TaxTMI 
TaxTMI 
2018 (12) TMI 207
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....ets and had also claimed these as application of funds which was contrary to the law, as the assessee had already been granted benefit of exemption when assessee acquired these fixed assets. 4. As regards other grounds of appeal, ld. D.R. submitted that Assessing Officer had disallowed certain amounts which were commission payment to middleman to attract new admission in the Institute and which the ld. CIT(A) has wrongly allowed. 5. Arguing in appeal No.266/LKW/2017, ld. D.R. stated that ld. CIT(A) has wrongly allowed benefit under section 11 of the Act ignoring the fact that activities of the assessee were commercial in nature and were not charitable one. 6. Ld. A.R. of the assessee, on the other hand, submitted that claim of depreciation on fixed assets is a separate claim which the assessee was entitled and, therefore, had rightly claimed the same and was rightly allowed by the ld. CIT(A). It was submitted that ld. CIT(A) while allowing the claim of assessee has relied on a number of decisions and, therefore, there is no infirmity in the order of ld. CIT(A). As regards claim against repayment of term loans, it was submitted that this issue is also in favour of the asses....
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.... only in cases where income is to be computed under the head "Profits and gains of business and profession" whereas Assessee is claiming exemption of its income under section 11 as charitable institution. 5.03 The first ground of disallowance i.e. "depreciation amounts to double deduction" is factually incorrect. The fact is that in earlier assessment years, the Assessee did not make any claim in respect of expenditure incurred on additions to fixed assets as "application of income". 5.04 The second ground of disallowance is legally incorrect. The depreciation is charged to Income & Expenditure A/c to work out the "Income" of the Society on sound commercial principles. Such claim is not under section 32(1). The depreciation is an allowable deduction in case of charitable institutions as held in the following judgments - (i) [2003] 264 ITR 110 (Bom) - CIT Vs. Institute of Banking Held at Page-113-114 (i) It is not correct that section 32 was the only section granting benefit of deduction of depreciation. (ii) Section 32 is not applicable to charitable trusts. (iii) Income of charitable trust is required to be computed u/s 11 on c....
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....ved as under - "............ strictly speaking, res judicata does not apply to income-tax proceedings. Again each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year." 5.06 In view of above facts and legal position, the disallowance/ addition of depreciation claim of Rs. 1,34,88,135 is erroneous in law and fact and liable to be deleted. 2.3 Discussion & Decision: Having gone through the finding given by- the A.O. and also the elaborate written submissions as made by the Ld. A.R. of the appellant, I am of the considered view depreciation in an allowable expenditure in computing income of the trust. To this effect, there are enumerable case laws in favour of the assessee; some of which have been quoted by the Ld. A.R. in his written submissions. The latest decision being that of the Hon'ble Karnataka High....
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....onal Bank 001200IC00800 278 For acquiring fixed assets F.Y.200910 2,00,00,000 48,12,512 3 Punjab National Bank 001200IC00800 357 For acquiring fixed assets F.Y.201011 2,80,00,000 60,70,856 4 Union Bank of India 3027063900000 12 For acquiring fixed assets F.Y.200809 65,00,000 18,75,395 TOTAL 5,85,00,000 1,35,22,4 95 8.02 The above repayments of loans aggregating to Rs. 1,35,22,495 (as shown in the last column of the Table) have been claimed by the /Assesses as application of income in the Computation of Income filed with the Return. 8.03 The Ld. A. O. has disallowed the above claim on the following grounds - "(i) The Term loan taken by the Assessee has never been shown as income of the society; hence, repayment of such loan cannot be claimed as expenditure, (ii) Further, it amounts to double deduction. The expenditure incurred by the Assessee from the loan amount has already been claimed as expenses claimed during the respective years. Hence to claim the repayment of loan as application of funds amounts to double deduction and is against normal accounting princi....
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....n the Act, which disentitles the assesseetrust from claiming repayment of loan as application of income. Especially in view of the fact that the trust has to augment its income and for that purpose it has put up a construction with borrowed fund. (ii) If raising of loan does not stand in the way of its charitable activities, the repayment thereafter must be treated as application of income. By repayment of the loan, the trust wiped out its liability and the income earned from the property would be available for being utilized for charitable purposes, (ii) [2000] 242 ITR 703 (Kam) - CIT Vs. Janmabhoomi Press Trust Held at Pages 701-704 Relying upon the earlier judgment of the same court, reported in [2000] 242 ITR 457 (Kam)- CIT Vs. Janmabhoomi Press Trust, held that the Tribunal is right in holding that repayment of debt incurred by the assesses for the construction of the commercial building taken up by the assesses for the purpose of augmenting Us funds, should be treated as "application" of the income of the assessee-trust for charitable purposes. 8.08 In view of above facts and legal position, the disallowance/ addition of repayment ....
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.... these additional charges, as the monetary cap is only on tuition fees. In any case, such additional receipts are de-minimis and are collected for specific purposes. The decision of the Hon'ble Supreme Court in the case of Unikrishnan, JP & Others which has been cited by the A.O. in his order, deals with the receipt of Capitation Fees. In this case, admittedly, there is no capitation fees, thus, the said decision of the Hon'ble Supreme Court is not at all applicable to the instant case. These fees/ charges, collected in addition to the tuition fees, were fully recorded and accounted funds and these have been spent for the purposes/ objects of the trust. Even assuming that the assessee trust had charged some additional fees/ charges which was in violation of the UPTU norms, it was for the UPTU to take appropriate action. The A.O. cannot step into the shoes of the UPTU to determine the excess amount, if any, charged. Further, it is now a settled law that "Education" per se is a charitable activity and even if some surplus is earned by the trust while imparting education, the same cannot be considered as a business activity as long as the funds of the trust are used for the pu....