TMI Blog2015 (5) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... n of time limits. Delegated legislative powers are circumscribed by the statute delegating such powers and transgression thereof can render the rules beyond the scope of such delegation. Hence, we cannot fault the learned CIT(A) taking cognizance of the revised Form No.10A filed by the assessee. In any case, as observed by learned CIT(A) in the case of Bharath Kalyan Pratisthan [ 2007 (1) TMI 98 - DELHI HIGH COURT] as well as Bharat Krishak Samaj [ 2007 (8) TMI 8 - HIGH COURT,NEW DELHI] had held that details of purpose of accumulation was not a requirement that can be read into section 11(2). Revenue has not been able to bring before us any decision of Hon ble jurisdictional High Court on this issue, and therefore, assessee has to be given the benefit of the decision in its favour, in preference to the decisions going against it Accumulation of claim based on Form No.10 - In view of the acceptance of the claim for accumulation of claim based on Form No.10 and in view of the fact that 15% accumulation was disallowed by the AO only for the reason of rejection of accumulation of funds based on Form No.10, we are of the view that the CIT(A) was fully justified in allowing the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2)(iv) is allowed in respect of capital expenditure on scientific research, no depreciation is allowable u/s 32 on the same asset. 5. The assessee pointed out that Hon'ble High Court of Karnataka in the case of All Saints Church, 148 ITR 786 (Kar) and Society of Sisters of St. Ann, 146 ITR 28 (Kar) has taken the view that where capital expenditure on acquisition of depreciable asset is considered as application of income for charitable purpose, allowing depreciation on the very same capital asset would not amount to double allowance. The assessee also pointed out that the decision of Escorts Ltd. (supra) will not be applicable as it was rendered on a different set of facts. 6. The AO however, held that allowance of depreciation when the cost has already been recovered by way of exemption as application of income amounts to double deduction and double benefit on the same asset. The AO referred to the decision of the of Hon'ble High Court of Kerala in the case of DDIT(E) v. Lissie Medical Institutions, 348 ITR 344 (Ker) wherein it was held that allowing depreciation of a depreciable asset when the cost of acquisition of depreciable asset was allowed as app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been referred to and distinguished by the Hon ble Court in the aforesaid decisions. 21. The issue raised by the revenue in the ground of appeal is thus no longer res integra and has been decided by the Hon ble Punjab Haryana High Court in the case of CIT v. Market Committee, Pipli, 330 ITR 16 (P H). The Hon ble Punjab Haryana High Court after considering several decisions on that issue and also the decision of the Hon ble Supreme Court in the case of Escorts Ltd. (supra), came to the conclusion that depreciation is allowable on capital assets on the income of the charitable trust for determining the quantum of funds which have to be applied for the purpose of trusts in terms of section 11 of the Act. The Hon ble Punjab Haryana High Court made a reference to the decision of the Hon ble Supreme Court in the case of Escorts Ltd. (supra) and observed that the Hon ble Supreme Court was dealing with a case of two deductions under different provisions of the Act, one u/s. 32 for depreciation and the other on account of expenditure of a capital nature incurred on scientific research u/s. 35(1)(iv) of the Act. The Hon ble Court thereafter held that a trust claiming depr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred in considering the revised Form no. 10 dated 11.01.2012 filed by the assessee for allowing accumulation u/s 11(2), but without appreciating the fact that such revised Form no. 10 was filed after completing the scrutiny assessment by the AO u/s 143(3) dated 09.12.2011 iii) The CIT(A) has erred in ignoring the settled legal position as per the law laid down by the Hon ble Supreme Court in the case of CIT vs Nagpur Hotel Owners Association (247 ITR 201) that it is mandatory on the part of the assessee to file the Form no. 10 before completing the scrutiny assessment by the AO for the purpose of claiming accumulation of income u/s 11(2). iv) The CIT(A) has erred in ignoring the fact that the Form no. 10, including revised Form no. 10, filed beyond the due date for filing return of income u/s 139(1) shall not be considered as valid one without obtaining the approval of CIT/DIT concerned for condonation of such delay. 3. Disallowance of set apart /accumulation of income u/s 11(1)(a) i) The CIT(A) has erred in allowing exemption u/s 11(1)(a) @ 15% of the income for set apart/accumulation without considering the fact that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious year, then the entire income accumulated would be liable to assessment under Sec.11(3). In other words the circular states that the entire accumulation and not merely the excess 15% of the income would be subject to tax. This circular was issued as an explanatory note to the circular No. 5P (LXX-6) of 1968. It read as under:- Attention is invited to the Board s Circular No 5p (LXX-6) of 1968, dated 19/6/1968(TC 235 1620) on the above mentioned subject. It has been brought to the Boards notices that para 5 of the above Circular created the impression that where a trust accumulates more than 25% percent will be taxable under section 11(1) of the Income Tax Act 1961. It is hereby clarified that the corrected position in this regard is that if a trust desires to accumulated income in excess of the limits laid down in the Sec. 11(2) of the Act have to be fulfilled in respect of the entire accumulation and not merely in respect of the accumulation in excess of 25% of the income. Further if the trust does not comply with the conditions laid down in Sec 11(2), the amount which becomes liable to assessment under Sec. 11(1) of the Income-tax Act 1961. In other wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is and after the two purposes in the resolution and not in the Form 10 is not of much significance. The same has been explained as typo error by the appellants. Taking into account the totality of the situation the assessing authority was not correct in denying the appellant the right to accumulate and the same is hereby granted. 9.6 It is also relevant to further notice that as submitted by the appellant the Hon ble Delhi High Court in the following cases i.e. Bharat Krishik Samaj v DDlT [2008] 306 ITR 153 (Delhi); Bharat Kalyan Pratisthan v DIT (Exemption) [2008] 299 ITR 406 (Delhi); DIT v Mamta Health Institute [2007] 293 ITR 380 (Delhi); DIT (Exemption) v Daulat Ram Education Society [2005] 278 ITR 260 (Delhi) CIT v Hotel Restaurant Association [2003] 261 ITR 190 (Delhi) has held that that purpose mentioned in Form 10 for accumulation of income need not be specific and was held that accumulation of income under section 11(2) cannot be denied even if purpose/objects mentioned in Form 10 are general. Though there are divergent views on the subject of various courts on this issue, considering the fact that the appellant having filed a revised Form No. 10 dated 11.01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1)(a) of l5% amounting to ₹ 7,31,25,661/- of the Act. I hereby direct the A.O. to allow the claim of accumulation or set apart of 15% of income of ₹ 7,31,25,661/-. In the result this ground of appeal is allowed. 18. Aggrieved by the order of CIT(Appeals), the Revenue has preferred grounds No.2 3 before the Tribunal. 19. We have heard the submissions of the ld. counsel for the assessee and the ld. DR. As far as the issue raised in ground No.2 by the Revenue is concerned, this Tribunal had on occasion to consider identical issue in the case of DDIT(E) v. Gokula Education Foundation, ITA No.1091/Bang/2014 by order dated 30.12.2014 and this Tribunal held as follows:- 7. As for the second issue, it is necessary to reproduce section 11(2) of the Act and Rule 17 which are on accumulation; Where(eighty five) percent of the Income referred to in clause(a) or clause(b) of sub-section (1) read with the Explanation to that sub-section is not applied, or is not deemed to have been applied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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