“Section 11(1)(ii)”

The Supreme Court approves the mixed fund theory, holding that no interest disallowance is warranted under section 36(1)(iii) if investments or advances are made from the assessee's own non-interest bearing funds, even when mixed funds are available. This presumption applies when non-interest bearing funds are sufficient to meet the investments.

The claim of depreciation under Section 32 of the Income Tax Act for assets used by charitable trusts is permissible, affirming the Bombay High Court's view that such a claim does not amount to a 'double benefit'.

Reopening of assessment beyond four years under Section 147 requires strict satisfaction of conditions precedent, including fresh tangible material, and cannot be based on a mere change of opinion from the original assessment. Further, debatable or interpretational issues cannot be adjusted during processing under Section 143(1).

Capital expenditure incurred by a trust from its own funds is considered an application of income, entitling the trust to claim exemption under Section 11(1) of the Income-tax Act.

A non-compete fee, being a capital expenditure, is not allowable as a deduction from income and does not qualify for depreciation under Section 32(1)(ii) of the Income-tax Act, 1961.

Charging fees, even when having regard to the economic status of beneficiaries, is permissible for the sustenance of charitable activities, provided it is necessary for operation and running expenses and does not amount to carrying on trade or commerce. This applies even after the introduction of the proviso to Section 2(15) of the Income Tax Act, 1961.

Depreciation is allowable on a non-compete fee as it constitutes an intangible asset, even if the right acquired cannot be transferred, provided it is treated as part of a block of assets.

Expenditure incurred by a charitable trust in an earlier year can be set off against income of the current year as application of income. Excess expenditure by a trust can be set off against its income.