G.K.R. CHARITIES, MUMBAI V. DDIT (E)II (1), MUMBAI

CO 34/MUM/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7706 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 19-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 16-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A H DALAL MS G K R CHARITIES
• Keywords: Depreciation; Charitable institution; Tax effect; Revenue expenditure; Capital expenditure
• Section: 143(3); 14A; 12A; 12AA; 32; 28; 11

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . .. . . . . . , !' #$ !' #$ !' #$ !' #$ , ,, , % &'( % &'( % &'( % &'( ) )) ) & & & & BEFORE SHRI G.E. VEERABHADRAPPA, PRESIDENT AND SHRI AMIT SHUKLA, JUDICIAL MEMBER &. / ITA NO. 8210/MUM./2010 ( %* + ,+ / ASSESSMENT YEAR : 200708 ) DY. DIRECTOR OF INCOME TAX11(1) ROOM NO.507, PIRAMAL CHAMBERS LALBAUG, PAREL, MUMBAI 400 012 .. -. / APPELLANT * V/S M/S. G.K.R. CHARITIES UNIT NO.304, SIGMA HIRANANDANI GARDENS POWAI, MUMBAI 400 076 .... /0-. / RESPONDENT (- )1 &. / PERMANENT ACCOUNT NUMBER AAATG2361E /0) &. / C.O. NO. 34/MUM./2012 ( &. 8210/MUM./2010 &) 34' 5 ) (ARISING OUT OF ITA NO. 8210/MUM./2010 ( %* + ,+ / ASSESSMENT YEAR : 200708 ) M/S. G.K.R. CHARITIES UNIT NO.304, SIGMA HIRANANDANI GARDENS POWAI, MUMBAI 400 076 .. /0) / CROSS OBJECTOR * V/S DY. DIRECTOR OF INCOME TAX (E)II(1) ROOM NO.507, PIRAMAL CHAMBERS LALBAUG, PAREL, MUMBAI 400 012 .... /0-. / RESPONDENT (- )1 & . / PERMANENT ACCOUNT NUMBER AAATG2361E ( 6 7 &) / REVENUE BY : MR. PAVAN VED %* +8' 6 7 &) / ASSESSEE BY : MR. A.H. DALAL M/S. G.K.R. CHARITIES 2 &* 6 '1 / DATE OF HEARING 18.07.2012 ')# 9:, 6 '1 / DATE OF ORDER 10.08.2012 ')# ')# ')# ')# / ORDER !' #$ !' #$ !' #$ !' #$ , ,, , % &'( % &'( % &'( % &'( ) )) ) ; ; ; ; / PER AMIT SHUKLA, J.M. THE PRESENT APPEAL PREFERRED BY THE REVENUE, IS DI RECTED AGAINST THE IMPUGNED ORDER DATED 21 JULY 2010, PASSED BY THE LE ARNED COMMISSIONER (APPEALS)I, MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) FOR ASSESSMENT YEAR 200708. THE GROUNDS RAISED BY THE REVENUE, RE AD AS FOLLOWS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE CLAIM OF T HE ASSESSEE FOR EXEMPTION UNDER SECTION 11 OF THE ACT IGNORING THE FACT THAT THE ASSESSEE WAS FOUND TO HAVE VIOLATED THE PROVISIONS OF SECTION 36A(3) OF THE BOMBAY PUBLIC TRUST ACT, WHEREIN THE TRUST I S UNDER THE LEGAL OBLIGATION TO OBTAIN PERMISSION OF THE CHARITY COMM ISSIONER TO RAISE LOANS FOR THE TRUST AND THE ASSESSEE TRUST HAD NEVE R GOT ANY SUCH PERMISSION FROM THE CHARITY COMMISSIONER IN THIS RE GARD, AND RELIANCE IS PLACED ON THE DECISION OF BOMBAY HIGH COURT IN C IT V/S PRUTHVI TRUST, 124 ITR 48. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE CLAIM OF T HE ASSESSEE FOR DEPRECIATION ON ASSETS AMOUNTING TO ` 19,48,496 THE COST OF WHICH WAS ALREADY ALLOWED AS APPLICATION AND THEREBY RESULTED IN ALLOWING DOUBLE DEDUCTION FOR THE SAME OUTGOING, WHICH IS AGAINST T HE PRINCIPLE LAID DOWN IN THE JUDGMENT OF HON'BLE SUPREME COURT IN TH E CASE OF ESCORTS LTD. V/S UNION OF INDIA, 199 ITR 43. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE CLAIM OF T HE ASSESSEE OF REPAYMENT OF LOAN AMOUNTING TO ` 2,91,57,058 AS APPLICATION OF INCOME WHEREIN THE COST OF ASSET FOR WHICH LOAN WAS TAKEN STOOD ALREADY ALLOWED AS APPLICATION OF INCOME, AND THERE BY RESULTED IN DOUBLE DEDUCTION FOR THE SAME OUTGOING WHICH IS AGA INST THE PRINCIPLE LAID IN THE JUDGMENT OF HON'BLE SUPREME COURT IN TH E CASE OF ESCORTS LTD. V/S UNION OF INDIA, 199 ITR 43. 2. FACTS RELEVANT FOR ADJUDICATION OF THE ISSUES INVOL VED ARE THAT THE ASSESSEE IS A CHARITABLE TRUST ENGAGED IN PROVIDING NECESSARY ASSISTANCE TO M/S. G.K.R. CHARITIES 3 THE AGED, DESTITUTE, ORPHANS, HANDICAPPED, MENTALLY RETARDED PERSONS, MEDICAL RELIEF WHICH FALLS WITHIN THE AMBIT OF CHARITABLE ACTIVITIES AS DEFINED IN SECTION 2(15) OF THE ACT. THE ASSESSEE TRUST IS REGISTERED WITH THE CHARITY COMMISSIONER AND ALSO LOOKING TO ITS CHARITABLE ACT IVITIES. IT HAS BEEN GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT, VIDE ORDER DATED 29 TH MAY 2000, BY THE DIT (EXEMPTION). 