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TMI Blog2020 (12) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee raised the following grounds of appeal as under: "(1). That on facts and in law the learned Commissioner of Income tax (Appeals) has grievously erred in confirming the disallowance of depreciation of Rs. 44,59,566/-. (2) That the learned CIT(A) has grievously erred in law and on facts in confirming the disallowance of claim under section11(1)(a) of the Act i.e. 15% of the total income before application of expenses. (3) The appellant craves leave to add, alter, amend any ground of appeal" 3. At the outset, for hearing the Learned Authorised Representative (Ld.AR) of the assessee has raised two grounds of appeal, both are covered in favour of the assessee. Ground No.1 which relates to disallowance of depreciation is covered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2005-06 and 2010-11 the assessing officer made similar additions, however on appeal before Ld. CIT(A) the disallowances were deleted. On further appeal before Tribunal the order of Ld. CIT(A) was upheld. The coordinated bench identical issue by following the order in case of Institute of Plasma Research in ITA No.1506/Ahd/2009 dated 21.02.2019, passed the following order: "6. We have heard both the parties, perused the material placed before us and gone through the orders of the authorities below. Respectfully following the ITAT judgment in the case of Institute of Plasma Research (supra), relying on judgment of Hon'ble jurisdictional High Court in the case of Sheth Manilal Ran Chhoddas Vishram Bhavan Trust (supra) and the amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Rs. 44.59 lakhs as depreciation. The assessee is also claiming accumulation of Rs. 1.13 crore and deficit is computed at Rs. 46.49 lakhs. The deduction under section 11 of the Act is admissible to the assessee only on the balance amount which remains after the expenses incurred on object. The AO of the view if the expenditure of the assessee is deducted from the total income, there will be no balance so as to claim deduction under section 11 of the Act. On appeal before the Ld. CIT(A), the action of AO was confirmed by following the decision of Mumbai Tribunal Dawat Institute of Dawoodi Bohra Community vs. ITO (Supra). 8. Before us, the Ld. AR of the assessee vehemently submitted that this ground of appeal is also covered by the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d allocated for the charitable or religious purposes or purposes it may be under section 11 (1)(a) of the Act. A sum of Rs. 66,24,580/- being 15% of the gross income even though the entire income has been applied on the object of the trust as an application of income and there left no income for accumulation. However, as requested by the learned Sr. DR that the facts are not cleared, the same can be verified by the AO but only verification of figures. Accordingly, we set aside the orders of the lower authorities and allow the appeal of the assessee. Consequently, the appeal for AY 2011-12 is exactly identic: and hence, taking a consistent view, we allow this appeal also." 10. We have further noted that in a recent decision Ahmedabad Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible to be carried forward for set off in subsequent assessment years having regard to statutory permission towards 15% accumulation under s. 11(1)(a)1l(1)(b) of the Act without any time limit. 8.2 To delineate on the issue, it may be pertinent to note that in order to be eligible for claiming exemption, it is essential that the income of the trust is applied for charitable objects. A charitable trust or institution is required to apply at least 85% of income derived from trust property towards charitable purposes. If the income spent on charitable or religious purposes during the previous year falls short of 85% of the income derived during the year, such shortfall may be subjected to tax in certain circumstances. Hence, a statutory obl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee to accumulate 15% for indefinite period in our view cannot operate as an obligation enforceable against it in the absence of accumulation. The method of computation of deficit to be truncated artificially 15% based on an entitlement (opposed to an obligation) as suggested by first appellate authority is totally devoid of any logic. This would tantamount to application of concession conferred on assessee in a reverse manner and thus put the assessee in a worser position in the event of accelerated application of receipts for salutary purposes. The action directed by CIT(A) has the effect of deprivation of concession granted and is repugnant to the intended outcome. The Pune Bench of Tribunal in Maharshi Karve Stree Shi kshan Samsthcu Karv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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