TaxTMI 
TaxTMI 
2018 (6) TMI 443
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....on which depreciation is claim now and further allowance of deprecation will tantamount to double deduction. In view of the recent decision of the Hon'ble Delhi High Court in the case of DIT(E) Vs. Charanjiv Charitable Trust dated 18.03.2014. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the claim of accumulated funds of Rs. 13,60,51,495/- u/s 11(2) of the I.T., Act, 1961 in absence of benefit of Exemption u/s 11 and 10(23C) of the I.T. Act, 1961. 4. The appellant craves leave to add, alter of amend any ground of appeal raised above at the time of hearing. 2. Briefly stated facts of the case are that the assessee GS1, India is an organization affiliated to GS1 International, Belgium for promotion of GS1 numbering system of Indian trade and industry for its use in product, services and location identification, promotion of EANCOM standards in electronic data interchange (EDI) and other services as offered by GS1 International. The assessee filed return of income on 25/09/2012 disclosing Nil income. The Assessing Officer noted the historical background of registration granted and cancelled by the Ld. Director of Income-T....
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....pective of the nature of use or application or retention of the income from such activity. Accordingly, he held that activities of the assessee were not charitable and excess of income over expenditure amounting to Rs. 10,58,54,244/- was held as taxable. The Assessing Officer also disallowed the depreciation of Rs. 13,48,881/- claimed as application of income on the ground that capital expenditure on those assets has already been claimed as application of income. The claim of carry forward of Rs. 13,60,51,495/-, which was accumulated in pursuance to section 11(2) of the Act in previous years, was also not allowed in view of the assessee held as not engaged in charitable activity. In this manner, the Assessing Officer assessed the total income at Rs. 24,32,54,620/- in his order under section 143(3) of the Act passed on 16/03/2015. On further appeal, the Ld. CIT(A) allowed the appeal of the assessee observing as under: "4.4 Taking into consideration the appellant's submission regarding its activities which are in line with the objects in its MOA, the decision of the Hon'ble Delhi High Court and the ITAT Bench Delhi with regard to the charitable nature of the activity of the appella....
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....ode licensing cannot be characterized as commercial receipt and subject to tax treatment. He further submitted that in the immediately preceding assessment year 2011-12 also the Tribunal held activities of the assessee as charitable and therefore, assessee is entitled for benefit under section11 of the Act. 5.3 We have heard the rival submissions and perused the relevant material on record. The Hon'ble Delhi High Court in ITA No. 333/2018 for assessment year 2011-12 upheld the activity of the assessee as charitable. The relevant finding of the Hon'ble Delhi High Court is reproduced as under: "The ITAT in this case relied upon the decision of this Court in another case of the assessee for a precious year [Commissioner of Income-tax (Exemption) Vs. M/s. GSI India, ITA 691/2017, decided on 16.02.2018]. The ITAT in this case relied upon the previous order of this Court in the case of M/s. GSI India Vs. Director General of Income Tax (Exemption) and Anr., W.P.(C) 7797/2009 dated 26.09.2013.] This Court notices that the same issue for another A.Y. was held in favour of the assessee and against the Revenue (in the case of Commissioner of Income Tax Vs. M/s. GSI India, ITA No. 691/20....
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....therefore, is carrying on business, has to be rejected. The intention behind the entire activity is philanthropic and not to recoup or reimburse in monetary terms what is given to the beneficiaries. Element of give and take is missing, but decisive element of bequeathing is present. In the absence of "profit motive " and charity being the primary and sole purpose behind the activities of the petitioner is perspicuously discernible and perceptible. 27. As observed above, fee charged and quantum of income earned can be indicative of the fact that the person is carrying on business or commerce and not charity, but we must keep in mind that charitable activities require operational/running expenses as well as capital expenses to be able to sustain and continue in long run. The petitioner has to be substantially selfsustaining in ling-term and should not depend upon government, in other words taxpayers should not subsidize the said activities, which nevertheless are charitable and fall under the residuary clause "general public utility". The impugned order does not refer to any statutory mandate that a charitable institution falling under the last clause should be wholly, substantial....
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....ritable Foundation, Poona (Civil Appeal No. 7186 of 2014 with Another) has rejected the contention of the Revenue of double benefit and allowed the depreciation on assets as application of income even though capital expenditure in respect of those assets was already claimed as application of income in earlier years. The relevant finding of the Hon'ble Supreme Court is reproduced as under: ".......................The view taken by the Assessing Officer in disallowing the depreciation which was claimed under Section 32 of the Act was that once the capital expenditure is treated as application of income for charitable purposes, the assessees had virtually enjoyed a 100 per cent write off of the cost of assets and, therefore, the grant of depreciation would amount to giving double benefit to the assessee. Though it appears that in most of these cases, the CIT (Appeals) had affirmed the view, but the ITAT reversed the same and the High Courts have accepted the decision of the ITAT thereby dismissing the appeals of the Income Tax Department. From the judgments of the High Courts, it can be discerned that the High Courts have primarily followed the judgment of the Bombay High Court in &....
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....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 32of 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 form building, plant and machinery and furniture was liable to be computed in normal commercial manner although the Trust may not be carrying on any business and the assets in respect whereof depreciation is claimed may not be business assets. In all such cases, section 32 of the Income Tax Act providing for depreciation for computation of income derived from business or profession is not applicable. However, the income of the Trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the Trust. In view of the aforesatated judgment of the Bombay High Curt, we answer question No. 1 in the affirmative i.e., in favour of the assessee and against the Department. 4. Question No. 2 herein is identical to the question which was raised before the Bombay High Court in the case of Direc....