9911796707
TMI Blog2015 (9) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... r disallowed the claim of the assessee on the ground that allowing depreciation would amount to double depreciation, by placing reliance on the judgment of the Apex Court in Escorts Ltd. and Another v. Union of India and Others (1993) 199 ITR 43. The Ld. representative placed his reliance on the decision of his Bench of the Tribunal in DDIT(Exemptions) v. Sri Rangalatchumi Educational Trust in I.T.A. No.1930/Mds/2014 dated 31.10.2014 and submitted that on identical circumstances, this Tribunal allowed depreciation. 3. Shri A. Kanagaraj, the Ld. representative for the assessee, further submitted that the next ground of appeal is with regard to adjustment of excess amount spent towards charitable purposes. According to the Ld. representative, the assessee has applied excess amount over and above the income, the same has to be allowed during the year under consideration. According to the Ld. representative, the expenditure incurred in the earlier year has to be allowed as application of income for the year under consideration. 4. I heard Sh. P. Radhakrishnan, the Ld. Departmental Representative also. Admittedly, the assessee is a charitable institution and the assessee is not doing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed for an asset under clause (i) 6or clause (ii) or clause (iia), as the case may be: Provided also that where an asset being commercial vehicle is acquired by the assessee on or after the 1st day of October, 1998, but before the 1st day of April, 1999, and is put to use before the 1st day of April, 1999, for the purposes of business or profession, the deduction in respect of such asset shall be allowed on such percentage on the written down value thereof as may be prescribed. Explanation - For the purposes of this proviso,-- (a) the expression "commercial vehicle" means "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle" and "medium passenger motor vehicle" but does not include "maxi cab", "motor-cab", "tractor" and "road-roller" ; (b) the expressions "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle", "medium passenger motor vehicle", "maxi-cab", "motor-cab", "tractor" and "road-roller" shall have the meanings respectively as assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988). Provided also that, in respect of the previous year relevant to the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... niture ; (b) intangible assets, being know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature. Explanation - 4. For the purposes of this sub-section, the expression "know-how" means any industrial information or technique likely to assist in the manufacture or processing of goods or in the working of a mine, oil-well or other sources of mineral deposits (including searching for discovery or testing of deposits for the winning of access thereto) ; Explanation - 5. For the removal of doubts, it is hereby declared that the provisions of this sub-section shall apply whether or not the assessee has claimed the deduction in respect of depreciation in computing his total income ; (iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing, a further sum equal to twenty per cent. of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii) : Provided that no deduction shall be allowed in respect of-(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany is 8an Indian company or in a scheme of amalgamation of a banking company, as referred to in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), with a banking institution as referred to in sub-section (15) of section 45 of the said Act, sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of that Act, of any asset by the banking company to the banking institution. (2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of section 72 and subsection (3) of section 73, the allowance or the part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome as shown in the accounts of the undertaking. Under section 11(4), any income of the business undertaking determined by the Income-tax Officer in accordance with the provisions of the Act, which is in excess of the income as shown in its accounts, is to be deemed to have been applied to purposes other than charitable or religious, and hence it will be charged to tax under sub-section (3). As only the income disclosed by the account will be eligible for exemption under section 11(1), the permitted accumulation of 25 per cent will also be calculated with reference to this income. 4. Where the trust derives income from house property, interest on securities, capital gains, or other sources, the word "income" should be understood in its commercial sense, i.e., book income, after adding back any appropriations or applications thereof towards the purposes of the trust or otherwise, and also after adding back any debits made for capital expenditure incurred for the purposes of the trust or otherwise. It should be noted, in this connection, that the amounts so added back will become chargeable to tax under section 11(3) to the extent that they represent outgoings for purposes other tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of The Anjuman-E-Himayath-E-Islam (supra) and the reason stated therein, the orders of the lower authorities are upheld. 6. Now coming to the excess application, an identical factual situation was considered by the Division Bench of this Tribunal in The Anjuman-E-Himayath-E-Islam (supra). This Tribunal found that excess application of income cannot be allowed since it is not the case of the assessee that the money was generated in the course of charitable activity. In fact, this Tribunal observed as follows:- "4.5. Application of fund by any charitable institution is possible only from the following sources:- i) Voluntary contributions received by the Trust towards its corpus, ii) Other voluntary contributions, iii) Accumulated fund, iv) Amount received by way of loan, v) Sundry creditors, vi) "Income" derived from the "Property" held under the Trust. [Hon'ble Calcutta High Court has held in the case DCIT VS. Girdharilal Shewnarain Tantia Trust reported in [1993] 199 ITR 15(Cal.) that "The "income" contemplated by the provisions of section 11 is the real income and not the income as assessed or assessable". Further, Hon'ble Apex High Court has held in the case of J. K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, it appears that the assessee trust's gross receipts is ' 5,11,60,794/- and the assessee trust have spent ' 5,35,57,149/- which shows that the assessee trust has spent ' 23,96,355/- more than its income received during the relevant year. This amount of ' 23,96,355/- may have been taken out from the 'corpus funds', 'accumulated funds', 'loan' obtained by the assessee trust or arising out of 'Sundry Creditors'. Therefore it is obvious that there is no excess application of income over and above the income received by the trust, hence the question of carry forward of excess application of income does not arise. However the amount applied from the 'Loan' or 'Sundry Creditors' will be allowed as application of fund in the year in which such 'Loan' or 'Sundry Creditors' are repaid. It is pertinent to mention that if the amount is applied from the 'Corpus fund' or 'accumulated fund' it will not be treated as application of fund because 'Corpus fund' and 'accumulate fund' are already exempt from the income of the Trust and once again if it is treated as application of fund it would amount to double deduction. Therefore the claim of the assessee to carry forward the excess application of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
