TaxTMI 
TaxTMI 
TaxTMI 
2016 (7) TMI 1046
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....tice that the aforesaid decision of the Tribunal was challenged by the Department before this Court in ITA No.1/2013. This Court vide order dated 22.02.2016 has dismissed the appeal. 5. We may record that this Court in the aforesaid decision dated 22.02.2016 had observed thus: "These appeals are filed by the revenue under Section 260-A of the Income Tax Act, 1961('the Act' for short) challenging the orders passed by the Income Tax Appellate Tribunal, Bangalore Bench. 2. Since, common question of law is raised in all these appeals, the matters are heard together and disposed of by this common Judgment. 3. The assessees in all these appeals are the charitable institutions registered under Section 12AA and 10(23)(c) of the Act. The question herein revolves around Section 11 of the Act. For the purpose of narrating the facts, we are considering ITA No.62/2010. The assessments for the assessment year 2005-06 were concluded under Section 144 of the Act denying exemption under Section 10(23) of the Act. The addition of income was made on account of disallowance of depreciation by the Assessing Officer. 4. Being aggrieved, the assessee preferred an appeal before the Commissioner of I....
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....has to be computed in terms of Section 32 of the Act. He also places reliance on Section 37 of the Act to point out that any expenditure not being expenditure of the nature described in Sections 30 to 36, not being in the nature of capital expenditure or personal expenses of the assessee expended wholly and exclusively for the purposes of business or profession shall be allowed in computing the income chargeable under the head 'Profit and gains of business or profession'. Applying the same analogy if, application of income is allowed under Section 11 of the Act, no depreciation can be allowed under Section 32 of the Act. Reliance is placed on Section 11(6) of the Act inserted by the Finance Act No.2, Act 14 with effect from 01.04.2015 to contend that the said amendment applies retrospectively being clarificatory in nature. Learned counsel for the revenue placed reliance on the following Judgments: (1) [A] COMMISSIONER OF INCOME TAX vs. SOCIETY OF THE SISTERS OF ST.ANNE ((1984) CTR 9 ) (2) LISSIE MEDICAL INSTITUTIONS vs. COMMISSIONER OF INCOME TAX ((2012) 348 ITR 0344) (3) ESCORTS LTD. vs. UNION OF INDIA ((1993) SC ITR Vol. 199) 12. On the other hand, learned counsel appearin....
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....he 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 outgoings. The depreciation is nothin....
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....t double 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 (supra) after placing reliance on the Judgment of CIT vs Muniswarat 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 normal commercial manner although....
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....er 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 scientific research. The statute does not permit thi....
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....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 sub-sections (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 the income shall be determined without, any deduction or allowance by way of depreciation or otherwise in respect of....
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....enerally, 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 & Ors. 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 & Ors. 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 the presumption attaches towards prospectivity. In the instant case, the proviso added to Section 113 of the Act is not beneficial to the as....