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER, ON PERUSAL OF THE RECORDS, REQUIRED THE ASSESSEE TRUST TO EXPLAIN AND GIVE REASONS ON THE FOLLOWING POINTS AS NARRATED BELOW: (I) DEPRECIATION OF ` 19,48,496, HAS BEEN CLAIMED IN THE INCOME & EXPENDITURE ACCOUNT, WHEN THE CAPITAL EXPE NDITURE ON THE ASSETS ACQUIRED BY THE ASSESSEE TRUST HAS ALREA DY BEEN ALLOWED AS APPLICATION OF INCOME FROM THE TRUST PRO PERTY UNDER SECTION 11 OF THE ACT IN THE EARLIER YEARS. THIS, P RIMAFACIE, AMOUNTS TO CLAIMING OF DOUBLE DEDUCTION AND IN VIEW OF THE JUDGMENT OF HON'BLE SUPREME COURT IN ESCORTS LTD. & ANR. V/S UNION OF INDIA & ORS., [1993] 199 ITR 43 (SC) , WHY THE DEPRECIATION CLAIMED SHOULD NOT BE DISALLOWED; (II) WHY THE AMOUNT OF ` 2,91,57,058, WHICH HAS BEEN CLAIMED AS APPLICATION OF INCOME ON ACCOUNT OF REPAYMENT O F LOAN TAKEN FROM MANAGING TRUSTEE IN THE EARLIER YEARS SHOULD N OT BE DISALLOWED WHEN THIS LOAN WHICH WAS RAISED HAS NOT BEEN DECLARED / TREATED AS INCOME IN THE YEAR OF RECEIPT ; AND (III) FOR RAISING UNSECURED LOAN OF ` 2,91,57,058, FROM THE TRUSTEE, WHETHER ANY PRIOR APPROVAL OF THE CHARITY COMMISSIONER HAS BEEN OBTAINED OR NOT UNDER THE BOMBAY PUBLIC TR USTS ACT, 1950 (FOR SHORT THE TRUSTS ACT ). SINCE FROM THE RECORDS IT IS SEEN THAT NO PRIOR APPROVAL HAS BEEN OBTAINED, IT A MOUNTS TO LEGAL VIOLATION OF THE SAID ACT AND ON THIS GROUND ALONE WHY REGISTRATION UNDER SECTION 12AA OF THE ACT, SHOULD NOT BE M/S. G.K.R. CHARITIES 4 CANCELLED AND EXEMPTION UNDER SECTION 11 OF THE ACT BE FORFEITED. 4. IN RESPONSE, THE ASSESSEE TRUST SUBMITTED THAT IT H AD TAKEN INTEREST FREE LOAN FROM THE MANAGING TRUSTEE IN ORDER TO MEE T EXCESS OF EXPENDITURE OVER INCOME OF THE TRUST, WHICH WAS TAKEN IN THE FI NANCIAL YEARS 200203, 200304 AND 200405 FOR SUM AGGREGATING TO ` 2,91,57,050. SOME TIME, IN THE MONTH OF OCTOBER 2003, THE ASSESSEE TRUST WAS I NFORMED ABOUT THE PROVISIONS OF BOMBAY PUBLIC TRUSTS ACT, 1950 (FOR S HORT THE TRUST ACT ), WHEREIN IT WAS REQUIRED TO OBTAIN PERMISSION OF THE CHARITY COMMISSIONER ABOUT TAKING INTEREST FREE LOAN FROM THE MANAGING T RUSTEE. THE ASSESSEE TRUST WAS UNDER THE IMPRESSION THAT INTEREST FREE L OAN TAKEN FROM THE MANAGING TRUSTEE DOES NOT REQUIRE ANY SPECIFIC PERM ISSION OF THE CHARITY COMMISSIONER. THEREAFTER, ON THE BASIS OF LEGAL ADV ISE, THE ASSESSEE TRUST APPLIED BEFORE THE CHARITY COMMISSIONER AFTER PASSI NG A RESOLUTION. THEREAFTER SEVERAL REMINDERS HAVE ALSO BEEN SENT FR OM TIME TO TIME RIGHT FROM THE YEAR 2003 TO 2005. IN THE YEAR 2005, A SHO W CAUSE NOTICE WAS ISSUED BY THE CHARITY COMMISSIONER AND THE REPLY BY THE ASSESSEE TRUST WAS SUBMITTED. ALL THESE DOCUMENTS WERE PLACED BEFORE T HE ASSESSING OFFICER. REGARDING CLAIM FOR DEPRECIATION, THE ASSESSEE SUBM ITTED THAT THIS ISSUE STANDS SETTLED BY THE JUDGMENT OF HON'BLE JURISDICT IONAL HIGH COURT IN CIT V/S INSTITUTE OF BANKING PERSONNEL SELECTION, [2003 ] 264 ITR 110 (BOM.) AND DIT V/S FRAMJEE CAWASJEE INSTITUTE, [1993] 109 CTR 463 (BOM.) . IT WAS CLARIFIED THAT THE JUDGMENT OF THE HON'BLE SUPR EME COURT IN ESCORTS LTD. (SUPRA) WAS PASSED ON DIFFERENT FACTS AND THE SAID JUDGMEN T IS NOT APPLICABLE IN SECTION 11 OF THE ACT. FURTHER, RELIA NCE WAS ALSO PLACED ON SEVERAL JUDGMENTS OF HONBLE HIGH COURTS INCLUDING THAT OF HONBLE GUJARAT AND KARNATAKA HIGH COURTS, A GIST OF WHICH HAS BEEN GIVEN AT PAGES4 AND 5 OF THE ASSESSMENT ORDER. ON THE ISSUE OF DEDUCTION OF ` 2,91,57,058, FOR REPAYMENT OF LOAN, IT WAS SUBMITTED THAT NO INTERES T WAS PAID ON THIS LOAN AND IF THE LOAN HAS BEEN TAKEN TO MEET DEFICIENCY I N CAPITAL AS WELL AS REVENUE EXPENDITURE