TMI Blog2017 (5) TMI 1415X X X X Extracts X X X X X X X X Extracts X X X X ..... peal, filed by the Assessing Officer, is directed against the order dated 15th September 2014, passed by the learned CIT(A), in the matter of assessment under section 143(3) of the Income Tax Act 1961, for the assessment year 2011-12. 2. Grievance of the Assessing Officer is as follows :- 1) The Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in deleting the disallowance of depreciation of ₹ 1,76,50,313/- made by the Assessing Officer. (I) The Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in allowing depreciation on the assets, the cost of which has already been allowed as a deduction on account of application of income as this would amount to double deduction in view of the decision of the Hon ble Supreme Court in the case of Escorts Ltd., 199 ITR 43, the decision of Kerala High Court in the case of Lissie Medical Institutions vs. Commissioner of Income Tax, Kochi, 348 ITR 344 and decision of Delhi High Court in the case of DIT(E) vs. Charanjiv Charitable Trust in (2014) 43 taxmann.com 300 (Delhi). (II) Whether, on the facts and in the circumstances of the case, deduction of depreciation u/s.32 which fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er shall not be included in the latter, of the person in receipt of the income. The expression total income has been defined under s. 2(45) of the Act to mean the total amount of income referred to in s. 5 computed in the manner laid down in this Act . The word income is defined under s. 2(24) of the Act to include profits and gains, dividends, voluntary payment received by trust, etc. It may 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 be allowed to be debited to the expenditure account of the trust. This contention appears to proceed on the assumption that the expenditure should necessarily involve actual delivery of or parting with the money. It seems to us that it need not necessarily be so. The expenditure should be understood as necessary outgoin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble 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 Bombay in the case of Institute of Banking Personnel Selection (IBPs) (supra) after placing reliance on the Judgment of CIT v. Munisuvrat Jain 1994 TLR 1084 on an identical issue, held: - 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to permit an assessee two deductions both under S.10(2)(vi) and S.10(2)(xiv) under the 1922 Act or under S.32(1)(ii) and 35(2)(iv) of the 1922 Act - qua the same 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 no objection in principle to allowances being made under both the provisions as their nature and purpose are different, then the interdict disallowing a double deduction will be meaningless even in respect of the previous years for which deduction is allowed under S.10(2) (xiv) /S.35 in respect of the same asset. If that were the correct principle, The assessee should logically be entitled to deduction by way of depreciation for all previous years including those for which allowance have been granted under the provision relating to scienti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the same or any other previous year. 22. The plain language of the amendment establishes the intent of the legislature in denying the depreciation deduction in computing the income of Charitable Trust is to be effective from 1.4.2015. This view is further supported by the Notes on Clauses in Finance [No.2] Bill, 2014, memo explaining provisions and circulars issued by the Central Board of Direct Taxes in this regard. Clause No.7 of the Notes on Clauses reads thus: Clause 7. of the Bill seeks to amend section 11 of the Income-tax Act relating Income from property held for charitable 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 subsections (6) and (7) in the said section so as to provide that - (i) where any income is required to be applied or accumulated or set apart for application, then, for such purposes t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent. If a legislation 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 v. Indian Tobacco Association, the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay v. State of Maharashtra. It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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