2017 (12) TMI 135 - HC - Income Tax

Claim for depreciation on capital assets of assessee trust - double deduction - Held that - Claim for depreciation to assessee trust on the claim assets is allowable. See Directorate of Income Tax Vs. Vishwa Jagriti Mission 2012 (4) TMI 289 - DELHI HIGH COURT Also the amendment to the Section 11 was perspective. We also notice that in Commissioner of Income Tax Vs. Seth Anandram Jaipuria Education Society (2017 (3) TMI 896 - ALLAHABAD HIGH COURT) and Director of Income Tax & Anr. Vs. Al-Ameen Charitable Fund Trust (2016 (3) TMI 462 - KARNATAKA HIGH COURT) it was held that the plain language of amendment of Section 11(6) of the Income Tax Act, 1961, made through the Finance (No. 2) Act 2014, established its parliamentary intent in computing income for charitable trust, only with effect from 01.04.2015. The Karnataka High Court took note of the Legislation as well as the memorandum explaining the provisions and circulars issued by the Central Board of Direct Taxes from time to time. - No question of law.

Summary

Issues:
1. Whether the findings of the ITAT regarding the claim for double deduction by a charitable trust under Section 12A of the Income Tax Act were justified.
2. Whether the applicability of Section 11(6) of the Income Tax Act was correctly interpreted by the ITAT.

Analysis:

Issue 1:
The Revenue appealed under Section 260A of the Income Tax Act, 1961, questioning the ITAT's decision on the claim for double deduction by a charitable trust. The trust, operating a school named Guru Gram Public School International, was denied a deduction for depreciation and additions to fixed assets, amounting to ?34,02,284 for the assessment year 2010-11. The CIT(A) and ITAT granted relief by allowing the double deduction. The Court referred to various judgments, including Directorate of Income Tax Vs. Vishwa Jagriti Mission, emphasizing the trust's eligibility for double deduction under Section 12A. The Revenue contended that the applicability of Section 11(6) was not covered by the Vishwa Jagriti Mission case. However, the Court found no question of law on this issue, citing precedents like Commissioner of Income Tax Vs. Seth Anandram Jaipuria Education Society and Director of Income Tax Vs. Al-Ameen Charitable Fund Trust, which clarified the prospective application of the amendment to Section 11(6) introduced by the Finance Act 2014.

Issue 2:
Regarding the interpretation of Section 11(6), the Court noted that the legislative intent was clear from the amendment, effective from 01.04.2015, as per the Karnataka High Court's analysis of the legislation, memoranda, and circulars issued by the Central Board of Direct Taxes. Consequently, the Court concluded that no question of law arose on this aspect. Ultimately, the Court dismissed the appeal, affirming the ITAT's decision to allow the double deduction claimed by the charitable trust under Section 12A of the Income Tax Act for the relevant assessment year.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the Court's reasoning behind dismissing the appeal.