9911796707
TMI Blog2013 (10) TMI 1482X X X X Extracts X X X X X X X X Extracts X X X X ..... I at Chennai, dated 19.3.2012 and 6.8.2012 respectively. They arise out of the assessments completed under Section 143(3) of the Income-tax Act, 1961. 2. The assessee is a charitable institution, engaged in the activities of running educational institutions. The assessee is granted registration under Section 12A. Being a charitable institution, the assessee claimed relief under Section 11, in the return filed for the impugned assessment years. In the course of assessment proceedings, the Assessing Officer found that the assessee has violated the provisions of Section 13(1)(c) of the Income-tax Act, 1961. The conclusion of the Assessing Officer regarding violation of Section 13(1)(c) was arrived at on the basis of her finding that the funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reflected in the accounts of the institution, going through opening balance, credits and debits during the concerned years and the closing balance. The Commissioner of Income Tax (Appeals) found that the assessee s way of accounting the transactions to receive the funds and pay back the funds to the specified persons, without netting of or squaring up, was only to facilitate a better understanding and to keep a track of transactions in a better manner. He ultimately held that the accounting of receipts and payments separately in the accounts of each of the persons specified in Section 13(3) of Income-tax Act, 1961, without squaring up or netting of and considering only the net balance at the end of the previous year, could not be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explained. It is seen that the assessee-Trust received money as and when there was no cash available with it. Actually, the trustees were helping the assessee to carry on its activities, when there was a shortage of funds. So, whether the balance in the name of a particular trustee is to be considered as the net figure for all the transactions entered in the name of different trustees or have to be treated as several transactions, is not at a relevant issue here. In fact, the assessee received money from the trustees for carrying on of its activities and those monies had been repaid to them or to their nominees as and when funds were available with assessee-Trust. Repayment of amounts to the nominees of creditors is nothing unlawful. 7. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uire the fixed asset is to be treated as application of funds for charitable purposes. 11. In the above circumstances, there is a misconception that an assessee, which is a charitable institution enjoying benefits under Section 11, is availing double benefits; one in the form of depreciation and the other in the form of application for the charitable purposes. 12. But, the above proposition is unfounded. Computing of income for arriving at normal income of the assessee and examining the application of funds for charitable purposes are two different segments. Depreciation is allowed in the first segment, while computing the income of the assessee as similar to any other assessees. It is from that income, the assessee is supposed to apply fun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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