TaxTMI 
TaxTMI 
2017 (6) TMI 498
X X X X Extracts X X X X
X X X X Extracts X X X X
....1 (hereinafter referred to as the 'Act') while filing returns for Assessment Year 2011-12. 03. The first issue raised in the present appeal by the revenue is with respect of disallowance of depreciation as application of income, which are covered in grounds (i to (iv) of the grounds of Revenue, which are descriptive in nature and hence not reproduced. 04. It is the contention of the Ld. DR that while computing the income u/s.11 and 12 of the Act, assessee had claimed depreciation to the tune of Rs. 18,90,94,568/- on the assets, when the investment made thereof had already been claimed as application of income during the year of investment. It was submitted that the assessee is not liable to claim depreciation on the same as it would amount to double deduction. The Ld. DR submitted that the order of the Hon'ble jurisdictional High Court in ITA No.62/2010 (67 taxmann.com 160), dt.22.02.2016, is clearly distinguishable. 05. The Ld. AR has submitted as follows : Section 11 of the Act clearly states that: "11 (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the income from the charitable institutions, then there is no way to preserve the corpus of the trust for deriving the income. The Board also appears to have understood the 'income' u/s. 11(1) in its commercial sense. The relevant portion of the Circular No. 5-P (LXX-6) of 1968, dated July 19, 1968, reads : "Where the trust derives income from house property, interest on securities, capital gains, or other sources, the word 'income' should be understood in its commercial sense , i. e . , book income , after adding back any appropriations or applications thereof towards the purpose of the trust or otherwise , and al so after adding back any debits made for capital expenditure incurred for the purposes of the trust or otherwise. It should be noted, in this connection, that the amounts so added back will become chargeable to tax u/s. 11(3) to the extent that they represent outgoings for purposes other than those of the trust. The amounts spent or applied for the purposes of the trus from out of the income computed in the aforesaid manner, should be not less than 75 per cent. of the latter, if the trust is to get the full benefit of the exemption u/s. 11(1)." ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....venue is also dismissed. UNUTILISED GRANTS AS INCOME 11. The third issue is on treatment of unutilised grants as income. Under this head also, the Revenue has raised grounds (i) to (iv) which are descriptive in nature and hence not reproduced. 12. The Ld. DR has submitted that the assessee has received grants from various universities and outside agencies towards education activity. However, in many cases, the assessee has not utilised the grants and are lying with the assessee, shown as liabilities in the Balance-Sheet. It was noticed during the scrutiny that the assessee has not maintained any separate bank account for the purpose of keeping the grants received from various universities and outside agencies and has wrongly merged the funds with other revenue streams of the assessee and it was further contended that the grants received by the assessee were not utilised for the purpose it was intended for a long-time. In view of the above, it was submitted that the findings of the CIT (A) are also required to be specified. Our attention was also drawn to para 6.4 of the order of the CIT (A), wherein it is mentioned as under : "6.4 As the AR has produced all record....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... head also, the Revenue has raised grounds (i) to (v) which are descriptive in nature and hence not reproduced. 16. The Ld. DR has submitted that the assessee had availed a loan to the tune of Rs. 28,59,60,638/- as on 31.03.2010 and the same was increased to Rs. 47,14,68,794/- as on 31.03.2011. Thus it was submitted that there was an increase in the loan amount to the extent of Rs. 18,55,08,156/- during the year under consideration. It was also submitted by the Ld. DR that the assessee for the purpose of availing the loan and actual utilisation of the same has submitted reply, wherein it was submitted that the loans were utilised for meeting the capital / revenue expenditure of the Society and its institution. It was also brought to the notice that the assessee during the year under consideration had also invested in two immovable properties during the financial year under consideration, which were purchased vide said deeds dt.18.03.2011 and 16.09.2010, for a sum of Rs. 2,58,67,200/- and Rs. 3,67,00,000/-. It was submitted by the Ld. DR that the reliance placed by the CIT (A) on the judgment of Hon'ble jurisdictional High Court in the matter of CIT v. Janmabhoomi Press Trust [24....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the present case, the sole basis of disallowing the amount of Rs. 10,62,94,245/- is on account of the loans borrowed for the purpose of capital expenditure. It is thus clear that the total expenditure incurred by the assessee was Rs. 47,87,64,431/-, for the charitable purposes / activities of the trust. It is also coming from the record that the assessee has applied the total amount of Rs. 47,87,64,431/- for the trust purposes. The reasoning given by the AO is this that as the excess fund was already available with the assessee-trust which was lying in the form FDRs, that should have been applied instead of the loan amount. As per the assessee, funds even if borrowed funds were utilised for the objects of the trust and therefore, it should be allowed. In our view, if this proposition of the assessee is accepted then it would amount to granting the benefit of double deduction. The income of the assessee is lying invested in FDR and it is not utilised for the objects of the trust or for repayment of loan earlier taken for objects of the trust. The assessee is asking for accepting the usage of borrowed funds as application of income for the objects of the trust , therefore seekin....