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2017 (6) TMI 498 - AT - Income TaxDisallowance of depreciation to assessee trust - Held that:- Depreciation is the exhaustion of the effective life of a fixed asset owing to 'use' or obsolescence.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. See Director of Income-tax, Exemptions v.Al- Ameen Charitable Fund Trust [2016 (3) TMI 462 - KARNATAKA HIGH COURT] Net receipts v. gross receipts in computation of application of income - Accumulation at 15% on gross receipts should be considered u/s.11(1)(a), and not on net receipts. See Jyothy Charitable Trust Versus The DCIT [2015 (11) TMI 1295 - ITAT BANGALORE] Treatment of unutilised grants as income - Held that:- The conclusion recorded by the CIT (A) do not clearly suggest that the inference was drawn by the CIT (A) based on the material already existing on record with the AO. In our view, it would always be advisble hat the first appellate authority should seek a remand report, in case the factual matrix are not clear from the records, from the AO. In the light of the above, we remand the matter to the file of the CIT (A) with a direction to seek a remand report from the AO on this issue, i.e., whether the grants received from other agencies including AICTE, were utilised for the specific purposes or not and whether the assessee has kept the said grants received by it in a separate bank account and has not merged the same with the regular account of the assessee. Claim for acquisition of capital assets from the borrowed fund - investment in fixed asset by using the loan - Held that:- Section 11 only contemplates the application of income and if the said income is applied for the aims and objectives of the trust, then the trust is entitled for exemption under the provision. The said analogy cannot be extended to acquisition of assets from the borrowed funds. If we hold so, then we would be equating the borrowed fund with the income of the trust. Under the law, it is the application of income and not of the fund that is required to be seen for the purpose of granting the exemption. In fact, the assessee would be entitled to exemption in view of the judgment in the matter of Janmabhoomi Press Trust (1999 (12) TMI 51 - KARNATAKA High Court), as and when the loan is repaid to the financial institutions. In view thereof, if the claim of the assessee that the borrowed funds were utilised for the objects of the trust, is entertained and accepted at this stage, it would tantamount to double benefit which cannot be the intention of the statute. CIT (A) erred in allowing the claim for acquisition of capital assets from the borrowed fund. - Decided in favour of revenue
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