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TMI Blog2011 (8) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... e Saxena, CIT/DR along with Shri Arun Dewan, ld. Sr. DR and Shri Ajay Chajjed, Advocate and Shri Anil Khabya, Ld. Counsel for assessee. The crux of arguments on behalf of the Revenue is that in view of the decision from the Hon'ble Apex Court in the case of Escorts Ltd. (supra), no double deduction is allowable to the present assessees. On the other hand, the ld. representatives for the respective assessee contended that the Tribunal in the case of National Centre of Human Settlement & Environment v. Joint. CIT [IT Appeal No.163/(Ind.) of 2009 for assessment year 2006-07] & Bhopal School of Social Science v. Asstt. CIT [IT Appeal No.164 (Ind.) of 2009] vide order dated 19.6.2009 decided the issue in favour of the assessee by following the decision in Asstt. CIT v. M.P. Madhyam [IT Appeal No.712 (Ind.) of 2004], assessment year 2004-05 and Asstt. CIT v. Society of Pillar [IT Appeal No.59 (Ind.) of 2008, dated 18.7.2008], wherein, the decision in the case of Escorts Ltd. (supra), relied upon by the assessee, was also considered. 3. We have considered the rival submissions and perused the material available on file. Since the issue involved in all the appeals is identical, as canvass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons; (ii) from the 1st day of the financial year in which the application is made, if the Commissioner is not so satisfied: Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1st day of June, 2007; (aa) the person in receipt of the income has made an application for registration of the trust or institution on or after the 1st day of June, 2007 in the prescribed form and manner to the Commissioner and such trust or institution is registered under section 12AA; (b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board, by general or special order, has directed in either case that it shall not be included in the total income of the person in receipt of such income; (d) income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution. Explanation.-For the purposes of clauses (a) and (b),- (1) in computing the fifteen per cent of the income which may be accumulated or set apart, any such voluntary contributions as are referred to in section 12 shall be deemed to be part of the income; (2) if, in the previous year, the income applied to charitable or religious purposes in India falls short of eighty-five per cent of the income derived during that year from property held under trust, or, as the case may be, held under trust in part, by any amount- (i) for the reason that the whole or any part of the income has not been received during that year, or (ii) for any other reason, then- (a) in the case referred to in sub-clause (i), so much of the income applied to such purposes in India during the previous year in which the income is received or during the prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of the net consideration is utilised in acquiring the new capital asset, the whole of the appropriate fraction of such capital gain; (ii) in any other case, so much of the appropriate fraction of the capital gain as is equal to the amount, if any, by which the appropriate fraction of the amount utilised for acquiring the new asset exceeds the appropriate fraction of the cost of the transferred asset. Explanation.-In this sub-section,- (i) "appropriate fraction" means the fraction which represents the extent to which the income derived from the capital asset transferred was immediately before such transfer applicable to charitable or religious purposes; (ii) "cost of the transferred asset" means the aggregate of the cost of acquisition (as ascertained for the purposes of sections 48 and 49) of the capital asset which is the subject of the transfer and the cost of any improvement thereto within the meaning assigned to that expression in sub-clause (b) of clause (1) of section 55; (iii) "net consideration" means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of income referred to in clause (a) or clause (b) of sub-section (1), read with the Explanation to that sub-section, which is not applied, but is accumulated or set apart, to any trust or institution registered under section 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, shall not be treated as application of income for charitable or religious purposes, either during the period of accumulation or thereafter.] (3) Any income referred to in sub-section (2) which- (a) is applied to purposes other than charitable or religious purposes as aforesaid or ceases to be accumulated or set apart for application thereto, or (b) ceases to remain invested or deposited in any of the forms or modes specified in sub-section (5), or (c) is not utilised for the purpose for which it is so accumulated or set apart during the period referred to in clause (a) of that sub-section or in the year immediately following the expiry thereof, (d) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of this Act relating to assessment; and where any income so determined is in excess of the income as shown in the accounts of the undertaking, such excess shall be deemed to be applied to purposes other than charitable or religious purposes. (4A) Sub-section (1) or sub-section (2) or sub-section (3) or sub-section (3A) shall not apply in relation to any income of a trust or an institution, being profits and gains of business, unless the business is incidental to the attainment of the objectives of the trust or, as the case may be, institution, and separate books of account are maintained by such trust or institution in respect of such business. (5) The forms and modes of investing or depositing the money referred to in clause (b) of sub-section (2) shall be the following, namely :- (i) investment in savings certificates as defined in clause (c) of section 2 of the Government Savings Certificates Act, 1959 (46 of 1959), and any other securities or certificates issued by the Central Government under the Small Savings Schemes of that Government; (ii) deposit in any account with the Post Office Savings Bank; (iii) deposit in any account with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes and which is eligible for deduction under clause (viii) of sub-section (1) of section 36; (ixa)deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for urban infrastructure in India. Explanation.-For the purposes of this clause,- (a) "long-term finance" means any loan or advance where the terms under which moneys are loaned or advanced provide for repayment along with interest thereof during a period of not less than five years; (b) "public company" shall have the meaning assigned to it in section 3 of the Companies Act, 1956 (1 of 1956); (c) "urban infrastructure" means a project for providing potable water supply, sanitation and sewerage, drainage, solid waste management, roads, bridges and flyovers or urban transport; (x) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee to cover up the application of income as specified under the Act. If that would have been case then the contention raised by the Revenue would have some force. We are hundred per cent in agreement with the contention of the ld. CIT/DR that there should be no double deduction but in the present appeals, there is no double deduction because the requirement of the Act is application of income within specified limit but in the present appeals, the claim of depreciation is after application of more than 85% of the income, therefore, the claim of depreciation has remained for academic interest only. 4. Even otherwise, depreciation allowance is a concession granted by the State in the computation of income based on many factors relevant to the wholesome fiscal administration. Depreciation represents the diminution in the value of an asset when applied to the purpose of making profit or gain. Depreciation is thus related to an asset and is a notional loss as against actual loss in the sense of outgoing of a business, meaning thereby, depreciation is a statutory allowance not confined expressly to diminution in value of the asset by the reason of wear & tear only. A charitab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unapplied profit. Additional condition by way of Explanation to section 11(2) inserted w.e.f. 1.4.2003 is intended to apply only to accumulations in excess of 15% u/s 11(2) and not to accumulations up to 15% u/s 11(1)(a). This view is fortified by the ratio laid down in DIT (Exemption) v. Bagri Foundation [2010] 192 Taxman 309 (Delhi), the ratio laid down in CIT v. Programme for Community Organisation [2001] 248 ITR 1/116 Taxman 608 (SC) and the ratio laid down in S.RM.M.CT.M. Tiruppani Trust v. CIT [1998] 230 ITR 636/96 Taxman 635 (SC). In order to satisfy the requirement of section 11(2)(b), the investment must necessarily come out to the current year's income. An investment made in the past obviously cannot satisfy this requirement. This view is further fortified from the decision in CIT v. Indian National Theatre Trust [2008] 305 ITR 149/169 Taxman 42 (Delhi). Therefore, in view of uncontroverted finding that the respective assessee duly complied with section 11(2) of the Act and the depreciation was claimed after application of more than 85% of income, therefore, we find no infirmity in the stand of the ld. CIT(A), consequently, these appeals of the Revenue are having no merit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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