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The Deputy Director of Income Tax (Exemptions) , Cirlce 17 (1) , Bangalore Versus Karnataka Jesuit Educational Society and Vica-Versa

2016 (9) TMI 1046 - ITAT BANGALORE

Independent accumulation of income u/s. 11(2), besides accumulation of profit u/s. 11(1)(a) - Held that:- It has been brought to our notice from the details of application of funds in both the assessment years with the submission that application of fund is already more than 85%, therefore the issue of accumulation of fund u/s. 11(2) becomes academic and does not require any adjudication, as the CIT(Appeals) has already allowed the accumulation of fund as per the provisions of section 11(1)(a) o .....

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f the Act and clause (iii) says that for the purpose of sub-section (2), deposits can be made in any account of the Scheduled Bank or co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); meaning thereby, if the assessee makes investments or deposits in the scheduled bank and claims the deposits as accumulated for the purpose of section 11(1)(a) or 11(2), the investment or deposit cannot be disal .....

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o be liable to be taxed in the previous year immediately following the previous year in which it was derived where it could not be applied to the specified purposes and the CIT(Appeals) has given directions that the said amount will be taxable in A.Y. 2009-10 and not in the current year. The CIT(Appeals) has taken into account the provisions of the Act and having noted that the accumulated fund was not applied for the specified purposes, he directed that this amount be taxed in the A.Y. 2009-10. .....

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f the CIT(Appeals). Since the appeals were heard together, these are being disposed of through this consolidated order. We, however, prefer to adjudicate them one after the other. ITA Nos.485 & 486/B/13 2. In these appeals, the revenue has assailed the order of the CIT(Appeals) that the CIT(A) has not followed the order of the Tribunal in the case of M/s. C M R Janardhana Trust in ITA Nos. 642 & 643/Bang/2008 dated 24.12.2008 in which it was held that if the entire amount of capital asse .....

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le jurisdictional High Court in the case of Al-Ameen Charitable Fund Trust in ITA No.62/2010 and various orders of the Tribunal in the case of Karnataka Reddy Janasangha v. DIT, in ITA No.220/Bang/2011 and DDIT v. International Institute of Information Technology in ITA No.396/Bang/2013 in which it has been held that assessee is entitled for depreciation, despite application of entire amount. While holding so, they have taken into account the decision of the Tribunal in the case of M/s. C M R Ja .....

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hnology (supra) are extracted hereunder for the sake of reference:- 5.3 We have heard both parties and perused and carefully considered the material on record. We find that the issue of the assessee being entitled to depreciation, is covered in favour of the assessee by the decision of the co-ordinate bench of this Tribunal in the assessee s own case for Assessment Year 2006-07 in ITA No.983/Bang/2011 of 17.9.2012 it has been as under at para 5 thereof: 05. At the time of hearing, the learned DR .....

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he assessee's appeal, the Tribunal observed as under : "7.5 The Hon'ble jurisdictional High Court in the case of CIT v Society of the Sisters of St. Anne (146 ITR 26 had categorically held that the amount of depreciation debited to the accounts of a charitable institution is to be deducted to arrive at the available income for the purpose of application to charitable and religious purposes. The decision of the Hon'ble jurisdictional High Court has been followed by the Hon'bl .....

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3/Bang/2011 dt. 17.9.2012 for Assessment Year 2006-07 were reversed by the Hon ble High Court of Karnataka. In these similar facts and circumstances of the case, we are bound to follow the earlier orders of the co-ordinate bench of this Tribunal (supra). Following the same, we hold that the assessee is entitled to depreciation and consequently dismiss grounds 2 to 4 raised by Revenue. 6. Since no contrary judgment has been placed by the revenue, we having perused the orders of the Tribunal, hold .....

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opposed to law and on facts of the case. 2. Accumulation or Set apart of income under Section l1(1)(a): (a) The learned CIT (Appeals)-V, Bangalore has erred in law in dismissing the appellant's claim for accumulation or set apart of an income of ₹ 1,95,43,427/- under Section 11(1)(a), being 15% of the gross receipts amounting to ₹ 13,02,89,512/- without notice to the Assessing Officer, by stating that, accumulation has already been allowed by the Assessing Officer under Section .....

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eals)- V, Bangalore has grossly ignored the decisions relied on by the Appellant in the following cases. (i) Additional Commissioner of Income tax & Another Vs. ALN Rao Charitable Trust [216 ITR 697] (SC) (ii) CIT Vs. Programme for Community Organisation [248 ITR 1] (SC) (iii) CIT Vs. Programme for Community Organisation [228 ITR 620] (Kerala) (iv) CIT Vs. G.R.Govinarajulu & Sons Charities [271 ITR 145] (Mad) 3. Investment made in fixed deposits amounting to ₹ 4,59,21,115/-: (a) Th .....

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), dated 24.9.1975 (CBDT Bulletin XXI/l/74, page 157), relied on by the Appellant. 4. Accumulated income treated as deemed income under Section l1(3)(c): (a) The learned CIT (Appeals)-V, Bangalore has erred in law in stating that, the income accumulated for the assessment year 2003-2004 amounting to ₹ 1,95,43,427/- will be taxable in the subsequent assessment year 2009-2010 by overlooking the fact that, the said income was spent within five years from the assessment year 2003-2004. 5. The .....

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in both the assessment years with the submission that application of fund is already more than 85%, therefore the issue of accumulation of fund u/s. 11(2) becomes academic and does not require any adjudication, as the CIT(Appeals) has already allowed the accumulation of fund as per the provisions of section 11(1)(a) of the Act. Therefore, we do not find it necessary to give a specific finding on a issue, whether accumulation of fund is further permissible after allowing accumulation of fund u/s. .....

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trust, but for accumulating the fund for a particular purpose, certain investments in FDRs are required. 11. The ld. DR, on the other hand, has placed reliance upon the orders of CIT(Appeals). 12. Having heard the rival submissions and from a careful perusal of the orders of authorities below, we find that the mode of investment is given in sub-section (5) of section 11 for accumulating the fund. Investment or deposits of money can be made as per sub-section (5) of section 11 of the Act and cla .....

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