TaxTMI 
TaxTMI 
2017 (9) TMI 1601
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.... the decision of the hon'ble Kerala High Court in the case of Lissie Medical Institutions v. CIT [2012] 348 ITR 344 (Ker). 2.2 Aggrieved by the order of assessment dated December 19, 2008 for the assessment year 2006-07, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals)-14, Bangalore challenging the Assessing Officer's action in disallowing the assessee's claim for depreciation. The learned Commissioner of Income-tax (Appeals) vide the impugned order dated June 30, 2016 allowed the assessee's appeal following, inter alia, the decision of the hon'ble Karnataka High Court in the case of DIT (Exemptions) v. Al-Ameen Charitable Fund Trust [2016] 383 ITR 517 (Karn) ; [2016] 67 taxmann.com 160 (Kar). 3. 3.1 The Revenue, being aggrieved by the order of the Commissioner of Income-tax (Appeals)-14, Bangalore, has preferred this appeal raising the following grounds challenging the learned Commissioner of Income-tax (Appeals)'s order in allowing the assessee's claim of depreciation : Disallowance of depreciation : (i) The Commissioner of Income-tax (Appeals) has failed to appreciate the fact that the hon'bl....
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....ly. the law laid down by the hon'ble Supreme Court is squarely applicable to the taxation of charitable/religious trust or institution under sections 11, 12 and 13 of the Income-tax Act. (iv) Though the Finance (No. 2) Act, 2014 has amended has amended the Income-tax Act, 1961, with regard to non-allowance of depreciation to charitable/religious trust or institution on the value of assets which has already been allowed as depreciation of income under section 11(1) by inserting sub-section (6) of section 11, with effect from April 1, 2015, such amendment cannot be construed as effective prospectively inasmuch as in accordance with the ratio laid down by the hon'ble Supreme Court in the case of Escorts Ltd. v. Union of India (supra), the amendment only set out more clearly and categorically what the Legislature had intended and conveyed under section 11(1) even earlier to the said amendment. As such, the amendment shall be considered as clarificatory in nature making it clear that the assessee is not entitled to claim double deduction in respect of some expenditure under section 11(1) as application of income and also depreciation simultaneously." 3.2 The learned ....
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....on'ble High Court in the case of Al- Ameen Charitable Fund Trust (supra) in paragraphs 15 to 25 of the order are extracted hereunder (pages 522 to 528 of 383 ITR) : "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 Society of the Sister's of St. Anne (supra) wherein the Division Bench of this court has held thus (page 31 of 146 ITR) : '9. 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 expression "total income" has been defined under section 2(45) of the Act to mean "the total amount of income referred to in section 5 computed in the manner laid down in this Act". The word "income" is defined under section2(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 under section 28. The word "income", therefore, is a m....
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....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 for computing income for purposes of section 11. The questions proposed have, thus, to be answered against the Revenue and in favour of the asses see.' The High Court of Bombay in the case of CIT v. Institute of Banking [2003] 264 ITR 110 (Bom) after placing reliance on the judgment of CIT v. Munisuvrat Jain [1994] Tax LR 1....
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....ined 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 hear 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 assessee two deductions-both under section 10(2)(vi) and section 10(2)(xiv) under the 1922 Act or under sections 32(1)(ii) and 35(2)(iv) of the 1961 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 section 10(2)(x....
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....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 income under this section in the same or any other previous year.' The plain language of the amendment establishes the intent of the Legislature in denying the depreciation deduction in computing the income of charitable trust is to be effective from April 1, 2....
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....eciation 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 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 general principles concerning retrospectivity in paragraphs 33 and 34, and the same is extracted hereunder (page 487 of 367 ITR) : 'We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without infli....