2014 (12) TMI 397 - HC - Income Tax

Eligibility for exemption u/s 10(23C)(via) Held that - The Tribunal as also the Commissioner held that the objects of the Trust remained unchanged - The Trust is registered with the Charity Commissioner of Mumbai and also registered u/s 12A - The certificate u/s 80G has also been granted by the DIT(E) Mumbai - assessee had throughout maintained that it had obtained the approval from the competent authority exempting it under the relevant legal provision - The application was also made in that behalf - compliance with the legal provision was made by producing before the AO the relevant order the order of the Tribunal is upheld. Conclusion of both essentially rests on the receipt of the order by the Assessee during the course of the assessment proceedings and referable to section 10(23C) (via) - the tendency of parties to complain to the higher Court on such issue is strongly deprecated - If the counsel in his discretion chooses not to press certain grounds, then, the complaint of this nature cannot be made subsequently and in a higher Court - if such explanations have to be accepted that would be going behind the contents of the order made by the competent authority u/s 10(23C)(via) if the authority is satisfied with regard to the essential requirements or ingredients of section 10(23C)(via), then, it is hardly open for the Revenue to complain thus, as such no substantial question of law arises for consideration Decided against revenue.

Summary

Issues Involved:
1. Denial of exemption under section 10(23C)(via) of the Income Tax Act.
2. Disallowance of depreciation and alleged double deduction.
3. Treatment of corpus donations.

Detailed Analysis:

1. Denial of Exemption under Section 10(23C)(via):
The Revenue contended that the Assessee did not claim exemption under section 10(23C)(via) in its return but under section 11, and therefore, the Assessing Officer rightly disallowed the exemption. However, the Commissioner of Income Tax (Appeals) and the Tribunal found that the Assessee Trust qualified for exemption under section 10(23C)(via) based on an approval received during the assessment proceedings. The Tribunal upheld the Commissioner's decision, noting that the Trust had made applications for approval from the prescribed authority and had obtained the necessary approval for assessment year 1999-2000 and onwards. The Tribunal concluded that compliance with the legal provision was met by producing the relevant order during assessment proceedings, and hence, the exemption was rightly granted.

2. Disallowance of Depreciation and Alleged Double Deduction:
The Revenue argued that depreciation should not have been allowed as it resulted in a double deduction. However, the Tribunal and the Commissioner concluded that there was no double benefit. They noted that once the asset is used for the purpose and object of the Trust, the claim for depreciation can be lodged and maintained in subsequent years. This conclusion was supported by several judgments, including those of the High Court, which established that such claims do not constitute double deductions.

3. Treatment of Corpus Donations:
The Revenue also challenged the treatment of corpus donations, particularly the donation from M/s. Shapoorji Pallonji Trust, arguing that it led to double deduction. The Tribunal and the Commissioner found that the corpus donations were properly accounted for and did not result in double deduction. The Tribunal noted that the Assessee had received approval for exemption under section 10(23C)(via), which covered the donations received for the old age home purpose. The Tribunal concluded that the donations were appropriately treated under the legal provisions.

Conclusion:
The Tribunal and the Commissioner of Income Tax (Appeals) consistently found in favor of the Assessee on all issues. They determined that the Assessee Trust was entitled to exemption under section 10(23C)(via), that the claim for depreciation did not result in double deduction, and that the corpus donations were correctly treated. The High Court dismissed the Revenue's appeal, stating that no substantial question of law arose from the Tribunal's decision, and upheld the Tribunal's findings. The appeal was dismissed with no costs.