TMI Blog2010 (7) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee - I.T.A. No.151 of 2010 - - - Dated:- 5-7-2010 - MR. JUSTICE ADARSH KUMAR GOEL, MR. JUSTICE AJAY KUMAR MITTAL, JJ. Mr. Yogesh Putney, Sr. Standing Counsel for the revenue. Mr. Rajesh Garg, Advocate for the assessee. ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (for short, the Act ) against the order of Income Tax Appellate Tribunal, Chandigarh Bench B Chandigarh dated 22.5.2009 in I.T.A. No.358/CHD/ 2009 for the assessment year 2006-07, proposing to raise following substantial questions of law:- 1. Whether on the facts and in the circumstances of the case, the learned ITAT was justified in holding that the expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act as charitable trust. The Assessing Officer disallowed the amount of contribution paid to the Marketing Board on the ground that proof of expenditure of the amount given as contribution to the Marketing Board was not provided. Claim of depreciation calculated as per statutory provisions was also disallowed on the ground that since income of the assessee was exempt from tax under Sections 11 to 13, allowing depreciation to ascertain whether 85% of funds were applied for purposes of trust, will amount to conferring double benefit. This view was reversed by the CIT(A). It was held that for computation of income, depreciation had to be allowed. As regards payments made to the Marketing Board, it was held that the same were as per statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- transferred by the appellant to the Board. (c) The application of funds for charitable purposes works is below 85% of the income of the appellant (this is after taking into account the relief given in respect of ground of appeal no.1). Even if the depreciation of Rs.233472/- is included in the application of funds (otherwise it is not application of funds), the appellant does not fulfill the condition of 85% of the utilization of money for charitable purposes. Therefore, the AOs version is correct and the ground of appeal is dismissed. 3. The Tribunal affirmed the order of the CIT(A). 4. We have heard leaned counsel for the parties. 5. Learned counsel for the revenue submits that depreciation could not be allowed when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying the income for charitable purposes, even capital expenditure may be incurred. Therefore, the nature of the expenditure in the hands of the entity which receives the money is not the criterion. So long as the assessee disburses the amount for charitable purposes, whether the amounts are utilised for capital or revenue purposes by the charity concerned, the assessee would have complied with that part of the requirement of s.11, namely, application of the income for charitable purposes. The authorities will have to find out as to whether they are really charitable purposes or not. Subject to such examination, the application of the income for charitable purposes will have to be excluded and it is only the balance that would require exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced to find out what the income derived from the property held under trust to be excluded from the total income is, for the purpose of the exemptions under Chap.III. 7. We have considered the rival submissions. We are in agreement with the view taken by Madras, M.P., Gujarat, Karnataka and Bombay High Courts referred to above. Judgment of the Hon ble Supreme Court in Escorts Ltd. and another is distinguishable. Moreover, in I.T.A. No.535 of 2009 The Commissioner of Income Tax, Karnal v. Market Committee, Pipli, decided today dealing with similar matter, we have upheld the view taken by the Tribunal. In this view of the matter, questions proposed have, thus, to be answered against the revenue and in favour of the assessee. The appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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