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TMI Blog2014 (1) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... dication in accordance with the decision in General Insurance Corporation of India vs. DCIT [2011 (12) TMI 70 - BOMBAY HIGH COURT]. Whether depreciation on fixed assets claimed as application of income be double deduction - Held that:- Following Lissie Medical Institutions vs. CIT [2012 (4) TMI 115 - KERALA HIGH COURT] - Assessee is not claiming double deduction on account of depreciation as has been held by the Revenue Authorities - 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 purpose of Trust - There is no double deduction claimed by the assessee - Decided in favour of assessee. Denial of claim of adjustment of carry forward of excess application of income - Held that:- The assessments for the earlier assessment years (i.e. 2003-04) are still pending before the A.O. in which the Tribunal has directed the A.O. to allow exemption as a result of registration u/s 12AA which is now available to the assessee - The issue has been restored for fresh adjudication in view of the decision of the Tribunal. Interest u/s 234D - Held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee which was not objected to by the ld. D.R. 7. That being so and in the absence of any supporting material placed on record by the ld. Counsel for the assessee, the above grounds taken by the assessee are, therefore, rejected being not pressed. 8. Ground No. 3 is against the sustenance of addition u/s 14A of the Act. 9. Brief facts of the above issue are that it was observed by the A.O. that the assessee has shown income from UTI bonds at Rs. 10,41,02,402/- as tax free income u/s 10(35) of the Act. According to the A.O. as per provisions of section 14A of the Act, for the purpose of computing total income under this chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to the income, which does not form part of the total income under the Act. The assessee was asked as to why disallowance should not be made u/s 14A r.w.s. Rule 8D. In response, it was submitted by the assessee that there is no direct expenditure to earn this income as the assessee has to compulsorily invests the surplus in the reserves and has to invest this in specified assets. It was further submitted that the figure of investment is the same as was there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be excluded by computing the income u/s 11(1) of the Act. The A.O. further observed that exclusion of such income from gross receipts means that this income is not available for application as per provisions of section 11(1)(a) of the Act. He further observed that even if the income is exempted, this has to be included in the gross receipts and has to be applied as per provisions of section 11(1) of the Act because the income has to be computed in commercial manner and not as per provision of section 14 of the Act. The A.O. while relying on certain decisions rendered on the agricultural income held that the income earned from bonds of UTI amounting to Rs. 10,41,02,402/- has to be treated as income of business undertaking which is a property held under trust and has to be applied as accumulated as per provision of section 11(1) and 11 (2) of the Act and accordingly worked out the income chargeable to tax as per calculation appearing at para 7.3 at page 26-27 of the assessment order at Rs. 146,67,10,413/-. On appeal, the ld. CIT(A) while upholding the views of the A.O. dismissed the ground taken by the assessee. 14. At the time of hearing the ld. Counsel for the assessee whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per Act including depreciation on the asset purchased in the year amounting to Rs. 49.05 crores. The assessee has also debited an amount of Rs. 1,20,37,104/- which are fixed assets of less than Rs. 1 lakh each into revenue account and has claimed depreciation. Thus the total addition on the fixed asset comes to Rs. 50,26,34,234/-. The assessee has treated the entire amount as application of income. However, the A.O. relying on the decision of Hon ble Supreme Court in Escorts India Ltd. Vs. Union of India (1993) 199 ITR 43 (SC) held that no double deduction is allowable and hence an amount of Rs. 2,29,54,563/- is not treated as application of income. On appeal the ld. CIT(A) after considering the decision in CIT vs. Institute of Banking Personal Selection, 131 Taxman 386 (Bom) while observing that the claim of the assessee of depreciation on application of income amounts to double deduction, upheld the disallowance made by the A.O. 20. At the time of hearing the ld. Counsel for the assessee submits that in view of the decision of the Hon ble Bombay High Court in the case of CIT vs. Institute of Banking Personal Selection (2003) 264 ITR 110 (Bom) the issue is covered in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me for purposes of section 11. The questions proposed have, thus, to be answered against the Revenue and in favour of the assessee . 15. In the absence of any distinguishing feature brought on record by the Revenue, we respectfully following the consistent view of the Hon ble jurisdictional High Court (supra), which is binding on us and the consistent view of the co-ordinate Benches of the Tribunal including the decision in GKR Charities (supra) wherein the Tribunal after considering the decision cited by the ld. D.R. in Lissie Medical Institutions, Kochi has held that it is settled principle of law that where there are two different decisions of High Courts, one favourable to the assessee should be followed, upheld the order of the ld. CIT(A) in deciding the issue in favour of the assessee and accordingly we are inclined to uphold the finding of the ld. CIT(A) in deleting the disallowance made by the A.O. The ground taken by the Revenue is, therefore, rejected . 23. In ACIT vs. Shri Adichunchanagiri Shikshana Trust (2012) 19 ITR (Trib)828 (Bangalore) the Tribunal after considering the decisions including the decision in Dy. Director of Income Tax (Exemptions) v. Lissie Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It has been discussed in the assessment order in para 8 and 9 that, the judgments given by the appellant are not applicable in his case as the exemption u/s 11 was not claimed by assessee and returns barred by time limitation, therefore, question of excess application does not arise. Moreover, the working of application of income by assessee is incorrect as discussed in the order. 27. On appeal, the ld. CIT(A) upheld the action of the A.O. 28. At the time of hearing, the ld. Counsel for the assessee submits that the ld. CIT(A) has erred in not directing the A.O. to allow the claim of adjustment of carry forward of excess application of income of the earlier years claimed for the computation of total income. He, therefore, submits that the claim made by the assessee be allowed. 29. On the other hand, the ld. D.R. supports the order of the A.O. and the ld. CIT(A). 30. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that it has been held by the A.O. that the exemption u/s 11 in the earlier years was notclaimed by the assessee and the returns are barred by limitation, therefore, the question of excess appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be borne in mind is that till such time as the assessment proceedings are completed in respect of any assessment year, the amendment made to the Act would be applicable even in case of pending proceedings. It is not the case of the respondent that the proceeding in regard to refund which has been granted under section-143(1) of the Act are concluded and final. The refund which has been granted under section 143(1) of the Act is provisional, to be finally determined when final assessment order is passed under section 143(3) of the Act. Explanation-2 to section 234D of the Act makes it clear that it would be applicable to pending proceedings i. e. where assessments in respect of such assessment year is not completed on 1/6/2003 . 36. Recently the Special Bench of the Tribunal in Kotak Mahindra Capital Co. Ltd. vs. ACIT (2012) 138 ITD 57 (Mum) [SB] has also considered the similar issue and has held vide para 48 of the order as under:- 48. As regards the issue involved in ground no.3 relating to levy of interest u/s.234D, it is observed that Explanation 2 has been inserted in sec.234D by the Finance Act, 2012 with retrospective effect from 1.6.2003 clarifying that the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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