TMI Blog1994 (7) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the Assessing Officer to allow depreciation following the decision of the Hon'ble Delhi High Court in the case of Ghalib Institute [ITA No. 2314 (Delhi) of 1983] as also Karnataka High Court, in the case of CIT v. Society of Sisters of St. Anne [1984] 146 ITR 28. Against the order of CIT(A) revenue is in appeal before us. 4. At the time of hearing before us the learned DR relied upon the order of Assessing Officer and submitted that when the entire capital expenditure itself is allowable under section 11, in the year when fixed asset was acquired the disallowance of depreciation by the Assessing Officer was justified. She further submitted that again allowing of depreciation would amount to double deduction on the same asset. 5. On the other hand the learned counsel for the assessee submitted that depreciation is allowable in the case of trust and in this respect he relied upon the order of Karnataka High Court in Society of Sisters of St. Anne's case and Madhya Pradesh High Court--CIT v. Raipur Pallottine Society [1989] 180 ITR 579. 6. We have carefully considered the arguments of both the sides. In the case of Society of the Sisters of St. Anne's case, their Lordship of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an assessee two deductions--both under section 10(2)(vi) and section 10(2)(xiv) of the 1922 Act or both under section 32(1)(ii) and section 35(1)(iv) of the 1961 Act. These provisions mandate that the assessee should, in a case where the assessee qualifies for both the allowances, be granted the special allowance for scientific research and not the routine annual one for depreciation. Even before the 1980 Amendment, the 1961 Act did not permit a deduction for depreciation in respect of the cost of a capital asset acquired for purposes of scientific research to the extent that such cost had been written off under section 10(2)(xiv) of the 1922 Act or under section 35(1) and (2) of the 1961 Act, and there was no difficulty at all in the interpretation of the provisions. The 1980 Amendment has effected no change at all in the provisions except to set out more clearly and categorically what the provisions said even earlier." That the ratio of the above case, squarely applies when entire value of asset is allowed as an expenditure under section 11. In that case the assessee will not be entitled to claim depreciation on same asset. However, the DR could not show us that full value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be included in the total income. The assessee had filed copy of letter from the donor stating that donation was in the corpus of the society. The Assessing Officer treated this donation as income on the grounds: (i) The trust is not yet registered under section 12A. Even the application for registration was delayed. The application was filed on 3-6-1981, while it should have been filed prior to February 1979. (ii) The assessee has utilized the donation for meeting day-to-day obligation instead of keeping the same as capital. Thus we hold that the donation cannot be accepted as donation towards corpus. He also observed that donor and donee both institutions are meant to promote the Programmes' propounded by Maharishi Mahesh Yogi and therefore donor institution had given the donation towards corpus to save assessee (donee) from liabilities of income-tax. 10. Assessee's appeal on this point was rejected by CIT(A). The CIT(A) held that the character of appellant trust as to whether it is charitable or not is yet to be determined on the basis of its application under section 12A. In the circumstances the provision of section 2(24)(iia) are not attracted. 11. At the time of heari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Similar provision is in section 12 also which reads as under: "12. Any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purposes of section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly." From a plain reading of above two provisions it would be that voluntary contributions received by a trust are income subject to exception, i.e., contribution received towards corpus. To put it differently, all voluntary contributions received by the trust, other than contribution towards corpus, are income in the hands of recipient. We also find support from the decision of this Bench in the case of Dharma Pratishthanam's case. The Hon'ble Members after examining the issue in detail had held as under: "It, therefore, follows by a combined reading of section 2(24)(iia) and section 12 that voluntary contributions rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, even if the application was late, it has to be disposed of. If the concerned authority was pleased not to condone the delay, he could have rejected the application. However by not deciding the application in number of years and denying the benefit to the assessee only on the ground that it is not registered, would be unfair. It would amount to giving punishment to the assessee on account of inaction of the Department. 15. Another contention of the revenue is that the utilization of the donation received towards corpus, for meeting day-to-day obligation will change the character of donation and make it liable for income-tax. This issue was also considered by this Bench in the case of Dharma Pratishthanam 11 ITD 40. After examining the issue in depth, it was held :-- "We have read the relevant sections carefully and we find nothing in those sections even remotely suggesting the above view. Section 2(24) when it provided that the voluntary contribution should be made with a specific direction that they shall form part of the corpus of the trust or institution, in order that it is not to be treated as income, it was laying emphasis on the wish, will and desire of the donor. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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