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TMI Blog2014 (8) TMI 1119X X X X Extracts X X X X X X X X Extracts X X X X ..... n the circumstances of the case, the learned assessing officer and the CIT(A) erred in holding that, there is a breach of section 11(5) read with section 11(2) and therefore, provisions of section 13(1 )(d) of the Act is applicable and therefore , forfeiture of exemption of the section 11 of the Act. (b) The appellant prays that, the appellant has not breached the provisions and conditions required for claiming exemption u/s. 11 of the Act. (c)The appellant prays that, the exemption withdrawn being bad in law it should be allowed. 3. (a) On the facts and in the circumstances of the case, the learned assessing officer and the CIT(A) erred in rejecting the claim of Rs. 2,26,21,694/- on account of depreciation which should be allowed in full. (b) The appellant prays that, the claim of deprecation is not double deduction. (c) The claim of depreciation is on the assets which has to be fully allowed as the application of income. (d) The appellant prays that, the learned assessing officer erred in rejecting the claim made on account of depreciation which should be allowed in full. 4. (a) On the facts and in the circumstances of the case, the learned assessing officer and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2007-08: Institutions O/p.Bal. Addition Cl. Bl. Remark Shah & Anchor Kutchhi Engg. College 0 7825500 7825500 The amount of Rs. 1,30,96,500/- has been added and taxed in assessment as per order dated 30/11/2009 Shah & Anchor Kutchhi Polytechnic 0 5271000 5271000 13096500 13056500 As on 31.03.2008 A.Y. 2008-09 Shah & Anchor Kutchhi Engg. College 7825500 5720000 13545500 The amount of Rs. 1,43,56,000/- (includes Rs. 1,23,56,000/-) have been added and taxed in assessment as per order dated 13/12/2010 Shah & Anchor Kutchhi Polytechnic 5271000 6636000 11907000 13096500 12356000 25452500 As on 31.3.2009 A.Y. 2009-10 Shah & Anchor Kutchhi Engg. College 13545500 3806260 17351760 Added entire amount outstanding to the credit in B/sheet Rs. 3,00,67,680/- instead of received during the year i.e. Rs. 46,15,180/- Shah & Anchor Kutchhi Polytechnic 11907000 808920 12715920 25452500 4615180 30067680 To support the above contention Ld. AR also invited our attention toward assessment orders which are also enclosed in the paper book as under: Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein the Charitable Trust had made deposits with S.M Finance Ltd. and Unitech Ltd. which were not Public Sector Undertakings. The AO observed that such investment was in violation of the provisions contained in section 11(5) and he denied the exemption to the assessee. The Tribunal allowed the relief to the assessee keeping in view the fact that since incorporation, the assessee was carrying charitable work and the donations were obtained by account payee cheques and corpus funds were invested as fixed deposits with Public Sector Undertakings; in the application forms it was mentioned that these concerns are authorized to accept deposits from Charitable Trusts and deposits were made; the fact that assessee upon becoming aware of the violation immediately withdrawn the amount from those two concerns. It was held by their Lordships that Tribunal did not commit any error in holding that assessee is entitled to exemption under section 11 of the Act. Reliance was also placed on several other decisions to contend that inadvertent violation of section 11(5) r.w.s. 13(1)(d)will not lead to rejection of exemption under section 11 of the Act. However, Ld. CIT(A) upheld the order of AO. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able or religious trust or institution and investment in units issued under any scheme of mutual fund referred to in clause (23D) of Section 10 of the Act is included. He submitted that such investment by the assessee is not in violation of section 11(5) r.w.s. 13(1)(d) of the Act. 5.4 Thus, it was submitted by Ld. AR that Ld. CIT(A) has erred in not accepting the claim of the assessee u/s. 11 of the Act. 6. On the other hand, Ld. DR submitted that the deposit of the assessee with Tata Motors Ltd. was in clear violation of section 11(5) r.w.s. 13(1)(d). Such investment by the assessee was not permitted, therefore, Ld. CIT(A) has rightly held that assessee is not entitled to get exemption under section 11 of the Act. He submitted that the account statement of Canara Bank for Canara Robeco mutual fund units were not submitted to AO. Therefore, he submitted that these grounds of the assessee should be dismissed. 7. We have heard both the parties and their contentions have carefully considered. Fixed Deposits were placed by the assessee with Tata Motors Ltd. on 2/2/2009. Admittedly, Tata Motors Ltd. is not an institution with which the fixed deposit could be eligible for investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following undisputed facts in this appeal: 7. The assessee is created only for the purpose of Charity and doing yeoman services to the society. It is also not disputed by the revenue that exemption under Section 11 of the Act was granted for earlier assessment period and for subsequent assessment period except for assessment year 1995-96. The same has been rejected only on the ground that investment made under three financial institutions are contrary to .Section 11(5) of the Act. The explanation offered by the Assessee that it had invested on account of the inadvertence and on the mis-representation of those financial institutions has been rejected by the Assessing Officer and the same has been affirmed by the Commissioner of Income tax before the Tribunal. Though the Judgment of the Delhi High Court was relied upon, the Tribunal without considering the same has affirmed the order passed the Commissioner of Income Tax (Appeals) and the Assessing Officer. In this background we have to consider whether the case of the appellant falls within the four corners of the facts involved in Agrim Charan Foundation's case. In Agrim Charan Foundation's case also certain deposits were ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax in accordance with the provisions of sec.10(23D) of the Income Tax Act, 1961. The income received by the Fund is not liable for deduction of tax at source. According to the said "Key Information Memorandum" a charitable trust/Wakfs or a society established under the relevant laws and authorized to invest in mutual fund schemes is one of the entity who could apply for the same. Keeping in view these provisions, the said investment by the assessee shall not in violation of section 11(5), therefore, there is no violation on account of that deposit. 7.2 Therefore, Ground No.2 & 5 are allowed in the manner aforesaid. 8. Apropos ground No.3, benefit of depreciation has been disallowed only on the ground that it will provide double benefit to the assessee as investment in the assets on which depreciation is being claimed was already allowed as application of income. Ld. CIT(A) has not considered this issue by way of a speaking order and has dismissed this claim on the ground that since assessee has been held to be not entitled for grant of exemption under section 11 then income of the assessee has to be computed under the normal provisions of the Act. However, AO has disallowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue that allowance of depreciation on the assets, the cost of which has already been allowed as a deduction on account of application of income, would amount to double deduction which is legally not permissible in view of the judgment of the Supreme Court in the case of Escorts Ltd. v. Union of India 199 ITR 443 ? The aforementioned question was adjudicated with the following observation: 3. So far questions (b) & (c) are concerned, counsel for the parties agree that the issue arising herein are covered by the decision of this Court in the matter of CIT v. Institute of Banking Personnel Selection (JBP$ [20031 264 ITR 110 / 131 Taxman 386 in favour of the assessee and against the revenue. In these circumstances, we do not see any reason to entertain questions (b) & (c). 4. In this view of the situation, as the issue is directly covered by the aforementioned observations of Jurisdictional High Court, we decline to interfere in the relief granted by Ld. CIT(A) and Ground No.1 to 3 raised by the revenue are dismissed." 8.2 In this view of the situation, after hearing both the parties, we allow ground No.3 filed by the assessee and AO is directed to grant benefit of depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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