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TMI Blog2015 (1) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... 49,16,762/- in spite of the fact that provisions cannot be claimed as expenses in the trust and even as per provisions of Sec. 40A(7), provision for gratuity is allowable only for the purpose of payment on a sum by way of contribution towards approved gratuity fund." 2. "On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing the Assessing Officer to allow depreciation on fixed assets without appreciating the fact that the capital expenditure incurred on acquiring the assets has already been claimed as application of income u/s.11 of the IT. Act 1961 in the current/past years. 3 "On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not appreciating the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this amount is not mere provision but actual liability on account of gratuity. It was submitted that Trust has also paid this amount in the succeeding year to HDFC Standard Life Insurance group gratuity scheme. The assessee is following mercantile system of accounting, according to which the provision for gratuity was made. On such submissions of the assessee Ld. CIT(A) has given relief on the ground that the assessee trust has made payment in subsequent financial year to the HDFC Standard Life Insurance under the group gratuity scheme. He also accepted the submission of the assessee, subject to verification of AO, that instead of a sum of Rs. 49,16,762/- the provision was made only to the extent of Rs. 21,53,386/-. The Revenue is aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and allowed on the asset, the capital expenditure incurred in respect of which was allowed as exemption on account of application of income u/s.11 of the Income Tax Act, 1961. This act of the assessee amounts to claim of double deduction in contravention of the law laid by the Hon'ble Supreme Court of India in the case of Escorts Limited vs. UOI, 1999 ITR (43). Further, the Assessee Trust has claimed deficit of Rs. 15,72,000/- and which has been allowed by the Assessing Officer. Needless to say that the deficit arises on account of expenditure and application of funds over the receipts. The source of this expenditure and application of funds over the receipts of the Trust is a corpus fund and accumulation under section 11 of the IT Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the decision of Hon'ble Bombay High Court in the case of CIT vs. Institute of Banking Personnel Section (supra), wherein following question was referred to their Lordships for decision: "3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law forward the deficit of earlier year and set it off against the surplus of subsequent years when the same was not allowable in the case of assessee trust in whose case income exempted under section 11 of the Income-tax Act, 1961.? Their Lordships have answered this question as under: "5. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll have 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 under section 11(1)(a) of the Act. Our view is also supported by the Judgment of the Gujarat High Court in the case of CIT v. Shri Plot Swetamber Murti Pujzk Jain Mandal [1995] 211 ITR 293. Accordingly, we answer question No. 3 in the affirmative i.e., in favour of the assessee and against the Department." 6. Accordingly, after hearing both the parties we find no infirmity in the order of Ld. CIT(A) on account of Ground No.4. Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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