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TMI Blog2015 (3) TMI 1289X X X X Extracts X X X X X X X X Extracts X X X X ..... & 242/JP/2014, ITA Nos. 254 & 255/JP/2014 - - - Dated:- 13-3-2015 - T. R. Meena (Accountant Member) And R. P. Tolani (Judicial Member) For the Assessee : G. G. Mundra, C.A. For the Revenue : Rajesh Ojha, JCIT-DR ORDER R. P. Tolani (Judicial Member) This is a set of cross appeals filed against two different orders of ld. CIT(A)1, Jaipur dated 31-10-2014 for the assessment year 2004-05 and 2009-10 respectively. The grounds raised are narrated as under:- Grounds raised by the assessee for 2004-05 1. That the ld. CIT(A) is wrong, unjust and has erred in law in holding the proceedings u/s 147/148of I.T. Act, 1961 initiated in the case of assessee trust by AO are not wrong and bad in law. 2.1 The ld. AR of the assessee has not pressed this ground at the time of hearing. Hence, it is dismissed being not pressed. Rest of the grounds for AYs 2004-05 and 2009-10 are common assailing the denial of application of benefits u/s 11 and 12 of I T Act to this charitable hospital on the purported violation of sec. 13(1)(d), same are as under: 1. That ld. CIT(A) is wrong, unjust and has erred in law in holding that provisions of Section 13(1)(d) of I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier years. 2.3 Apropos the contested grounds of the assessee; i.e. refusing the benefits of exemption u/s 11 and 12 of the Act on the alleged issue of violation of sec. 13(1)(d) in respect of TISCO shares; it is claimed that same stands decided in favour of the assessee by this Bench order dated 5-11-2014 in ITA No. 169/JP/2012 wherein the ITAT has decided the issue in favour of the assessee by following observations. 4.7 We find merit in the contention of ld. Counsel for the assesse that the proposition of apportionment of income eligible for benefits u/s 11 and 12 between exempted or non exempted income is upheld by Hon ble Supreme Court in Dawoodi Bohra Trust (supra). Thus Hon ble Supreme court has rationally dealt with this situation and instead of denying the entire benefits of sec 11 and 12 even for a technical, venial or smaller breach a sound and reasonable proposition has been laid down. In view of the foregoings we have no hesitation to hold that the entire benefits of sec. 11 and 12 cannot be forfeited from the trust and the corresponding dividend income from TISCO shares will not be eligible for Benefits of sec. 11 and 12. 5.1 Now we advert to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can claim depreciation on assets acquired out of application of trust income, irrespective of the facts that cost of purchase is out of application of income exempt u/s 11 and 12 of the Act. Following are the case laws relied:- a. In ITO. v. S.S. Jain Subodh Shiksha Samiti in [ITA No. 250/JP/2007 ] it was held: Where the society had claimed depreciation even when the cost of the assets have been treated as applied, it shall be treated as applied towards the income of the society. The word applied used in section 11 should be construed widely and not in a narrow sense as held in : b. In ACIT vs. Bhopal Campion School Society [2011] 14 Taxmann.com 59 (Indore ) it was held: Even otherwise, depreciation allowance is a concession granted by the State in the computation of income based on many factors relevant to the wholesome fiscal administration. Depreciation represents the diminution in the value of an asset when applied to the purpose of making profit or gain. Depreciation is thus related to an asset and is a notional loss as against actual loss in the sense of outgoing of a business, meaning thereby, depreciation is a statutory allowance not confined expressly to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquisition of which has been claimed as an application of income under this section in the same or any other previous year. The memorandum explaining the amendment of above provision appended with Finance (No. 2) Act, 2014 explains the same as under: - The second issue which has arisen is that the existing scheme of section 11 as well as section 10 (23C) provides exemption in respect of income when it is applied to acquire a capital asset. Subsequently, while computing the income for purposes of these sections, notional deduction by way of depreciation etc. is claimed and such amount of notional deduction remains to be applied for charitable purpose. Therefore, double benefit is claimed by the trusts and institutions under the existing law. The provisions need to be rationalized to ensure that double benefit is not claimed and such notional amount does not get excluded from the condition of application of income for charitable purpose. In view of the above, it is also proposed to amend the Act to provide that under section 11 and 10 (23C), income for the purposes of application shall be determined without any deduction or allowance by way of depreciation or otherwise i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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