TMI Blog2015 (12) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... tion - Held that:- When the assessee claims the cost of the capital expenditure as exemption under Section 11 of the Act, then the cost of the capital asset becomes NIL. Admittedly, depreciation under Section 32 of the Act has to be allowed only on written down value of the asset. When the written down value of the asset becomes NIL since the entire cost was allowed as application of income under Section 11 of the Act, this Tribunal is of the considered opinion that there cannot be any further claim for deduction under Section 32 of the Act. In view of the above, this Tribunal is of the considered opinion that the assessee is not eligible for deduction under Section 32 of the Act towards depreciation. However, it is made clear that the assessee is eligible for exemption under Section 11 of the Act for all the assessment years under consideration.- Decided against assessee. - ITA No. 1602/Mds/2014 - - - Dated:- 18-12-2015 - Shri N. R. S. Ganesan, Judicial Member And Shri A. Mohan Alankamony, Accountant Member For the Appellant : Shri A. B. Koli, JCIT For the Respondent : Sh. N. Devanathan, Advocate Sh. N. Muralidharan, CA Sh. S. Sridhar, Advocate ORDER Per N. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under Section 32 of the Act. The Ld. D.R. placed his reliance on the decision of this Bench of the Tribunal in the Anjuman-E-Himayath-E-Islam v. ADIT (Exemption) in I.T.A. No.2271/Mds/2014 dated 02.06.2015. The Ld. D.R. also placed his reliance on the decision of Delhi Bench of this Tribunal in ITO v. Delhi Bureau of Textbooks in I.T.A. Nos.2362-2363/Del/2010 dated 23.04.2015. 5. On the contrary, Shri S. Sridhar, the Ld. counsel for the assessee, submitted that admittedly the assessee was registered as charitable institution under Section 12AA of the Act. Subsequently, the registration was cancelled by an order dated 23.12.2011. The assessee challenged the order of cancellation before this Tribunal in I.T.A. No. 455/Mds/2012 dated 03.12.2013. The Tribunal found that when the assessee was granted registration as charitable institution and the object of the trust continues as it is, the registration cannot be cancelled. The Tribunal has also found that the receipt of cash through sale of tickets and rent on stalls, is incidental to the activity carried on by the assessee. The Ld. counsel clarified that the assessee is not doing any trading; the assessee is not selling any books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows:- Taking cue from the aforesaid case law, we hold that since the DIT(E) had already considered the charitable nature of assessee s objects at the time of granting registration and there is no change in the said factual position, impugned cancellation of registration under challenge does not hold good. So far as receipts in question are concerned, they are incidental to the activities carried out as per assessee s objects of conducting book fairs etc. In view of this finding of the Tribunal, the receipt in question is only incidental to the activity of the assessee. In fact, the registration granted to the assessee was cancelled on the ground that the assessee is collecting sale of tickets on book fair, rent on stalls and service tax. For the very same assessment year under consideration, this Tribunal found that the cancellation of registration is not justified. In view of the decision of co-ordinate Bench of this Tribunal, to which the Ld. Accountant Member is a party, this Tribunal is of the considered opinion that the collection of sale of tickets, rent on stalls and service tax are incidental to the main activity of the assessee. Therefore, it cannot be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Central Government under section 42: Provided further that where any asset referred to in clause (i) 6or clause (ii) or clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in that previous year, the deduction under this subsection in respect of such asset shall be restricted to fifty per cent. of the amount calculated at the percentage prescribed for an asset under clause (i) 6or clause (ii) or clause (iia), as the case may be: Provided also that where an asset being commercial vehicle is acquired by the assessee on or after the 1st day of October, 1998, but before the 1st day of April, 1999, and is put to use before the 1st day of April, 1999, for the purposes of business or profession, the deduction in respect of such asset shall be allowed on such percentage on the written down value thereof as may be prescribed. Explanation - For the purposes of this proviso,-- (a) the expression commercial vehicle means heavy goods vehicle , heavy passenger motor vehicle , light motor vehicle , medium goods v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to, and by way of renovation or extension of, or improvement to, the building, then, the provisions of this clause shall apply as if the said structure or work is a building owned by the assessee. Explanation - 2. For the purposes of this sub-section written down value of the block of assets shall have the same meaning as in clause (c) of sub-section (6) of section 43; Explanation - 3. For the purposes of this sub-section, 10the expressions assets shall mean-- (a) tangible assets, being buildings, machinery, plant or furniture ; (b) intangible assets, being know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature. Explanation - 4. For the purposes of this sub-section, the expression know-how means any industrial information or technique likely to assist in the manufacture or processing of goods or in the working of a mine, oil-well or other sources of mineral deposits (including searching for discovery or testing of deposits for the winning of access thereto) ; Explanation - 5. For the removal of doubts, it is hereby declared that the provisions of this sub-section s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the case may be, the amount of any insurance, salvage or compensation moneys payable in respect thereof (including the amount of scrap value, if any) the same proportion as the amount of twenty-five thousand rupees bears to the actual cost of the motor car to the assessee as it would have been computed before applying the said proviso ; (2) sold includes a transfer by way of exchange or a compulsory acquisition under any law for the time being in force but does not include a transfer, in a scheme of amalgamation, of any asset by the amalgamating company to the amalgamated company where the amalgamated company is 8an Indian company or in a scheme of amalgamation of a banking company, as referred to in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), with a banking institution as referred to in sub-section (15) of section 45 of the said Act, sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of that Act, of any asset by the banking company to the banking institution. (2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under sub-section (1) in any previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... XX-6) of 1968, dated 19-6-1968. Subject : Section 11-Charitable trusts-Income required to be applied for charitable purpose-Instructions regarding. In Board's Circular No. 2-P(LXX-5) of 1963, dated the 15th May, 1963, it was explained that a religious or charitable trust claiming exemption under section 11(1) of the Income- tax Act, 1961, must spend at least 75 per cent of its total income, for religious or charitable purposes. In other words, it was not permitted to accumulate more than 25 per cent of its total income. The question has been reconsidered by the Board and the correct legal position is explained below. 2. Section 11(1) provides that subject to the provisions of sections 60 to 63 the following income shall not be included in the total income of the previous year . . . . The reference in sub-section (a) is invariably to income and not to total income . The expression total income has been specifically defined in section 2(45) of the Act as the total amount of income . . . computed in the manner laid down in this Act . It would accordingly be incorrect to assign to the word income used in section 11(1)(a), the same meaning as has been specifically as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside the books of account of the trust unless it was written back which was not done by the assessee. It was not permissible for a charitable institution to generate income outside the books in this fashion and there would be violation of section 11(1)(a). It was for the assessee to write back the depreciation and if that was done, the Assessing Officer would modify the assessment determining higher income and allow recomputed income with the depreciation written back by the assessee to be carried forward for subsequent years for application for charitable purposes. Further Hon ble Calcutta High Court has held in the case DCIT VS. Girdharilal Shewnarain Tantia Trust reported in [1993] 199 ITR 15(Cal.) that The income contemplated by the provisions of section 11 is the real income and not the income as assessed or assessable. Respectfully following the decision of the Hon ble Kerala High Court and taking cue from the decision of the Hon ble Calcutta High Court, we do not find any hesitation to confirm the order of the Ld. CIT(A) and also the views expressed by him in his order. Accordingly this appeal is held in favour of the Revenue. 12. Apart from that, when th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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