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TMI Blog2012 (10) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... al principles also warrants the conclusion that the expenditure incurred in an earlier year can be set off against the income of the subsequent year. Therefore, Orders of the lower authorities are set aside and Assessing Officer to quantify the excess application of income by the assessee-Trusts and allow carry forward of the same for set off against the surplus made by it in a subsequent year - in favour of Assessee. - I.T.A.No.927 to 930/2012 - - - Dated:- 6-7-2012 - SHRI N.S. SAINI AND SHRI V. DURGA RAO, JJ. Appellant by : Shri R.M.Narayanan, CA Respondent by : Shri G. Nanthakumar, Jt. CIT ORDER PER N.S. SAINI, ACCOUNTANT MEMBER These are the appeals filed by different assessees against separate orders of the CIT(A)-XII, Chennai, dated 22.2.2012. 2. The A.R of the assessee submitted that he is arguing the appeal in the case of Services Association of Seventh Day Adventists P. Ltd in I.T.A.No. 928/Mds/2012 wherein the issue is denial of deduction in respect of depreciation while computing the income of the assessee in terms of section 11 of the Income-tax Act, 1961. He submitted that in all other appeals also the same issue is involved. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Education Society (330 ITR 21). 5. Per contra, learned D.R. supporting the orders of the authorities below, reiterated that the decision of Hon ble Apex Court in the case of Escorts Ltd. (supra) supported the disallowance made by the A.O. 6. We have perused the orders and heard the rival submissions. In our opinion, the question as to whether depreciation can be claimed as an utilization for the purpose of applying Section 11 of the Act stands resolved in favour of assessee by the decision of Hon ble Punjab Haryana High Court in the case of Tiny Tots Edcuation Society (supra). The co-ordinate Bench of this Tribunal in the case of Sri Mariamman Educational Health and Charitable Trust (supra), after considering the arguments of the counsel for both sides, which were on similar lines, had at paras 5 6 of its order dated 2.2.2011, held as under:- 5. We have heard both the sides and considered the material on record as well as precedents relied upon by the ld. Counsel for the assessee and find that similar issue arose in the appeals of the Department, which has been discussed, considered and decided by the B Bench of the Tribunal (in which one of us is party) and vide ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed. 6. Assessee took up the matters in appeal and it was contended before the first appellate authority that orders of the Assessing Officer are not legally correct because he has erred in holding that depreciation on assets should not be taken into account for determining the total income of the assessee trust, that Ld. Assessing Officer ought to have followed Bombay High Court decision in the case of CIT Vs. Institute of Banking Personal Solution ( 264 ITR 110), and prayed that appeal be allowed. 6. During the appellate proceedings, the learned counsel for the assessee submitted the detailed written submission whose salient features were reproduced by the Ld. CIT(A) in his order in para-5 of his order and while considering the facts and circumstances of the case, impugned order, rival submissions and case laws relied upon by the assessee as well as by the Assessing Officer, the issue involved in this case was discussed from para-7 8 in appeal for Assessment Year 2004-05 and CIT(A) has concluded to decide the appeal in favour of the assessee as per paras 9 to 11 of his order for the year 2004-05 as under:- 9. It could be seen from the judgement of the Hon ble Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggrieved by these orders of CIT(A), the department has come up in appeal for all the years and while relying upon another Supreme Court decision in the case of Escort Ltd., (199 ITR 43 ), it was contended that double taxation can not be allowed, unless there is express provision for the same in the statute and while referring to CIT(A) s order in the case of M/s.Rangaletchurni Educational Trust, Chennai, which has been decided in favour of the Department, it was pleaded for reversal of the order of Ld. CIT(A) for all the four years and to uphold the order of the Assessing Officer in this regard. 8. Ld. DR while arguing the appeals of the Department has mainly relied upon Hon ble Supreme Court in the case of M/s.Escort Ltd., (supra) to plead that when income of the assessee is being allowed as application of fund, so allowance of depreciation on the same would tantamount to double deduction, which is not permissible, therefore the order of the Ld. CIT(A) for all the four years should be reversed and that of Assessing Officer may be restored. 9. Ld. Counsel for the assessee while relying upon the basis and reasoning as given by the Ld.CIT(A) in allowing the first appeals of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar) and CIT V. Raipur Pallottine Society [1989] 180 ITR 579 (M.P.), the judgment of the Hon ble Supreme Court in Escorts Ltd., (supra), was held not to be applicable to the situation where depreciation was claimed by a charitable institution in determining percentage of funds applied for the purposes of charitable objects. It was observed:- 9. In the present case, the assessee is not claiming double deduction on account of depreciation as has been suggested by Ld. Counsel for the Revenue. The income of the assessee being exempt, the assessee is only claiming that depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purposes of the trust. There is no double deduction claimed by the assessee as canvassed by the Revenue. Judgment of the Hon ble Supreme Court in Escorts Ltd and another (supra) is distinguishable for the above reasons. It can not be held that double benefit is given in allowing claim for depreciation for computing income for purposes of Sec.11. The questions proposed have, thus, to be answered against the revenue and in favour of the assessee. 7. In view of above, we are unable to hold that the questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year in which it is realized. Section 41(2) as it stood at the material time stated that if in respect of any plant and machinery, any depreciation had been allowed and subsequently such plant and machinery was sold, discarded or destroyed, the assesse might get some value either as a result of sale or Insurance or from salvage or compensation thereabout. The necessity to keep section 41 (2) as a provision in addition to section 41(1) arose from the fact that in its very nature, depreciation is neither a loss, nor an expenditure, nor a trading liability, referred to in section 41 (1). The depreciation recovered on sale of the capital asset was includible in the total income as balancing charge only under section 41(2). That concept was foreign to the scheme of section 41(1). The balancing charge under section 41(2) arose only where any depreciable asset (building, machinery, plant or furniture) was sold In fact, when the concept of block of assets stood introduced with effect from 1-4-1988,section 41(2) stood deleted. However, even after 1-4-1988, the proviso to section 31(1)(ii) continued till 1.4.1996 when by the Finance (No.2)Act, 1995 the bottles and crates even below Rs 5,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or consideration as application of income in the subsequent years. I have perused the assessee s submissions. Each assessment year is independent and hence the expenses of one year cannot be treated as the expenses or application of income of the other year unless specifically provided for in the statutes. In the case of unabsorbed losses of one year can be carried forward to the subsequent years as per the specific provisions of sec.70 to 80 of the I.T Act. There are no specific provisions in the IT Act to carry forward the excess application of income of one year, to the subsequent years and treat as the application of that (subsequent) year. In the absence of any specific provisions, the general principle that each assessment year is independent is to be considered and hence it is not required/possible for the Revenue to quantify the excess application of income of any particular assessment year and allow it to be carried forward to the subsequent years. Therefore, there are no merits in the assessee s claim for quantification of the excess application of income of the earlier years and their carry forward position. Hence the assessee s contentions are not justified and re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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