INCURRED FOR THE OBJECTS OF THE TRUST, THE SAID RE PAYMENT OF LOAN IN SUBSEQUENT YEAR IS TO BE CONSIDE RED AS AMOUNT APPLIED M/S. G.K.R. CHARITIES 5 FOR THE OBJECTS OF THE TRUST. IN SUPPORT OF THIS CO NTENTION, RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN CIT V/S SHRI PLOT SWETAMBER MURTI PUJAK JAIN MANDAL, [1995] 211 ITR 2 93 (GUJ.) AND THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN CIT V/S MAHARANA OF MEWAR CHARITABLE FOUNDATION, [1987] 164 ITR 439 (RAJ.) . LASTLY, IT WAS SUBMITTED THAT RAISING OF SUCH UNSECURED LOANS EVEN IF IT VIO LATES THE PROVISIONS OF TRUSTS ACT, WILL NOT LEAD TO CANCELLATION OF REGIST RATION UNDER SECTION 12AA OF THE ACT. 5. THE ASSESSING OFFICER REJECTED THE CONTENTIONS OF T HE ASSESSEE TRUST AND HELD THAT FIRSTLY , INSOFAR AS THE LOAN TAKEN IN VIOLATION OF THE PROVI SIONS OF TRUSTS ACT IS CONCERNED, THE ASSESSEES CASE GET S SQUARELY COVERED BY THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S PRUTHIVI TRUST, [1980] 124 ITR 488 (BOM.) , WHEREIN IT HAS BEEN HELD THAT ANY ACTIVITY NOT AUTHORISED BY THE OBJECT / TRUST DEED WILL ENTAIL F ORFEITURE OF EXEMPTION AND, THEREFORE, EXEMPTION UNDER SECTION 11 IS BEING DENI ED TO THE ASSESSEE TRUST. SECONDLY , ON THE ISSUE OF CLAIM OF DEPRECIATION, HE HELD TH AT THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) , WAS NOT CHALLENGED BEFORE THE HON'BLE SUPREME COU RT DUE TO LOW TAX EFFECT AND, THEREFORE, THE JUDGMENT OF HON'BLE SUPREME COURT IN ESCORTS LTD. (SUPRA) WILL APPLY AND DEPRECIATION HAS TO BE DISALLOWED. LASTLY , ON THE ISSUE OF ALLOWABILITY OF CLAIM OF REPAYMENT OF LOA N, THE ASSESSING OFFICER HELD THAT THE SAME AMOUNTS TO DOUBLE DEDUCTION WHIC H IS NOT PERMISSIBLE IN VIEW OF THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN ESCORTS LTD. (SUPRA) . ACCORDINGLY, THE ASSESSING OFFICER FORFEITED THE EXEMPTION UNDER SECTION 11 OF THE ACT AND TAXED THE ENTIRE SURPLUS ALONG WITH THE DONATION, ETC. 6. BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSE SSEE TRUST, ON THE ISSUE OF DENIAL OF EXEMPTION UNDER SECTION 11 OF TH E ACT, REITERATING ITS CONTENTIONS AND SUBMITTED THAT INSOFAR AS FORFEITUR E OF EXEMPTION UNDER SECTION 11 OF THE ACT IS CONCERNED, THE SAME IS ERR ONEOUS IN LAW & ON FACTS AS THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COUR T IN PRUTHIVI TRUST M/S. G.K.R. CHARITIES 6 (SUPRA) WAS RENDERED IN ALTOGETHER DIFFERENT CONTEXT AND WILL NOT BE APPLICABLE IN ITS CASE. THE ISSUE WAS ENTIRELY DIFF ERENT, AS IN THAT CASE THE HONBLE COURT HAS HELD THAT THE TRUSTEES WERE CARRY ING ON THE BUSINESS WHICH WAS NOT AUTHORISED BY THE TRUST DEED AND, THEREFORE , THE ASSESSEE TRUST WAS NOT ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE A CT, WHEREAS, NO SUCH BUSINESS WAS CARRIED OUT BEYOND THE TRUST DEED. IN THE ASSESSEES CASE, THE ASSESSEE TRUST MERELY HAD TAKEN INTEREST FREE UNSEC URED LOAN FROM THE MANAGING TRUSTEE FOR WHICH THERE IS NO PROHIBITION IN THE TRUST DEED. REGARDING THE FORMALITIES UNDER THE TRUSTS ACT, IT WAS SUBMITTED THAT THE SAME WAS COMPLETED IN THE YEAR 2003 AND UNDER THE I NCOME TAX ACT, 1961, THERE IS NO SPECIFIC PROVISION THAT IN SUCH A CASE, EXEMPTION SHALL BE FORFEITED. ON THE CONTRARY, RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN ACIT V/S SURAT CITY GYMKHANA, [2008] 300 ITR 214 (S C) , WHEREIN IT HAS BEEN HELD THAT THE REGISTRATION OF A TRUST UNDER SECTION 12A OF THE ACT ONCE GRANTED, IS A FAIT ACCOMPLI AND THE AS SESSING OFFICER CANNOT FURTHER PROBE IN THE OBJECTS AND DENY EXEMPTION UND ER SECTION 11 OF THE ACT. SIMILARLY, THE HONBLE GUJARAT HIGH COURT IN HIRALAL BHAGWATI V/S CIT, (2000) 246 ITR 188 (GUJ.) , HELD THAT ONCE REGISTRATION IS GRANTED UNDER SECTION 12A OF THE ACT, THE INCOME TAX OFFICER IS N OT JUSTIFIED IN REFUSING BENEFITS UNDER SECTION 11 OF THE ACT. 7. ON THIS ISSUE, THE