9911796707
TMI Blog2016 (5) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.6.2009, Annexure A.1 passed by the Income Tax Appellate Tribunal, Amritsar Bench (in short, "the Tribunal") in ITA No.223 (ASR)/2009 for the assessment year 2004-05, claiming following substantial question of law:- "Whether in the facts and circumstances of the case, the Hon'ble Income Tax (Appellate) Tribunal was correct in law in denying the exemption under section 11 of the Act on capital expenditure incurred by the assessee on objects of general public utility contrary to the judgment of the Hon'ble Apex Court in S.RM.M.CT.M Teruppani Trust vs. CIT reported in (1998) 230 ITR 636?" 3. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed.The appellant-assessee was register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in S.RM.M.CT.M Teruppani Trust's case (supra), was not applicable as the assessee had not brought out any material to suggest that the said amounts were spent for charitable purpose. The Tribunal declined the exemption under Section 11 of the Act only on the ground that the expenditure being capital in nature, the assessee was not entitled to exemption. Hence the instant appeal by the appellant-assessee. 4. We have heard learned counsel for the parties. 5. Learned counsel for the appellant-assessee submitted that the issue involved in this appeal stands concluded by the judgment of this Court in Pinegrove International Charitable Trust vs. Union of India and others, (2010) 327 ITR 73 wherein the judgment of the Apex Court in S.RM.M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of an educational institution, capital expenditure is to be deducted, whenever the institution like the petitioner-society applies its income for the achievement of its object. The word 'applies its income' means 'to put to use' or 'to turn to use' or 'to make use' or 'to put to practical use' (see CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal, 211 ITR 293 (Guj)]. The aforesaid view is further supported from a bare perusal of clause 11 of Form No. 56D of the Rules, which is required to be filed in terms of the provisions of Rule 2CA when viewed in the light of the judgment rendered by Hon'ble the Supreme Court and the High Court of Delhi in the cases of S.R.M.M. CT. M. Tiruppani Trust v. CIT, [1998] 230 ITR 636 and CIT v. Divine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted from the total income of the Trust for the purposes of finding out how much has been accumulated by the assessee-Trust. Thus, both on principle and precedents the capital expenditure is to be deducted from the gross income of the educational institutions like the petitioner-society. Admittedly, in the present case of the petitioner-society the application of income is more than 100% for the attainment and achievement of its objects in the last three years, a fact not disputed by the Chief Commissioner of Income Tax. The petitioner-society, when admittedly having utilized more than 100% of the income for achieving its objects, could by no stretch of imagination be held to be an educational institution existing for the purposes of making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs. 8 lakhs does constitute that income of the assessee-Trust. But this income was required to be invested in Government securities in view of the declaration filed by the assessee under Section 11(2). Since the amount is not so invested, the benefit of Section 11(1)cannot be extended to the assessee. This is the only submission we have to consider. A mere look at Section 11(1) and 11(2) is sufficient to dispel this argument. Under Section 11(1), every Charitable or Religious Trust, irrespective of whether it has filed a declaration under Section 11(2) or not, is entitled to deduction of certain income from its total income of the previous year. The income so exempt is the income which is applied by the Charitable or Religious Trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption of this additional accumulated income also, the assessee is required to invest the additional accumulated income in the manner laid down in Section 11(2) after following the procedure laid down therein. In the present case the assessee is not claiming any benefit under Section 11(2) as it cannot; because in respect of this assessment year, the assessee has not complied with the conditions laid down in Section 11(2). The assessee, however, is entitled to claim the benefit of Section 11(1)(a). In the present case, the assessee has applied Rs. 8 lakhs for charitable purposes in India by purchasing a building which is to be utilised as a hospital. This income, therefore, is entitled to an exemption under Section 11(1). In addition, under ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
