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TMI Blog2015 (9) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. Since these aspects were not examined by the authorities below and the facts are not clear from the orders of the lower authorities with regard to activity of the assessee, this Tribunal is of the considered opinion that the Assessing Officer has to re-examine the issue and he has to bring out the entire facts with regard to object and activity of the assessee-society on record. Accordingly, the orders of the lower authorities are set aside and the entire claim of deduction under Section 11 of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the issue afresh in the light of the Memorandum of the assessee-society and the activity which is actually carried on by the assessee and thereafter decide the issue in accordance with law after giving reasonable opportunity to the assessee. - Decided in favour of assessee for statsitical purposes. Claim of depreciation on the asset on which the assessee claims deduction under Section 11 as application of income - Held that:- Section 32 of the Act, which provides for depreciation on capital asset falls under Chapter IV (D) of the Act. Section 32 of the Act which provides f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociety has established any educational institution, the Ld. Counsel submitted that the assessee has not established any educational institution, however, it has created fund for helping the needy students. 4. On the contrary, Sh. P. Radhakrishnan, the Ld. Departmental Representative, submitted that though the predominant object of the assessee is education, it is not known how the funds of the society was applied for charitable purpose. It is not clear from the orders of the lower authorities whether the assessee is running any educational institution or not. It is also not clear from the assessment order whether any funds were advanced to the students for carrying out the educational activities by the recognised institutions. Moreover, establishing and running a Working Women Hostel has nothing to do with education. According to the Ld. D. R., only the activity, which is incidental to the main activity, could be treated as charitable activity. In this case, the main activity is education, therefore, establishing and running a Working Women Hostel cannot be treated as an activity incidental to the main activity. 5. I have considered the rival submissions on either side and pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be computed only on the Written Down Value of the capital asset. Since the Written Down Value is NIL, on allowing the entire cost as application of income under Section 11 of the Act, the computation itself fails. The Ld. D. R. has placed reliance on the judgment of the Apex Court in J. K. Synthetics Ltd. v. Union of India (1993) 199 ITR 43 and also the judgment of Kerala High Court in Lissie Medical Institutions v. CIT (2012) to taxmann. Com 9. 9. On the contrary, Sh. A. S. Sriraman, the Ld. Counsel for the assessee, submitted that the taxable income of the assessee has to be computed in a commercial form after allowing all permissible deductions under the provisions of Income-tax Act. According to the Ld. counsel, depreciation under Section 32 of the Act is an allowance that has to be deducted for arriving at taxable income. If anything remains after allowing depreciation, the same has to be allowed under Section 11 of the Act as application of income. Referring to the decision of this Bench of the Tribunal in ITO v. KGISL Ltd. in I.T.A. No.1813/Mds/2012 dated 3.6.2013, the Ld. Counsel submitted that on identical circumstances, this Tribunal found that there are divergent ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the considered opinion that the assessee cannot claim depreciation, especially when the cost of asset was allowed as application of income under Section 11 of the Act. In fact, the Apex Court in J. K. Synthetics Ltd.(supra) had examined the issue and observed as follows at para 11:- For the reasons discussed above we are of the view that, even before the 1980-amendment, the Act did not permit a deduction for depreciation in respect of the cost of a capital asset acquired for purposes of scientific research to the extent such cost has been written off under section 10(2)(xiv)/35(1) and (2). Prior to 1968, such assets qualified for an allowance of one-fifth of the cost of the asset in five previous years starting with that of its acquisition and during these years the assessee could not get any depreciation in relation thereto. In respect of assets acquired in previous year relevant to the assessment year 1968-69 and thereafter, their cost was written off in the previous year of acquisition and no depreciation could be allowed in that year. This is clear from the statute. Equally, it is not envisaged, and indeed, it would be meaningless to say, that depreciation could be allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome from house property will not be attracted. However, provisions of section 22 to 27 of the Act will come into play when the assessee is not entitled to the benefit of Section-11(1)(a) of the Act and when such income of the Trust is chargeable to tax under the head income from house property . It is pertinent to mention here that Hon ble Calcutta High Court supra has held that income contemplated by the provisions of section 11 is the real income and not the income as assessed or assessable. Accordingly, while arriving at the rental income of the assessee-trust any expenditure incurred whatsoever related to the rental income has to be allowed as deduction and the net income which is the real income, will be treated as the income of the Trust. From our above discussion the ground raised by the assessee on this issue will not survive and therefore, the order of the Revenue is upheld. 12. In view of the above, the decision of this Tribunal in KGISL Trust may not be applicable to the facts of the case. Accordingly, the order of the CIT(Appeals) is set aside and that of the Assessing Officer is restored. A similar view was taken by Cochin Bench of this Tribunal in Shri Thomas Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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