is not specifically mentioned in objects that object of assessee is to provide medical help also but broad object has been written which is establishment of hospital. establishment of hospital is wide enough to cover within itself object of providing medical help and thus narrower view has been taken by AO and CIT(A) and this disallowance is to be deleted. 13. On other hand, learned Departmental Representative relying on following decisions pleaded that even as per scheme of Act, benefit cannot be extended on assessee for deduction under s. 24(1)(i) of Act : 1. CIT vs. Ganga Charity Trust Fund (1986) 53 CTR (Guj) 365 : (1986) 162 ITR 612 (Guj) to contend that before determining income which could be actually applied or accumulated for purpose of trust all outgoings including income-tax must be deducted. He contended that what assessee did not incur as expenditure cannot be allowed. He contended that assessee is claiming notional expenditure which has not been incurred, therefore, same cannot be allowed. 2. CIT vs. Rao Bahadur Calawala Cunnan Chetty Charities (supra) wherein it has been held that computation under different categories or heads arises only for purpose of ascertaining total income for purpose of change and this provision cannot be introduced to find out what income derived from property held under trust to be excluded from total income is for purpose of exemption under Chapter-III. Thus he pleaded that assessee s claim for 1/5th of income on account of repairs is not in accordance with law and, therefore, has rightly been disallowed by AO and learned CIT(A) has rightly upheld disallowance. 1 4 . As regards depreciation, it was pleaded that this claim was never raised before AO and learned CIT(A) has rightly rejected claim. For this purpose he relied on order of CIT(A). He referred to decision of CIT vs. Hico Products (P) Ltd. (2001) 166 CTR (SC) 403 : (2001) 247 ITR 797 (SC) to contend that depreciation is not allowable in respect of capital assets for which full deduction under s. 35(2)(iv) was allowed. He contended that adopting same analogy where entire investment by assessee made on building has been claimed as application of income, no further deduction in shape of depreciation could be allowed. 1 5 . For disallowance on account of medical help, he relied on orders of AO and CIT(A). 1 6 . We have carefully considered rival submissions in light of material placed before us. So far as it relates to claim of assessee regarding 1/5th allowance on account of repair in respect of income from house property as well as depreciation answer lies in decision of Hon ble jurisdictional High Court in case of Sheth Manilal Ranchhoddas Vishram Bhavan Trust (supra). Two following questions were referred before their Lordships : "1. Whether, on facts and in circumstances of case, Tribunal was right in law in holding that, while computing income under s. 11(1)(a) of IT Act, 1961, depreciation has to be allowed ? 2. Whether Tribunal was right in law in holding that, having regard to scheme of Act, income referred to in s. 11(1)(a) of Act is to be computed not in accordance with provisions of Act but in accordance with normal rules of accountancy under which depreciation has to be allowed while computing such income under s. 11(1)(a) of Act ?" Giving answer to above two questions, observations of their Lordships are as under : "2. assessee is trust registered under Public Trusts Act. income of assessee is mainly from immovable property. In returns of income filed for asst. yrs. 1971-72 and 1972-73, assessee claimed depreciation and calculated its income accordingly. ITO has rejected claim of assessee as he was of view that income from house property was to be calculated according to ss. 22 to 27 of Act. In appeal, AAC held otherwise. Revenue then went to Tribunal. Tribunal dismissed appeal. Same thing happened for asst. yr. 1972-73 also. After both appeals were dismissed, Revenue applied to Tribunal for raising above two questions and referring same to this Court. 3. What is urged by learned counsel appearing for Revenue is that ss. 2 2 to 27 of Act are specific provisions providing for computation of income and, therefore, Tribunal committed error in holding that income of assessee as contemplated by s. 11(1)(a) of Act was required to be computed not in accordance with those provisions but in accordance with normal rules of accountancy under which depreciation is always taken into account for finding out real income. 4. Whether depreciation has to be allowed as necessary deduction for computing income of charitable institution was question which came up before Karnataka High Court in CIT vs. Society of Sisters of St. Annie (1984) 39 CTR (Kar) 9 : (1984) 146 ITR 28 (Kar). Noticing difference between word income and expression total income and necessity for providing depreciation in order to maintain correct accounts, High Court held that amount of depreciation debited to accounts of charitable institution has to be deducted to arrive at income available for application to charitable and religious purposes. Same view has been taken by Madhya Pradesh High Court in CIT vs. Raipur Pallottine Society (1989) 180 ITR 579 (MP). 