TaxTMI 
TaxTMI 
2018 (4) TMI 1483
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....ees like charitable or religious institutions are governed by almost the separate or independent provisions of Section 11, 12, 12A, 12AA & 13 and these provisions are independent code in itself in Chapter III of the Income Tax Act, 1961 and claim of depreciation u/s 32 come under chapter IV of the Act under the head 'D' - Profit and Gains of Business or profession and depreciation is allowed when the capital assets are used for the purpose of business? ii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is right in dismissing appeal filed by the revenue on the issue of disallowance of depreciation by ignoring the fact that in the case of charitable or religious institutions, the assessee is not eligible for any type of depreciation as the entire expenditure for the purchase of capital assets is allowed as a deduction and the same is treated as application of income u/s 11(1) and claiming depreciation on the same capital assets tantamount to double deduction and is not as per law as these capital assets are not use for the purpose of business or profession as provide u/s 32(1)? iii) Whether on the facts and in circumstances of the case and ....
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....r and then allow the same to be carried forward for application for subsequent years. It is for the Assessee to write back depreciation and if done the AO will modify the assessment determining higher income and allow recomputed income with the depreciation written back by the Assessee to be carried forward for subsequent years for application for charitable purposes. 2. Since the High Court has also already given the benefit for other assessment years we do not find any reason to interfere with the order passed by the High Court. The appeal is accordingly dismissed. In view of the aforesaid, the application for intervention is not pressed as we have not gone into the merits of the case." He further relied upon the decision of Supreme Court in CIT- III, Pune vs. Rajasthan and Gujarati Charitable Foundation Poona and other connected matters (Civil Appeal 7186/2014) decided on 13th December, 2017 which reads as under:- "After hearing learned counsel for the parties, we are of the opinion that the aforesaid view taken by the Bombay High court correctly states the principles of law and there is no need to interfere with the same. It may be mentioned that most of the High Courts ....
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....pani Trust v. Commissioner of Income Tax MANU/SC/0107/1998 : (1998) 2 SCC 584, this Court in the context of benefit claimed Under Section 11 of the Act held: 9. In the present case, the Assessee is not claiming any benefit Under Section 11(2) as it cannot; because in respect of this assessment year, the Assessee has not complied with the conditions laid down in Section 11(2). The Assessee, however, is entitled to claim the benefit of Section 11(1)(a). In the present case, the Assessee has applied Rs. 8 lakhs for charitable purposes in India by purchasing a building which is to be utilised as a hospital. This income, therefore, is entitled to an exemption Under Section 11(1). In addition, Under Section 11(1)(a), the Assessee can accumulate 25% of its total income pertaining to the relevant assessment year and claim exemption in respect thereof. Section 11(1)(a) does not require investment of this limited accumulation in government securities. The balance income of Rs. 1,64,210.03 constitutes less than 25% of the income for Assessment Year 1970-71. Therefore, the Assessee is entitled to accumulate this income and claim exemption from income tax Under Section 11(1)(a). We set aside ....
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....nditions subject to which approval has been given, such approval and exemption must forthwith be withdrawn. All these cases are disposed of making it clear that the Revenue is at liberty to pass fresh orders if such necessity is felt after taking into consideration the various provisions of law contained in Section 10(23C)read with Section 11 of the Income-tax Act." In all those appeals which have come from the High Court of Punjab and Haryana and filed by the Department of Income-tax except one from the Gujarat High Court, the High Court has followed its aforesaid judgment in Pinegrove International Charitable Trust. Since this view stands approved, all these appeals are dismissed. We, however, make it clear that observations made in para. 25, reproduced above, shall apply in these cases. One appeal is from the Gujarat High Court which has also followed the view taken by the Punjab and Haryana High Court in Pinegrove International Charitable Trust, which also stands dismissed. We also make it clear that the observations made in para. 25 in Queen's Educational Society v. CIT MANU/SC/0287/2015 : [2015] 8 SCC 47 : [2015] 372 ITR 699, 729 (SC) shall be followed. 6.2 He str....
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....has further relied upon the decision of this Court in case of Commissioner of Income Tax vs. M/s Compucom Foundation and other connected matters (DBITA No. 209/2017) decided on 14th November, 2017, wherein it has been held as under:- "4. Now the issue is squarely covered as stated by counsel for the respondent in case of Commissioner of Income Tax-II vs. Krishi Upaj Mandi Samiti (DBITA No. 32/2010) decided on 16th January, 2015 wherein it has been held as under:- "5. The assessee is a charitable institution registered under Section 12-A of the Act of 1961 and 100% capital expenditure was availed by it against the asset concerned i.e. a building. Section 32(1) of the Act of 1961 provides for depreciation in respect of building, plant and machinery owned by the assessee and used for business purposes. Income of a charitable trust like the present assessee derived from the depreciable heads is also liable to be computed on commercial basis, however, while doing so it is to be kept in mind that ultimately assessee is a charitable institution and its income for tax purposes is required to be determined by taking into consideration provisions of Section 11 of the Act of 1961 after ex....
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.... submits that the amount of salary claimed on account of payment to the sons i.e., Anoop and Alock was reasonable, as both are looking after the business and assessee has got paralytic attack in the year 1983, therefore, the payment of salary to these persons at the rate of Rs. 6,000 and Rs. 5,000 per month, respectively, was justified. 5. The facts on record reveal that both are graduates and Anoop, to whom assessee has paid Rs. 6,000 p.m. in the year under consideration was getting only Rs. 1,000 p.m. just in the preceding year. So far paralytic attack to the assessee is concerned, it happened in the year 1983. The assessee has carried on the business even after paralytic attack without the help of these two sons. 6. We also notice that in the preceding year i.e., 1991, assessee has disclosed income of Rs, 70,000. This year he has disclosed only income of Rs. 45,673. On these facts, there is no justification of paying such heavy salary to the sons of the assessee, who are employed by the assessee for the purpose of his business. 7. It is also pertinent to note that what should be the reasonable salary is basically a question of fact and Tribunal is a fact-finding final bo....