Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News What's New Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

COMMISSIONER OF INCOME TAX (EXEMPTIONS) , BANGALORE AND THE ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTIONS) , BANGALORE Versus M/s. BANGALORE BAPTIST HOSPITAL SOCIETY

Depreciation on assets put into use - assets have been claimed by the assessee as an application of income for charitable activities - Held that:- Allowing exemption on the application of income on the capital asset acquired during the relevant year and further, allowing depreciation in the subsequent years, at any stretch of imagination, could not be construed as double deduction. - Allowing depreciation in subsequent years, on the capital asset, which has already availed the benefit of ded .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee as canvassed by the Revenue. 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. - It is also to be noticed that while in the year of acquiring the capital asset, what is allowed as exemption is the income out of which such acquisition of asset is made and when depreciation deduction is allowed in the subsequent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y the Revenue apprehending double deduction is totally misconceived. - Section 11[6] of the Act is prospective in nature denying the depreciation deduction in computing the income of Charitable Trust and operates with effect from 01.04.2015. This is further clarified when compared with certain other provisions which have been made retrospectively in the same Finance Act. - Decided against revenue - ITA NO.3/2016 - Dated:- 16-6-2016 - MR. JAYANT PATEL AND R. B.SREENIVASE GOWDA, JJ. FOR THE AP .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

charitable activities and the amendment made in 2012 in I.T. Act will also hold that assessee is not entitled for depreciation on assets put to use?" 2. We have heard Mr. E.I. Sanmathi, learned Counsel appearing for the appellants-Revenue. 3. The learned Counsel for the appellants-Revenue fairly concedes that the similar questions came to be considered by this Court in case of The Director of Income Tax Vs. Al-Ameen Charitable Fund Trust in ITA No.62/2010and allied matters and vide its dec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. The assessees in all these appeals are the charitable institutions registered under Section 12AA and 10(23)(c) of the Act. The question herein revolves around Section 11 of the Act. For the purpose of narrating the facts, we are considering. The assessments for the assessment year 2005-06 were concluded under Section 144 of the Act denying exemption under Section 10(23) of the Act. The addition of income was made on account of disallowance of depreciation by the Assessing Officer. 4. Being agg .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

milarly, in ITA Nos. 233-234/2013, ITA No. 1/2013, ITA No. 433/2013, ITA No. 414/2010, on the assessment orders denying exemption under Section 11, read with Section 10(23c) of the Act and making an addition of income on account of disallowance of depreciation, the assessee preferred appeals which were allowed in favour of the assessee. Revenue challenged the said orders of the CIT(Appeals) before the Tribunal unsuccessfully. The orders passed by the Tribunal are challenged in these appeals. 8. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

epreciation is allowable under Section 11 of the Act, and there is no double claim of capital expenditure as held by the Assessing Officer and the principles enunciated by the Apex Court in Escorts Ltd., 199 ITR 43 was not applicable and the principles enunciated by this Hon'ble Court in Society of Sisters St. Ann's 146 ITR 18 was applicable?" 10. Heard the learned counsel appearing for the parties and perused the material on record. 11. Learned counsel Sri. K.V. Aravind appearing f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uted in terms of Section 32 of the Act. He also places reliance on Section 37 of the Act to point out that any expenditure not being expenditure of the nature described in Sections 30 to 36, not being in the nature of capital expenditure or personal expenses of the assessee expended wholly and exclusively for the purposes of business or profession shall be allowed in computing the income chargeable under the head 'Profit and gains of business or profession'. Applying the same analogy if, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

SSIE MEDICAL INSTITUTIONS vs. COMMISSIONER OF INCOME TAX ((2012) 348 ITR 0344) (3) ESCORTS LTD. vs. UNION OF INDIA ((1993) SC ITR Vol. 199) 12. On the other hand, learned counsel appearing for the assessee Sri. A. Shankar would contend that Chapter-III of the Act and Chapter-IV of the Act play in different fields. Sections 11 to 13(B) covered under Chapter-III of the Act, governs the manner of computation of total income and exemption by Charitable Trusts. Sections 14 to 59 governed by Chapter-I .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

but under normal commercial principles as laid down by the Courts. It is further contended that allowing exemption on the application of income on the capital asset acquired during the relevant year and further, allowing depreciation in the subsequent years, at any stretch of imagination, could not be construed as double deduction. 13. Mr. Parthasarthy, learned counsel appearing for the assessee in some of the appeals adopts the arguments advanced by Mr. A. Shankar. 14. Learned counsel appearing .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