LEARNED COMMISSIONER (APPEALS) A GREED WITH THE CONTENTIONS OF THE ASSESSEE AND HELD THAT THE JUDGM ENT OF HON'BLE JURISDICTIONAL HIGH COURT IN PRUTHIVI TRUST (SUPRA) IS CLEARLY DISTINGUISHABLE AND WILL NOT APPLY TO THE FACTS OF THE PRESENT CASE . RATHER HE HELD THAT THE DECISION OF A COORDINATE BENCH OF THE TRIBUNAL, MU MBAI, IN ITO (EXEMPTION) V/S BOMBAY STOCK EXCHANGE, ITA NO.5551/MUM./2009, O RDER DATED 22 ND AUGUST 2006 , APPLIES TO THE FACTS OF THE CASE, WHEREIN IT WAS HELD THAT MERE OBSERVATIONS IN THE REPORT OF JOINT PARLIAMENTARY C OMMITTEE (JPC) AND SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) POINT ING OUT THE LAPSE AND IRREGULARITIES IN WORKING OF THE STOCK EXCHANGE CAN NOT TAKE AWAY THE BENEFIT OF SECTION 11. THE BELATED APPLICATION BY THE ASSES SEE TO THE CHARITY COMMISSIONER IS PURELY A TECHNICAL LAPSE, WHICH IS CURABLE. THE LEARNED M/S. G.K.R. CHARITIES 7 COMMISSIONER (APPEALS), THUS, RELYING ON THE JUDGME NTS OF THE HON'BLE SUPREME COURT AND HIGH COURT CITED BY THE ASSESSEE TRUST, DIRECTED THE ASSESSING OFFICER TO ALLOW THE ASSESSEES CLAIM FOR EXEMPTION UNDER SECTION 11 OF THE ACT. 8. ON THE SECOND ISSUE OF DISALLOWANCE OF CLAIM FOR DE PRECIATION OF ` 19,48,496, THE LEARNED COMMISSIONER (APPEALS) UPHEL D THE CONTENTIONS OF THE ASSESSEE TRUST ON THE GROUND THAT THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) IS SQUARELY APPLICABLE AND THE JUDGMENT OF HON'BLE SUPREME COUR T IN ESCORTS LTD. (SUPRA) WAS RENDERED TOTALLY ON A DIFFERENT FOOTING WHEREI N THE HON'BLE SUPREME COURT WAS DEALING WITH 100% COST OF SCIENTI FIC RESEARCH ALLOWED AS REVENUE EXPENDITURE UNDER SECTION 35 OF THE ACT AND FURTHER ALLOWANCE OF DEPRECIATION UNDER SECTION 32 OF THE ACT. HE THUS, DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATION OF ` 19,48,496. 9. LASTLY, ON THE ISSUE OF REPAYMENT OF LOAN OF ` 2,91,57,058, AS APPLICATION OF INCOME, THE LEARNED COMMISSIONER (AP PEALS) HELD THAT THE CBDT CIRCULAR NO.100 DATED 24 TH JANUARY 1973 , CLARIFIES THAT REPAYMENT OF LOAN WILL AMOUNT TO APPLICATION OF INCOME. FURTHER, THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN SHRI PLOT SWETAMBER MURTI PUJAK JAIN MANDAL (SUPRA) AND OTHER HIGH COURT JUDGMENTS ARE DIRECTLY ON THIS ISSUE. HE THUS DIRECTED THE ASSESSING OFFICER TO TREAT THE REPAYMENT OF LO AN TAKEN IN EARLIER YEARS AS APPLICATION OF INCOME. 10. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE FIRST GROUND SUBMITTED THAT THE MONEY BORROWED FROM THE M ANAGING TRUSTEE WAS IN VIOLATION OF SPECIFIC PROVISIONS OF THE TRUSTS A CT AND, THEREFORE, THE JUDGMENT RELIED ON BY THE ASSESSING OFFICER IN PRUTHIVI TRUST (SUPRA) , IS APPLICABLE. FURTHER, THE CASE LAWS RELIED ON BY THE ASSESSEE TRUST BEFORE THE LEARNED COMMISSIONER (APPEALS) ARE NOT APPLICABLE A S THE ASSESSING OFFICER IS NOT PROBING INTO THE OBJECTS, BUT ONLY POINTING OUT THAT SUCH AN ACT OF THE ASSESSEE VIOLATES THE PROVISIONS OF THE TRUSTS ACT. M/S. G.K.R. CHARITIES 8 11. ON THE ISSUE OF DEPRECIATION, THE LEARNED DEPARTMEN TAL REPRESENTATIVE MADE VERY ELABORATE SUBMISSIONS CONTENDING, INTERA LIA, THAT ONCE THE ASSETS ON WHICH THE DEPRECIATION HAS BEEN CLAIMED HAS BEEN CLAIMED AS DEDUCTION IN THE YEAR OF ACQUISITION AS APPLICATION OF INCOME , HOW THE DEPRECIATION CAN BE TREATED AS APPLICATION IN THIS YEAR. THIS CERTAI NLY AMOUNTS TO CLAIM OF DOUBLE DEDUCTION. THE HON'BLE SUPREME COURT IN ESCORTS LTD. (SUPRA) HAS CLEARLY LAID DOWN THE RATIO THAT DOUBLE DEDUCTION C ANNOT BE ALLOWED UNDER THE PROVISIONS OF ACT. HE SUBMITTED THAT A COORDINATE BENCH OF THE TRIBUNAL, COCHIN BENCH, HAS DIRECTLY DEALT UPON THIS ISSUE IN DDIT V/S ADI SHANKARA TRUST, ITA NO.96/COCH./2009, ORDER DATED 16 TH JUNE 2011 , AND ALSO IN DDIT V/S LISSIE MEDICAL INSTITUTION, REPORTED AS 2010TI OL644 . HE SUBMITTED THAT IN THESE DECISIONS, THE TRIBUNAL HAS NOT ONLY