TaxTMI 
TaxTMI 
2016 (1) TMI 1118
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is to relatives as envisaged U/s.13(3) of the act ignoring the fact that, the Assessing Officer has not given any such findings in the assessment and the issue of infringement of provisions of section 13(3) of the act was not before the Honble CIT(A) ". 3. The assessee is a charitable trust duly registered u/s.12A(a) of the Income Tax Act, 1961 (Act). The Assessee has established various educational institutions in Bangalore with the object of imparting education, principally to Telugu speaking minority of Karnataka and to help preserve their language and culture without distinction of religion. The other objects of the Assessee are establishment of hostels, training institutes, orphanages, residential schools etc. 4. In the course of assessment proceedings the AO noticed that a sum of Rs. 5,04,766/- was claimed as application of income for charitable purpose. The said sum represented amount paid for meeting the education expenses of Ms.Thrista daughter of Ms.Sabitha Ramamurthy, a trustee of the Assessee and was shown as sponsorship fee. According to the AO the sum in question had been spent for charitable purpose outside India and therefore the same cannot be regarded as a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to educated persons from amongst the poor to establish self-employment schemes. According to CIT(A) the aforesaid objective will not be fulfilled in giving scholarship to Ms.Trishtha because she was a person of means and the payment in question was also prohibited u/s.13(3) of the Act, which reads thus: "13. (1) Nothing contained in section 11^97[or section 12 ] shall operate so as to exclude from the total income of the previous year of the person in receipt thereof- (a) & (b)..... (c ) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof- (i) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or (ii) if any part of such income or any property of the trust or the institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in sub-section (3) : ................... (3) The persons referred to in clause (c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erference. 10. Ground Nos.4 & 5 raised by the Assessee reads as follows: "4.The learned Commissioner of Income Tax (Appeals) erred in confirming the disallowance of depreciation of Rs. 515,36,087/- ignoring the position of law for the A Y.2009-10 that, depreciation is an allowance to be considered for application. 5. The learned Commissioner of Income Tax (Appeals) erred in not following the ratio laid down by the Hon'ble t ribunal Bangalore in the case of ACIT Vs Sri.Adhichunchanagiri Shikshana Trust (2013) 141 ITD 575 (Blore) ". 11. In the course of assessment u/s. 143(3) of the Act for AY 2011-2012 the AO noticed from the details of depreciation claimed, that the depreciation was claimed on assets, the cost of acquisition of the said assets had been claimed by the assessee as capital expenditure towards application of funds towards the objects of the trust and allowed as such. According to the AO, allowing such a claim would amount to allowing double deduction. On the facts of the present case, he was of the view that the decision of the Hon'ble Supreme Court in the case of Escorts Limited & another Vs. Union of India 199 ITR 43 is squarely applicable....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng double deduction and placed reliance on the decision of Hon'ble Supreme Court in Escorts Ltd. (supra). The CIT(A), however, allowed the claim of assessee. On further appeal by the Revenue, the Tribunal held as follows:- "20. We have considered the rival submissions. If depreciation is not allowed as a necessary deduction for computing income of charitable institutions, then there is no way to preserve the corpus of the trust for deriving the income as it is nothing but a decrease in the value of property through wear, deterioration, or obsolescence. Since income for the purposes of section 11(1) has to be computed in normal commercial manner, the amount of depreciation debited in the books is deductible while computing such income. It was so held by the Hon'ble Karnataka High Court in the case of CIT Vs. Society of Sisters of St. Anne 146 ITR 28 (Kar). It was held in CIT vs. Tiny Tots Education Society (2011) 330 ITR 21 (P&H) , following CIT vs. Market Committee, Pipli (2011) 330 ITR 16 (P&H) : (2011) 238 CTR (P&H) 103 that depreciation can be claimed by a charitable institution in determining percentage of funds applied for the purpose of charitable objects. Claim ....