TMI Blog2016 (7) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Singh, Judicial Member, and Shri Ashwani Taneja, Accountant Member For The Revenue : Smt. N.V. Nadkarni-DR For The Assessee : None ORDER Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 13/11/2015 of the Ld. First Appellate Authority, Mumbai. 2. During hearing of this appeal, nobody represented the assessee, in spite of issuance of registered AD notice, therefore, we have no option but to proceed ex-parte, qua the assessee, and tend to dispose of this appeal on the basis of material available on record. On the other hand, the ld. DR, Smt. N.V. Nadkarni, defended the conclusion arrived at in the assessment order by contended that the impugned issue is covered by the decision from Hon ble Apex Court in Escorts Ltd. (199 ITR 43)(SC). 2.1. We have considered the submissions of the ld. DR and perused the material available on record. The facts, in brief, are that the assessee trust is registered u/s 12A of the Income Tax Act, 1961 (hereinafter the Act), declared income of ₹ 66,733/- in its return filed on 29/09/2008 annexed with income and expenditure account, audited balance sheet. The ld. Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee on April 3, 1986, the deficit was increased to ₹ 8918 lakhs This revision of accounts was authorised by the Bombay Public Trust Registration Office The assessee is a charitable trust registered under the Bombay Public Trust Act It is also registered under section 12A of the Income-tax Act The assessee-institute is governed by a board consisting of Executive Officers of RBI, Central Recruitment Board, Banking Services Recruitment Board, etc The object of the assessee is charitable in nature The income of the assessee is exempt under section 11 of the Income-tax Act The assessee had claimed depreciation which was rejected by the Assessing Officer on the ground that capital expenditure incurred during the accounting year was allowed as a deduction from the income of the assessee and, therefore, the claim of the assessee for depreciation on buildings was disallowed Further, the assessee had claimed depreciation on furniture and fixtures to the tune of ₹ 49,453 at 10 per cent of the written down value which was disallowed by the Assessing Officer on the ground that the said assets have been received by the assessee on transfer from_National Institute of Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquisition? It was held by the Bombay High Court that section 11 of the Income-tax Act makes a provision in respect of computation of income of the trust from property held for charitable or religious purposes and it also provides for application and accumulation of income On the other hand, section 28 of the Income-tax Act deals with chargeability of income from profits and gains of business and section 29 provides that income from profits and gains of business shall be computed in accordance with section 30 to section 43C That, section 32(1) of the Act provides for depreciation in respect of building, plant and machinery owned by the assessee and used for business purposes It further provides for deduction subject to section 34 In that matter also, a similar argument, as in the present case, was advanced on behalf of the Revenue, namely, that depreciation can be allowed as deduction only under section 32 of the Income-tax Act and not under general principles The court rejected this argument It was held that normal depreciation can be considered as a legitimate deduction in computing the real income of the assessee on general principles or under section 11(1)(a) of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion No 2 is answered in the affirmative, ie, in favour of the assessee and against the Department Now coming to question No 3, the point which arises for consideration is : whether excess of expenditure in the earlier years can be adjusted against the income of the subsequent year and whether such adjustment should be treated as application of income in the subsequent year for charitable purposes? It was argued on behalf of the Department that expenditure incurred in the earlier years cannot be met out of the income of the subsequent year and that utilisation of such income for meeting the expenditure of earlier years would not amount to application of income for charitable or religious purposes In the present case, the Assessing Officer did not allow carry forward of the excess of expenditure to be set off against the surplus of the subsequent years on the ground that in the case of a charitable trust, their income was assessable under self-contained code mentioned in section 11 to section 13 of the Income-tax Act and that the income of the charitable trust was not assessable under the head Profits and gains of business under section 28 in which the provision for carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to be regarded as application of income of the trust for charitable and religious purposes in the subsequent year in which adjustment has been made having regard to the benevolent provisions, contained in section 11 of the Act and that such adjustment will have to be excluded from the income of the trust u/s 11(1)(a) of the Act. Even otherwise, in a later decision in DIT (E) vs Shri Vile Parle Kelavani Mandal (2015) 58 taxman.com 288, the Hon ble jurisdictional High Court held as under:- As far as question no.4 is concerned, this Court has repeatedly held that there is nothing like double deduction. When the assessee has acquired an asset from the income of the trust and thereafter the amount that is claimed is the depreciation on the use of the assets, such depreciation claim does not mean double deduction. The deduction earlier claimed is towards application of funds of the trust for acquiring assets. The later is depreciation and it is permissible deduction considering the use of the assets. This has been clarified repeatedly by this Court. If any reference is required then the case of CIT vs Institution of Banking Personnel Selection (IBPS) (2003) 264 ITR 110/113 Taxman ..... X X X X Extracts X X X X X X X X Extracts X X X X
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