5. In CIT vs. Rao Bahadur Calavala Cunnan Chetty Charities (1982) 135 ITR 485 (Mad), Madras High Court was required to consider whether, for purpose of computing accumulation in excess of 25 per cent as laid down in s. 11(1)(a) of Act, income has to be computed under various heads enumerated in IT Act. It held that income from properties held under trust would have to be arrived at in normal commercial manner without classification under various heads set out in s. 14. It held that expression income has to be understood in popular or general sense and not in sense in which income is arrived at for purpose of assessment to tax by application of some artificial provisions either giving or denying deduction. It observed that computation under different categories or heads arises only for purposes of ascertaining total income for purposes of charge. Those provisions cannot be introduced to find out what income derived from property held under trust to be excluded from total income is, for purpose of exemptions under Chapter III. 6. We are in respectful agreement with view taken by Karnataka, Madhya Pradesh and Madras High Courts. We, therefore, answer both questions referred to us in affirmative and against Revenue. No order as to costs." From above observations it is clear that their Lordships have concurred with decision of Hon ble Madras High Court in case of CIT vs. Rao Bahadur Calavala Cunnan Chetty Charities (supra) which has been applied by AO while objecting to claim of assessee under s. 24(1)(i) of Act and they have approved view that income has to be computed under provisions of s . 11(1)(a) of Act in normal commercial manner without classification under various heads set out in s. 14 and expression has to be understood in popular or general sense and not in sense in which income is arrived at for purpose of assessment to tax by application of some artificial provisions either giving or denying deductions and computation under different categories or heads arises only for purpose of ascertaining total income for purpose of charge. Thus their Lordships have recognised that income which falls under s. 11 has to be arrived at in normal commercial manner without classification under various heads. Applying said principle to assessee-trust income has to be computed as per normal commercial manner, thus there was no scope of granting deduction under s. 24(1)(i) by application of some artificial provisions classified under various heads set out in s. 14. 17. It was mentioned in grounds of appeal filed before CIT(A) that sum of Rs. 4,41,530 was debited by assessee in income and expenditure account on account of depreciation for year under consideration and copy of this income and expenditure account has been submitted before us at p. 69 of paper book. Thus it is clear that assessee had shown said sum as depreciation which is claimed as expenditure in income and expenditure account. Though this claim was not raised before AO it was raised before CIT(A). CIT(A) has denied this claim on ground that claim was not raised before AO and for this purpose he relied on decision of Hon ble Supreme Court in case of Gurjargravures (P) Ltd. (supra). 18. We have carefully gone through this decision. In said decision it is held that AAC could not have entertained question of relief under s. 84 and directed AO to allow necessary relief where no claim was made before AO. It was found that despite fact that no claim was made before AO, there was also no material on record to support such claim. But position in case of also no material on record to support such claim. But position in case of assessee is different. As pointed out earlier that depreciation claim has been claimed in income and expenditure account. Therefore, claim of assessee could not be denied on ground that said claim was not made before AO. Learned Departmental Representative had raised issue that where entire cost has been allowed as expenditure, no depreciation is eligible. However, it is not case of AO or CIT(A) that entire cost of said building was allowed as expenditure in case of assessee. On other hand, in balance sheet value of building stands. Therefore, there being no supportive material with regard to this contention of learned Departmental Representative, we find no merit in such contention. Now there remains question that whether assessee is entitled to get depreciation ? Answer to this question has also been given by jurisdictional High Court in aforementioned case of CIT vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust (supra) wherein it was held that assessee-trust was entitled to get depreciation. relevant observations have already been reproduced. Respectfully following aforementioned decision of jurisdictional High Court, we direct AO to allow depreciation to assessee. 19. On issue of disallowance of Rs. 79,346, there is no dispute to fact that object of assessee-trust includes merely establishment of hospital. Establishment of hospital in itself embedded provisions for medical help to be extended to public. Establishment of hospital is one of modes to provide such medical help. Taking liberal view we hold that providing medical help is also covered in objects of trust, particularly when genuineness of such payments incurred by assessee in respect of medical help have not been doubted. Therefore, we direct AO to delete disallowance. 20. To sum up, our findings are as under : (a) assessee is not entitled to deduction under s. 24(1)(i). (b) assessee is entitled to get depreciation as claimed by it in income and expenditure account [we find that claim of depreciation before CIT(A) in grounds of appeal was Rs. 4,41,530 whereas in grounds filed before us, is Rs. 6,49,856]. According to aforementioned decision of Hon ble Gujarat High Court in case of CIT vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust (supra) amount of depreciation debited to accounts of charitable institution has to be deducted to arrive at income available for application to charitable and religious purposes. Therefore, we hold that assessee is entitled for depreciation only to extent of Rs. 4,41,530 in place of Rs. 6,49,856 mentioned in grounds of appeal before us. (c) disallowance of Rs. 79,346 is deleted. 21. In result, appeal filed by assessee is partly allowed. *** SHRIMAD VALLABH VISHWA DHARMA SANSTHA v. ADDITIONAL COMMISSIONER OF INCOME TAX