E [(1984) 39 CTR (KAR) 9] [6] DIRECTOR OF INCOME TAX [EXEMPTION] Vs. COUNCIL OF SCIENTIFIC AND INDUSTRIAL RESEARCH in ITA No.331/2013 DD 27.11.2013 15. The question involved in this case is no more res integra. This question was considered by this Court as far back as in the year 1984, in the case of Society of the Sister's of St. Anne (supra) wherein the Division Bench of this Court has held thus: "9. It is clear from the above provisions that the income derived from property held unde .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

be noted that profits and gains are generally used in terms of business or profession as provided u/s. 28. The word "income", therefore, is a much wider term than the expression "profits and gains of business or profession". Net receipt after deducting all the necessary expenditure of the trust (sic). 10. There is a broad agreement on this proposition. But still the contention for the Revenue is that the depreciation allowance being a notional income (expenditure ?) cannot b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tc. In Spicer & Pegler's Book-keeping and Accounts, 17th Edn., pp. 44, 45 & 46, it has been noted as follows : "Depreciation is the exhaustion of the effective life of a fixed asset owing to 'use' or obsolescence. It may be computed as that part of the cost of the asset which will not be recovered when the asset is finally put out of use. The object of providing for depreciation is to spread the expenditure, incurred in acquiring the asset, over its effective lifetime; t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

MISSIONER OF INCOME-TAX, vs SETH MANILAL RANCHODDAS VISHRAM BHAVAN TRUST 198 ITR 598 [GUJ]; [4] COMMISSIONER OF INCOME-TAX, vs BHORUKA PUBLIC WELFARE TRUST [1999] 240 ITR 513 [CAL]; [5] COMMISSIONER OF INCOME-TAX, vs RAO BAHADUR CALAVALA CUNNAN CHETTY CHARITIES 135 ITR 485 (MAD)] [6] COMMISSIONER OF INCOME-TAX vs. MARKET COMMITTEE PIPLI [(2011) 238 CTR (P&H) 103 Allowing depreciation in subsequent years, on the capital asset, which has already availed the benefit of deduction in computing th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to be applied for the purposes of the trust. There is no double deduction claimed by the assessee as canvassed by the Revenue. Judgment of the Hon'ble Supreme Court in Escorts Ltd., & Anr. (supra) is distinguishable for the above reasons. 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. 17. High Court of Bo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

timate deduction in computing the real income of the assessee on general principles or under section 11(1)(a) of the Income Tax Act. The court rejected the argument on behalf of the revenue that section 32 of the Income Tax Act was the only section granting benefit of deduction on account of depreciation. It was held that income of a Charitable Trust derived from building, plant and machinery and furniture was liable to be computed in normal commercial manner although the Trust may not be carryi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d Judgment of the Bombay High Court, we answer question No. 1 in the affirmative i.e., in favour of the assessee and against the department." 18. The Judgment in Escorts Ltd. (supra) was rendered by the Apex Court in the context of Section 10(2)(vi) and Section 10(2)(xiv) of the 1922 Act or under Section 32(1)(ii) and Section 35(2)(iv) of the 1965 Act. It was the case of the assessee claiming a specified percentage of the written down value of the asset as depreciation besides claiming dedu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

no difference between the English and Indian Acts; the former also in terms prohibits depreciation only so long as the assets are used for scientific research. In our opinion, the other provisions of the Act to which reference has been made - some of which were inserted after the present controversy started - are not helpful and we have to construe the real scope of the provisions with which we are concerned. We think that all misconception will vanish and all the provisions will fall into place .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

expenditure. Is then the use of the words "in respect of the same previous year" in clause (d) of the proviso to S.10(2) (xiv) of the 1922 Act and S. 35(2)(iv) of the 1961 Act contra-indication which permits a disallowance of depreciation only in the previous years in which the other allowance is actually allowed. We think the answer is an emphatic 'no' and that the purpose of the words above referred to is totally different. If, as contended for by the assessees, there can be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

anted under the provision relating to scientific research. The statute does not permit this. The restriction imposed would, therefore, be illogical and unjustified on the basis suggested by the assessees. On the other hand, if we accept the principle we have outlined earlier viz. that, there is a basic legislative scheme, unspoken but clearly underlying the Act, that two allowances cannot be, and are not intended to be, granted in respect of the same asset or expenditure, one will easily see the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uted under Chapter III of the Act. Accordingly, the judgment of Lissie Medical Institutions [supra] based on Escorts Ltd., [supra], is not applicable to the facts of the present case. 20. It is also to be noticed that while in the year of acquiring the capital asset, what is allowed as exemption is the income out of which such acquisition of asset is made and when depreciation deduction is allowed in the subsequent years, it is for the losses or expenses representing the wear and tear of such ca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

