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TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 792
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....y indication to the contrary, the statute should not be read as to permit an assessee two deductions ? 2) Whether the hon'ble Commissioner of Income-tax (Appeals) was correct in not following the decision of the Kerala High Court in the case of Lissie Medical Institutions v. CIT [2012] 348 ITR 344 (Ker) (ITA No. 42 of 2011) wherein the other judicial pronouncements by various High Courts were held to be not applicable holding that the issue of double deduction was not before them ? 3) Whether the Income-tax Appellate Tribunal was right in not appreciating the intention of the Legislature not to allow double deduction at any point of time and, therefore, for bringing clarity on the issue, the law has been amended with effect from the assessment year 2015-16. 4) Whether the hon'ble Commissioner of Income-tax (Appeals) was correct in holding that depreciation is allowable in cases of trust on normal commercial principles, where the assessment of trusts are covered under section 11, section 12 and section 13 of the Income-tax Act, 1961, and the provisions of section 28 to section 44 of the Act are not applicable to charitable trust as only application of income during the....
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....7. We find that the hon'ble jurisdictional High Court in the case of DIT (Exemptions) v. Al-Ameen Charitable Fund Trust (supra) has held that while acquiring the capital assets what is allowed as exemption is the income out of which such acquisition of asset is made and when the depreciation deduction is allowed in the subsequent years, it is for the losses or the expenses representing the wear and tear of such capital asset incurred, if not allowed then there is no way to preserve the corpus of the trust for deriving its income. 8. The relevant finding of the hon'ble High Court in paragraphs 15 to 25 are as under (pages 522 to 528) : "The question involved in this case is no more res integra. This question was considered by this court as far back as in the year 1984, in the case of CIT v. Society of the Sisters of St. Anne [1984] 146 ITR 28 (Karn) wherein the Division Bench of this court has held thus (page 31 of 146 ITR) : 'It is clear from the above provisions that the income derived from property held under trust cannot be the total income because section 11(1) says that the former shall not be included in the latter, of the person in receipt of the income. The....
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....blic Welfare Trust [1999] 240 ITR 513 (Cal); (5) CIT v. Rao Bahadur Calavala Cunnan Chetty Charities [1982] 135 ITR 485 (Mad) ; and (6) CIT v. Market Committee, Pipli [2011] 330 ITR 16 (P&H) ; [2011] 238 CTR (P&H) 103. Allowing depreciation in subsequent years, on the capital asset, which has already availed the benefit of deduction in computing the income of the trust in the year of its acquisition is considered by the Punjab and Haryana High Court in the case of Market Committee, Pipli (supra) and held thus (page 20 of 330 ITR) : 'In the present case, the assessee is not claiming double deduction on account of depreciation as has been suggested by learned counsel for the Revenue. The income of the assessee being exempt, the assessee is only claiming that depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purposes of the trust. There is no double deduction claimed by the assessee as canvassed by the Revenue. The judgment of the hon'ble Supreme Court in Escorts Ltd. (supra) is distinguishable for the above reasons. It cannot be held that double benefit is given in allowing claim for depreciation fo....
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.... of 199 ITR) : 'There is an apparent plausibility about these arguments, parti cularly in the context of the alleged departure in the language used in section 10(2)(xiv) from that employed in section 20 of the U. K. Finance Act, 1944. We may, however, point out that the last few underlined words of the English statute show that there is really no difference between the English and Indian Acts ; the former also in terms prohibits depreciation only so long as the assets are used for scientific research. In our opinion, the other provisions of the Act to which reference has been made-some of which were inserted after the present controversy started-are not helpful and we have to construe the real scope of the provisions with which we are concerned. We think that all misconception will vanish and all the provisions will fall into place, if we bear in mind a fundamental, through unwritten, axiom that no Legislature could have at all intended a double deduction in regard to the same business outgoing, and if it is intended, it will be clearly expressed. In other words, in the absence of clear statutory indication to the contrary, the statute should not be read so as to permit an as....
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....ed that while in the year of acquiring the capital asset, what is allowed as exemption is the income out of which such acquisition of asset is made and when depreciation deduction is allowed in the subsequent years, it is for the losses or expenses representing the wear and tear of such capital asset incurred if, not allowed then there is no way to preserve the corpus of the trust for deriving its income as held in Society of the Sisters of St. Anne's case (supra). This judgment of the co-ordinate Bench of this court is binding on us and we have no reasons to disturb the settled position of law at this length of time/depart from the said reasoning. As such, the arguments advanced by the Revenue apprehending double deduction is totally misconceived. Section 11(6) inserted with effect from April 1, 2015, by the Finance (No. 2) Act, 2014, reads as under : '(6) In this section where any income is required to be applied or accumulated or set apart for application, then, for such purposes the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an application of inco....
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....ting scheme of section 11 as well as section 10(23C) provides exemption in respect of income when it is applied to acquire a capital asset. Subsequently, while computing the income for purposes of these sections, notional deduction by way of depreciation, etc., is claimed and such amount of notional deduction remains to be applied for charitable purpose. Therefore, double benefit is claimed by the trusts and institutions under the existing law. The provisions need to be rationalised to ensure that double benefit is not claimed and such notional amount does not get excluded from the condition of application of income for charitable purpose.' Paragraphs 7.5, 7.5.1, 7.6 of the Central Board of Direct Taxes Circular reported in [2015] 371 ITR (St.) 22 makes it clear that the said amendment shall take effect from April 1, 2015, and will accordingly apply in relation to the assessment year 2015-16 and subsequent assessment years. The Constitution Bench of the apex court in Vatika Township (P.) Ltd.'s case (supra), had laid down the general principles concerning retrospectivity in paragraphs 33 and 34, and the same is extracted hereunder (page 487 of 367 ITR) : 'We would....