DEALT WITH ALL THE JUDGMENTS AVAILABLE ON THE ISSUE BUT HAS ALSO ANALYSED EACH A ND EVERY OF THEM AND HAS TAKEN INTO CONSIDERATION THE JUDGMENT OF HON'BLE SU PREME COURT IN ESCORTS LTD. (SUPRA) . HE FURTHER POINTED OUT THAT THE DECISION IN LISSIE MEDICAL INSTITUTION (SUPRA) HAS NOW BEEN AFFIRMED BY THE HONBLE KERALA HIGH CO URT IN A VERY ELABORATE MANNER, WHEREIN ALL THE CASE LA WS RELIED UPON BY THE ASSESSEE HAS BEEN TAKEN NOTE OF. REGARDING THE JUDG MENT OF HON'BLE JURISDICTIONAL HIGH COURT IN INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) , HE SUBMITTED THAT THIS JUDGMENT RELATES TO PRIOR TO INSERTION OF SECTION 14A OF THE ACT WITHOUT CONSIDERING THE JUDG MENT OF HON'BLE SUPREME COURT IN ESCORTS LTD. (SUPRA) . HENCE, THIS DECISION IS PER INCURIAM . LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT DEPRECIATION IS ALLOWABLE ON THE ACTUAL COST OF THE ASSETS AND THE ACTUAL COS T MEANS COST WHICH IS NOT MET BY ANY OTHER PERSON DIRECTLY OR INDIRECTLY. IN CASE OF THE TRUST, COST IS MET BY THE DONORS, THEREFORE, DEPRECIATION IS NOT A LLOWABLE. ALLOWING THE ACTUAL COST IN THE YEAR OF PURCHASE MEANS ALLOWING DEPRECIATION OF THE ASSETS OF ALL THE SUBSEQUENT YEARS ON ONE GO. THE DEPRECIA TION IS TO BE ALLOWED ON THE COST OF THE CAPITAL OVER A PERIOD OF YEARS AND ONCE THE CAPITAL HAS ALREADY BEEN ALLOWED, THERE IS NO QUESTION OF ALLOWING DEPR ECIATION. ON THE ISSUE OF DEDUCTION OF REPAYMENT OF LOAN AMOUNT, HE REITERAT ED THE SAME SUBMISSIONS. M/S. G.K.R. CHARITIES 9 12. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSE SSEE ON THE FIRST GROUND OF APPEAL SUBMITTED THAT THE JUDGMENT OF PRUTHIVI TRUST (SUPRA) IS NOT APPLICABLE AS THE SAME WAS IN THE CONTEXT OF VI OLATION OF TRUST DEED AND HERE IT IS THE CASE OF A TECHNICAL LAPSE UNDER THE TRUSTS ACT. ACCORDING TO THE INCOME TAX ACT, 1961, SUCH LAPSE CANNOT BE A GROUND FOR DENYING THE EXEMPTION UNDER SECTION 11 OF THE ACT. ON THIS ISSU E, HE RELIED UPON THE DECISION OF THE TRIBUNAL WHICH HAS BEEN REFERRED TO BY THE LEARNED COMMISSIONER (APPEALS) IN HIS ORDER. 13. ON THE SECOND GROUND, HE SUBMITTED THAT NOT ONLY TH IS ISSUE IS DIRECTLY COVERED BY THE JUDGMENT OF HON'BLE JURISDICTIONAL H IGH COURT INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) , BUT ALSO PLETHORA OF DECISIONS OF THE TRIBUNAL, MUMBAI BENCH, COPIES OF WHICH WERE PLACED IN THE PAPER BOOK. HE FURTHER SUBMITTED THAT, IN THE RECENT JUDGMENT OF H ONBLE PUNJAB & HARYANA HIGH COURT IN CIT V/S MARKET COMMITTEE, PIPLI, [2011] 330 ITR 16 (P&H) , THIS ISSUE CAME UP FOR CONSIDERATION WHEREIN THE HO NBLE HIGH COURT HAS DISTINGUISHED THE CASE OF ESCORTS LTD. (SUPRA) AND CLEARLY HELD THAT THE CLAIM OF DEPRECIATION BY A CHARITABLE INSTITUTION IS TO B E ALLOWED AS APPLICATION OF INCOME UNDER SECTION 11 OF THE ACT AND IT DOES NOT AMOUNT TO DOUBLE BENEFIT. 14. REGARDING THE JUDGMENT OF HONBLE KERALA HIGH COURT , HE SUBMITTED THAT WHEN SEVERAL HIGH COURTS ARE IN FAVOUR OF THE ASSESSEE INCLUDING THAT OF THE HON'BLE JURISDICTIONAL HIGH COURT, THE JUDGMENT OF HONBLE KERALA HIGH COURT IS NOT BINDING UPON TO THE TRIBUNAL SITTING I N MUMBAI. 15. ON THE LAST GROUND I.E., REGARDING APPLICATION OF I NCOME ON REPAYMENT OF LOAN, HE SUBMITTED THAT NOT ONLY CBDT CIRCULAR I S IN FAVOUR OF THE ASSESSEE BUT ALSO THE JUDGMENT OF HIGH COURT WHICH HAS BEEN CITED BEFORE THE LEARNED COMMISSIONER (APPEALS) INCLUDING THAT OF THE HONBL E GUJARAT HIGH COURT IN CIT V/S SHRI PLOT SWETAMBER MURTI PUJAK JAIN MANDAL (SUPRA) AND THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN GONVINDU NAICKER ESTATE V/S ACIT, [2001] 248 ITR 368 (MAD.) . HE THUS STRONGLY RELIED ON THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS). M/S. G.K.R. CHARITIES 10 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND ON A CAREFU L CONSIDERATION OF THE FACTS & CIRCUMSTANCES OF THE CASE