.2015 by Finance Act No. 2/2014, reads as under: "(6) In this section where any income is required to be applied or accumulated or set apart for application, then, for such purposes the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an application of income under this section in the same or any other previous year." 22. The plain language of the amendment establishes the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ble or religious purposes. The existing provisions of the aforesaid section contain a primary condition that for grant of exemption in respect of income derived from property held under trust, such income should be applied for the charitable purposes in India, and where such income cannot be so applied during the previous year, it has to be accumulated in the prescribed modes. It is proposed to insert sub-sections (6) and (7) in the said section so as to provide that- (i) where any income is req .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n 12A [as it stood before is amendment by the Finance (No. 2) Act, 1996] and the said registration is in force for any previous year, then, nothing contained in section 10 [other than clause (1) and clause (23C) thereof] shall operate to exclude any income derived from the property held under trust from the total income of the person in receipt thereof for that previous year. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

charitable purpose. Therefore, double benefit is claimed by the trusts and institutions under the existing law. The provisions need to be rationalized to ensure that double benefit is not claimed and such notional amount does not excluded from the condition of application of income for charitable purpose". 23. Paragraphs 7.5, 7.5.1, 7.6 of Central Board of Direct Taxes Circular reported in 371 ITR 22 makes it clear that the said amendment shall take effect from 1.4.2015 and will accordingly .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India & Ors. v. Indian Tobacco Associatio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

confronted with any such situation here. 34. In such cases, retrospectively is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectivity. In the instant case, the proviso added to Section 113 of the Act is not beneficial to the assessee. On the contrary, it is a provision which is onerous to the assessee. Therefore, in a case like this, we have to proceed with the normal rule of presumption agains .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

  ↓     Latest Happening     ↓  

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

Forum: Input credit of gst paid on urd

Notification: Seeks to exempt goods imported for organising FIFA under 17, world cup, 2017

Forum: Wrong quote of GSTIN no of buyer in GSTR-1

Forum: Getting upload error message.Cannot upload json file for GSTR1 even after using offline tool V 1.2..

Forum: Issue of Payment Voucher

Forum: filing of unaudited financial accounts

Forum: GST on Notional rent

Forum: need of extention of agm in case of non filing

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 – comments and suggestions-reg.

Highlight: Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of residence - disallowance of ad hoc expenditure deleted.

Highlight: Project import - Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated - Redemption fine and penalty imposed.

Highlight: Penalty u/s 112 (a) - CHA - Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences

Highlight: Import of services - GST - The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India. - Demand confirmed.

Notification: SEZ for IT/ITES at Madhurwada Village, Visakhapatnam District in the State of Andhra Pradesh - denotified.

Highlight: Merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange.

Highlight: Merely vehicle numbers was not mentioned on the invoices cannot be the reason to deny Cenvat Credit

Highlight: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017 - Circular

Circular: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017

News: Auction for Sale (Re-issue) of Government Stocks

Article: TDS APPLICABILITY ON GOVERNMENT CONTRACTS UNDER GST (Under Section 51 of the CGST Act, 2017)

News: Manmohan takes potshots at note ban, 'hasty' rollout of GST

News: GST on petrol, diesel requires wider discussion: Nitish

Article: WHEN CAN ONE TAKE ITC FOR RCM CASES?

Notification: TDS liability under Section 51 of CGST, 2017 come into force w.e.f. 18-9-2017 - Persons liable to deduct TDS from payment made or credited to the supplier of taxable goods or services specified

Notification: Central Goods and Services Tax (Seventh Amendment) Rules, 2017

Notification: Seeks to extend the last date for filing the return in FORM GSTR-3B for the months of August to December, 2017

Circular: Filing of Special Leave Petition against Orders of Hon'ble High Courts staying Collection of Tax under GST- reg.

Highlight: Exemption u/s 54F - LTCCG - once entire net consideration is invested, the absence of completion certificate cannot be a ground to deny the benefit of deduction.

Highlight: Deduction u/s 10B - initial AY - Mere authorization to enable the Assessee to import material or export produce in the earlier date would not ipso facto tantamount to commencement of substantial activity of ‘manufacture’/’production’.

Circular: Sub:- Procedure to be followed for Import under DEEC/EPCG Scheme- reg.

News: RBI Reference Rate for US $

Article: INELIGIBLE INPUT TAX CREDIT UNDER GST REGIME

Article: MISTAKES IN DRAFTING

Article: All about E-way Bill under GST

Highlight: Provision for sick leave liability - based on the basis of notional figures - such notional liability cannot be allowed as deduction - section 43B(f) is not applicable.

Highlight: Penalty u/s 271(1)(c) - the amended provision of Explanation 5A made applicable w.r.e.f from 1.6.2007 cannot be pressed into service.



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version