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TMI Blog2016 (7) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the appellants fairly concedes that the Tribunal in the impugned order has relied upon its decision in the case of ACIT vs- Shri Adichunchunagiri Shikshana Trust in ITA Nos.774 775 (Bang) 2011. 4. Learned counsel further brought to our notice that the aforesaid decision of the Tribunal was challenged by the Department before this Court in ITA No.1/2013. This Court vide order dated 22.02.2016 has dismissed the appeal. 5. We may record that this Court in the aforesaid decision dated 22.02.2016 had observed thus: These appeals are filed by the revenue under Section 260-A of the Income Tax Act, 1961( the Act for short) challenging the orders passed by the Income Tax Appellate Tribunal, Bangalore Bench. 2. Since, common question of law is raised in all these appeals, the matters are heard together and disposed of by this common Judgment. 3. The assessees in all these appeals are the charitable institutions registered under Section 12AA and 10(23)(c) of the Act. The question herein revolves around Section 11 of the Act. For the purpose of narrating the facts, we are considering ITA No.62/2010. The assessments for the assessment year 2005-06 were conclude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the capital asset is already allowed as application of income in the year of such acquisition. Claim of deduction by way of depreciation on the same capital asset in the subsequent years results in allowing double deduction contrary to the scheme of the Act. It is further contended that depreciation has to be computed in terms of Section 32 of the Act. He also places reliance on Section 37 of the Act to point out that any expenditure not being expenditure of the nature described in Sections 30 to 36, not being in the nature of capital expenditure or personal expenses of the assessee expended wholly and exclusively for the purposes of business or profession shall be allowed in computing the income chargeable under the head Profit and gains of business or profession . Applying the same analogy if, application of income is allowed under Section 11 of the Act, no depreciation can be allowed under Section 32 of the Act. Reliance is placed on Section 11(6) of the Act inserted by the Finance Act No.2, Act 14 with effect from 01.04.2015 to contend that the said amendment applies retrospectively being clarificatory in nature. Learned counsel for the revenue placed reliance on the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s considered by this Court as far back as in the year 1984, in the case of Society of the Sister s of St.Anne (supra) wherein the Division Bench of this Court has held thus: 9. It is clear from the above provisions that the income derived from property held under trust cannot be the total income because S.11(1) says that the former shall not be included in the latter, of the person in receipt of the income. The expression total income has been defined under S.2(45) of the Act to mean the total amount of income referred to in S.5 computed in the manner laid down in this Act . The word income is defined under S. 2(24) of the Act to include profits and gains, dividends, voluntary payment received by trust, etc. It may be noted that profits and gains are generally used in terms of business or profession as provided u/s. 28. The word income , therefore, is a much wider term than the expression profits and gains of business or profession . Net receipt after deducting all the necessary expenditure of the trust (sic). 10. There is a broad agreement on this proposition. But still the contention for the Revenue is that the depreciation allowance being a notional income (exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee 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., Anr. (supra) is distinguishable for the above reasons. It cannot be held that double benefit is given in allowing claim for depreciation for computing income for purposes of section 11. The questions proposed have, thus, to be answered against the Revenue and in favour of the assessee. 17. High Court of Bombay in the case of Institute of Banking (supra) after placing reliance on the Judgment of CIT vs Muniswarat Jain (1994 TLR 1084 ) on an identical issue, held:- In that matter also, a similar argument, as in the present case, was advanced on behalf of the revenue, namely, that depreciation can be allowed as deduction only under section 32 of the Income Tax Act and not under general principles. The court rejected this argument. It was held that normal depreciation can be considered as a legitimate deduction in computing the real income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vanish and all the provisions will fall into place, if we hear in mind a fundamental, through unwritten, axiom that no legislature could have at all intended a double deduction in regard to the same business outgoing, and if it is intended it will be clearly expressed. In other words, in the absence of clear statutory indication to the contrary, the statute should not be read so as to permit an assessee two deductions both under S.10(2)(vi) and S.10(2)(xiv) under the 1922 Act or under S.32(1)(ii) and 35(2)(iv) of the 1922 Act - qua the same expenditure. Is then the use of the words in respect of the same previous year in clause (d) of the proviso to S.10(2) (xiv) of the 1922 Act and S. 35(2) (iv) of the 1961 Act contra-indication which permits a disallowance of depreciation only in the previous years in which the other allowance is actually allowed. We think the answer is an emphatic `no' and that the purpose of the words above referred to is totally different. If, as contended for by the assessees, there can be no objection in principle to allowances being made under both the provisions as their nature and purpose are different, then the interdict disallowing a double deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6) In this section where any income is required to be applied or accumulated or set apart for application, then, for such purposes the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an application of income under this section in the same or any other previous year. 22. The plain language of the amendment establishes the intent of the legislature in denying the depreciation deduction in computing the income of Charitable Trust is to be effective from 1.4.2015. This view is further supported by the Notes on Clauses in Finance [No.2} Bill, 2014, memo explaining provisions and circulars issued by the Central Board of Direct Taxes in this regard. Clause No.7 of the Notes on Clauses reads thus: Clause 7. of the Bill seeks to amend section 11 of the Income-tax Act relating Income from property held for charitable or religious purposes. The existing provisions of the aforesaid section contain a primary condition that for grant of exemption in respect of income derived from property held under trust, such income should be applied for the charitable purposes in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Township [P] Ltd., s case [supra], had laid down general principles concerning retrospectivity in Paragraphs 33 and 34, and the same is extracted hereunder: 33. We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India Ors. v. Indian Tobacco Association, the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay v. State of Maharashtra Ors. It was held that where a law is en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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