AND ON A PERU SAL OF THE MATERIAL AVAILABLE ON RECORD AS WELL AS THE JUDICIAL PRONOUN CEMENTS CITED BEFORE US. INSOFAR AS THE FIRST ISSUE IS CONCERNED I.E., DENIA L OF EXEMPTION UNDER SECTION 11 OF THE ACT BY THE ASSESSING OFFICER ON THE GROUN D THAT LOAN TAKEN BY THE ASSESSEE IN EARLIER YEARS FROM MANAGING TRUSTEE IS IN VIOLATION OF THE TRUSTS ACT AND, THEREFORE, EXEMPTION UNDER SECTION 11 OF T HE ACT SHOULD BE DENIED TO THE ASSESSEE, THE SAME CANNOT BE UPHELD. UNDER T HE PROVISIONS OF THE INCOME TAX ACT, 1961, ONCE THE LEARNED COMMISSIONER OF INCOME TAX GRANTS REGISTRATION UNDER SECTION 12AA, LOOKING TO THE OBJ ECTS OF THE TRUST, THE SAME CANNOT BE WITHDRAWN UNTIL AND UNLESS THERE IS A VIO LATION OF PROVISIONS OF SECTION 13, OR THE LEARNED COMMISSIONER OF INCOME T AX CANCELS THE REGISTRATION UNDER SECTION 12AA(3), AS PER THE COND ITIONS MENTIONED THEREIN. ONCE THE ASSESSEE HAS TAKEN INTEREST FREE UNSECURED LOANS AND HAS DULY SHOWN IN THE STATEMENT OF ACCOUNTS IN RESPECTIVE YE ARS, THERE IS NO REQUIREMENT UNDER THE ACT THAT THE PROVISIONS OF OT HER ACTS HAVE TO BE COMPLIED WITH. THE HON'BLE JURISDICTIONAL HIGH COUR T IN PRUTHIVI TRUST (SUPRA) FOUND THAT THE ASSESSEE TRUST WAS CARRYING ON THE B USINESS OF MANUFACTURING AND MARKETING PRODUCE FOR MAKING PROF IT WITHOUT ANY AUTHORISATION GIVEN IN THE TRUST DEED. HERE, IN THE PRESENT CASE, IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THERE WAS A BAR IN THE TRUST DEED OR IN THE OBJECTS FOR TAKING UNSECURED LOANS. THUS, THE JUDGM ENT OF HON'BLE JURISDICTIONAL HIGH COURT IN PRUTHIVI TRUST (SUPRA) IS NOT APPLICABLE AT ALL. FURTHER, THE HON'BLE SUPREME COURT IN SURAT CITY GYMKHANA (SUPRA) WHEREIN THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN HIRALAL BHAGWATI (SUPRA) , HAS BEEN UPHELD, LAYS DOWN THE PROPOSITION THAT O NCE THE REGISTRATION OF TRUST UNDER SECTION 12A OF THE ACT HAS BEEN GRANTED, THE ASSESSING OFFICER CANNOT MAKE FURTHER PROBE THE OBJ ECT OF THE TRUST AS THE REGISTRATION ITSELF IS A FAIT ACCOMPLI. FURTHER, IT IS NOTICED THAT THE LEARNED COMMISSIONER (APPEALS) HAS RELIED UPON THE DECISION OF THE TRIBUNAL IN BOMBAY STOCK EXCHANGE (SUPRA) WHEREIN THERE WAS AN ADVERSE OBSERVATION OF JPC AND SEBI REGARDING LAPSE AND IRREGULARITIES IN THE WORKING OF THE STOCK M/S. G.K.R. CHARITIES 11 EXCHANGE, THE TRIBUNAL HELD THAT BENEFIT OF SECTION UNDER SECTION 11 OF THE ACT CANNOT BE DENIED ON SUCH REMARKS. THUS, THE FIN DINGS GIVEN BY THE LEARNED COMMISSIONER (APPEALS), ON THIS SCORE, ARE HEREBY UPHELD AND GROUND NO.1, RAISED BY THE REVENUE IS DISMISSED. 17. REGARDING GROUND NO.2, I.E., ALLOWABILITY OF DEPREC IATION ON ASSETS AMOUNTING TO ` 19,48,496, AS APPLICATION OF INCOME UNDER SECTION 11 OF THE ACT, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS GI VEN A VERY ELABORATE SUBMISSIONS AND HAS HEAVILY ALSO RELIED UPON THE DE CISION OF THE TRIBUNAL COCHIN BENCH AND THE JUDGMENT OF HONBLE KERALA HIG H COURT. HOWEVER, IT IS NOTICED THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) HAD DIRECTLY DEALT WITH THIS ISSUE WHEREIN IT HAS BEEN OBSERVED AND HELD AS UNDER: 3. AS STATED ABOVE, THE FIRST QUESTION WHICH REQUIR ES CONSIDERATION BY THIS COURT IS : WHETHER DEPRECIATION WAS ALLOWABLE ON THE ASSETS, THE COST OF WHICH HAS BEEN FULLY ALLOWED AS APPLICATION OF INCOME UNDER S. 11 IN THE PAST YEARS? IN THE CASE OF CIT VS. MUNISU VRAT JAIN (1994) TAX LR 1084 (BOM) THE FACTS WERE AS FOLLOWS. THE ASSESS EE WAS A CHARITABLE TRUST. IT WAS REGISTERED AS A PUBLIC CHA RITABLE TRUST. IT WAS ALSO REGISTERED WITH THE CIT, PUNE. THE ASSESSEE DE RIVED INCOME FROM THE TEMPLE PROPERTY WHICH WAS A TRUST PROPERTY. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASST. YRS. 1977-78, 1978 -79 AND 1979-80, THE ASSESSEE CLAIMED DEPRECIATION ON THE VALUE OF T HE BUILDING @ 2-1/2 PER CENT AND THEY ALSO CLAIMED DEPRECIATION ON FURN ITURE @ 5 PER CENT. THE QUESTION WHICH AROSE BEFORE THE COURT FOR DETER MINATION WAS : WHETHER DEPRECIATION COULD BE DENIED TO THE ASSESSE E, AS EXPENDITURE ON ACQUISITION OF THE ASSETS HAD BEEN TREATED AS AP PLICATION OF INCOME IN THE YEAR OF ACQUISITION? IT WAS HELD BY THE BOMB AY HIGH COURT THAT S. 11 OF THE IT ACT MAKES PROVISION IN RESPECT OF C OMPUTATION OF INCOME OF THE TRUST FROM THE PROPERTY HELD FOR CHAR ITABLE OR RELIGIOUS PURPOSES AND IT ALSO PROVIDES FOR APPLICATION AND A CCUMULATION OF INCOME. ON THE OTHER HAND, S. 28 OF THE IT ACT DEAL S WITH CHARGEABILITY OF INCOME FROM PROFITS AND GAINS OF BUSINESS AND S. 29 PROVIDES THAT INCOME FROM PROFITS AND GAINS OF BUSINESS SHALL BE COMPUTED IN ACCORDANCE WITH S. 30 TO S. 43C. THAT, S. 32(1) OF THE ACT PROVIDES FOR DEPRECIATION IN RESPECT OF BUILDING, PLANT AND MACH INERY OWNED BY THE ASSESSEE AND USED FOR THE BUSINESS PURPOSES. IT FUR THER PROVIDES FOR DEDUCTION SUBJECT TO S. 34. IN THAT MATTER ALSO, A SIMILAR ARGUMENT, AS IN THE PRESENT CASE, WAS ADVANCED ON BEHALF OF THE REVENUE, NAMELY, THAT DEPRECIATION CAN BE ALLOWED AS DEDUCTION ONLY UNDER S. 32 OF THE IT ACT AND NOT UNDER GENERAL PRINCIPLES. THE COURT REJECTED THIS ARGUMENT. IT WAS HELD THAT NORMAL DEPRECIATION CAN BE CONSIDERED AS A LEGITIMATE DEDUCTION IN COMPUTING THE REAL INCOME O F THE ASSESSEE ON GENERAL PRINCIPLES OR UNDER S. 11(1)(A) OF THE IT A CT. THE COURT M/S. G.K.R. CHARITIES 12 REJECTED THE ARGUMENT ON BEHALF OF THE REVENUE THAT S. 32 OF THE IT ACT WAS THE ONLY SECTION GRANTING BENEFIT OF DEDUCT ION ON ACCOUNT OF DEPRECIATION. IT WAS HELD THAT INCOME OF A CHARITAB LE TRUST DERIVED FROM BUILDING, PLANT AND MACHINERY AND FURNITURE WAS LIA BLE TO BE COMPUTED IN NORMAL COMMERCIAL MANNER ALTHOUGH THE TRUST MAY NOT BE CARRYING ON ANY BUSINESS AND THE ASSETS IN RESPECT WHEREOF D EPRECIATION IS CLAIMED MAY NOT BE BUSINESS ASSETS. IN ALL SUCH CAS ES, S. 32 OF THE IT ACT PROVIDING FOR DEPRECIATION FOR COMPUTATION OF I NCOME DERIVED FROM BUSINESS OR PROFESSION IS NOT APPLICABLE. HOWEVER, THE INCOME OF THE TRUST IS REQUIRED TO BE COMPUTED UNDER S. 11 ON COM MERCIAL PRINCIPLES AFTER PROVIDING FOR ALLOWANCE FOR NORMAL DEPRECIATI ON AND DEDUCTION THEREOF FROM GROSS INCOME OF THE TRUST. IN VIEW OF THE AFORESTATED JUDGMENT OF THE BOMBAY HIGH COURT, WE ANSWER QUESTI ON NO. 1 IN THE AFFIRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGA INST THE DEPARTMENT. QUESTION NO. 2 HEREIN IS IDENTICAL TO THE QUESTION WHICH WAS RAISED BEFORE THE BOMBAY HIGH COURT IN THE CASE OF DIRECTO R OF INCOME-TAX (EXEMPTION) VS. FRAMJEE CAWASJEE INSTITUTE (1993) 1 09 CTR 463 (BOM). IN THAT CASE, THE FACTS WERE AS FOLLOWS : TH E ASSESSEE WAS THE TRUST. IT DERIVED ITS INCOME FROM DEPRECIABLE ASSET S. THE ASSESSEE TOOK INTO ACCOUNT DEPRECIATION ON THOSE ASSETS IN COMPUT ING THE INCOME OF THE TRUST. THE ITO HELD THAT DEPRECIATION COULD NOT BE TAKEN INTO ACCOUNT BECAUSE, FULL CAPITAL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISITION OF THE ASSETS. THE ASSESSEE WENT IN APPEAL BEFORE THE AAC. THE APPEAL WAS REJECTED. THE TRIBUNAL, HOWEVER , TOOK THE VIEW THAT WHEN THE ITO STATED THAT FULL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISITION OF THE ASSETS, WHAT HE REALLY M EANT WAS THAT THE AMOUNT SPENT ON ACQUIRING THOSE ASSETS HAD BEEN TRE ATED AS APPLICATION OF INCOME OF THE TRUST IN THE YEAR IN WHICH THE INCOME WAS SPENT IN ACQUIRING THOSE ASSETS. THIS DID NOT MEAN THAT IN COMPUTING INCOME FROM THOSE ASSETS IN SUBSEQUENT YEARS, DEPRE CIATION IN RESPECT OF THOSE ASSETS CANNOT BE TAKEN INTO ACCOUNT. THIS VIEW OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. HENCE, QUESTION NO. 2 IS COVERED BY THE DECISION OF THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. CONSEQUENTLY, QUESTION NO. 2 IS ANSWERED IN THE AFFIRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. 18. FROM THE ABOVE FINDINGS, IT CAN BE SEEN THAT THE HO N'BLE JURISDICTIONAL HIGH COURT HAS DIRECTLY ANSWERED THIS ISSUE IN FAVO UR OF THE ASSESSEE. BEING A JURISDICTIONAL HIGH COURTS JUDGMENT, WE ARE BOUN D BY THE AFORESTATED FINDINGS. NOT ONLY THIS, THE HONBLE PUNJAB & HARYA NA HIGH COURT IN MARKET COMMITTEE, PIPLI (SUPRA) , HAS DEALT WITH THIS ISSUE AFTER TAKING INTO CONSIDERATION THE JUDGMENT OF HON'BLE SUPREME COURT IN ESCORTS LTD. (SUPRA) WHERE A CATENA OF CASE LAWS WERE TAKEN INTO CONSID ERATION ON THIS ISSUE AND FINALLY HELD AS UNDER: M/S. G.K.R. CHARITIES 13 HELD THAT THE ASSESSEE WAS NOT CLAIMING DOUBLE DEDU CTION ON ACCOUNT OF DEPRECIATION AS HAD BEEN SUGGESTED BY TH E REVENUE. THE INCOME OF THE ASSESSEE BEING EXEMPT, THE ASSESSEE W AS ONLY CLAIMING THAT DEPRECIATION SHOULD BE REDUCED FROM THE INCOME FOR DETERMINING THE PERCENTAGE OF FUNDS WHICH HAD TO BE APPLIED FOR THE PURPOSES OF THE TRUST. THERE WAS NO DOUBLE DEDUCTION CLAIMED BY THE ASSESSEE AS CANVASSED BY THE REVENUE, IT COULD NOT BE HELD THAT DOUBLE BENEFIT WAS GIVEN IN ALLOWING CLAIM FOR DEPRECIATION FOR CO MPUTING INCOME FOR PURPOSES OF SECTION 11. CASE REVIEW CIT V. RAIPUR PALLOTTINE SOCIETY [1989] 180 ITR 579 (MP); CIT V. RAO BAHADUR CALAVALA CUNNAN CHETTY CHARITIES [1982] 135 ITR 485 (MAD): CIT V. SETH MANUAL RANCHHODDAS VISHRAM BHAWAN TRUST [1992] 198 ITR 598 (GUI.); CIT V. SOCIETY OF THE SISTERS OF ST . ANNE [1984] 146 ITR 28 (KAR.); CIT V. INSTITUTE OF BANKING [2003] 2 64 ITR 110 (BOM) RELIED ON. ESCORTS LTD. V. UOI [1993] 199 ITR 43 (SC) DISTINGU ISHED. [EMPHASIS ADDED ] 19. FURTHER, IT IS NOTICED THAT FOLLOWING THE AFORESAID JUDGMENTS, THE ITAT, MUMBAI BENCH, IN ITO V/S PARMESHWARIDEVI GORDHANDAS GARODIA, ITA NO.4108/MUM./2010, ORDER DATED 10 TH AUGUST 2011 , HAS OBSERVED AND HELD AS UNDER: 4. WE HAVE CAREFULLY CONSIDERED THE FACTS AND THE R IVAL CONTENTIONS. IN CIT VS. INSTITUTE OF BANKING (SUPRA), THE BOMBAY HI GH COURT HELD THAT WHILE COMPUTING THE INCOME OF A TRUST, BOTH THE CAP ITAL EXPENDITURE ON ACQUISITION OF ASSETS AND THE DEPRECIATION ON THE S AID ASSETS WERE ALLOWABLE, THE CAPITAL EXPENDITURE BEING ALLOWED AS APPLICATION OF INCOME OF THE TRUST AND DEPRECIATION BEING ALLOWABL E AS A LEGITIMATE DEDUCTION IN COMPUTING THE REAL INCOME OF THE ASSES SEE ON GENERAL PRINCIPLES. IN COMING TO THIS CONCLUSION THE HIGH C OURT FOLLOWED ITS EARLIER DECISION IN CIT VS. MUNISUVARAT JAIN (1994) TAX LAW REPORTER 1084 (BOM). THE SUPREME COURT IN THE JUDGMENT CITED SUPRA HELD THAT IT IS A FUNDAMENTAL AND UNWRITTEN AXIOM THAT NO LEG ISLATURE COULD HAVE INTENDED A DOUBLE DEDUCTION IN REGARD TO THE SAME B USINESS OUTGOING AND IF IT IS SO INTENDED, IT WILL BE CLEARLY EXPRES SED. ON THIS BASIS THE SUPREME COURT REFUSED TO ALLOW A DEDUCTION OF DEPRE CIATION ON ASSETS USED FOR SCIENTIFIC RESEARCH, SINCE THE ACQUISITION OF THE ASSETS THEMSELVES WERE ALLOWABLE AS DEDUCTION, EVEN THOUGH THE EXPENDITURE REPRESENTED CAPITAL EXPENDITURE. BOTH THESE JUDGMEN TS HAVE BEEN CONSIDERED BY THE PUNJAB & HARYANA HIGH COURT IN A RECENT DECISION IN CIT VS. MARKET COMMITTEE, PIPLI (2011) 330 ITR 16 ( P & H). IN THIS CASE THE ASSESSEE WAS A TRUST REGISTERED UNDER THE INCOME TAX ACT AS A CHARITABLE TRUST. THE ASSESSING OFFICER DISALLOWE D DEPRECIATION ON THE ASSETS ON THE GROUND THAT SINCE THE INCOME WAS EXEM PT, ALLOWING DEPRECIATION TO ASCERTAIN WHETHER THE REQUIRED PERC ENTAGE OF FUNDS WERE APPLIED FOR THE PURPOSES OF THE TRUST WOULD AM OUNT TO CONFERRING DOUBLE BENEFIT. HIS VIEW WAS AFFIRMED BY THE CIT(A) BUT THE TRIBUNAL M/S. G.K.R. CHARITIES 14 ALLOWED THE ASSESSEES APPEAL. ON FURTHER APPEAL BY THE REVENUE TO THE HIGH COURT, IT WAS HELD THAT THE INCOME OF THE ASSE SSEE BEING EXEMPT, THE ASSESSEE WAS ONLY CLAIMING THAT DEPRECIATION SH OULD BE REDUCED FROM THE INCOME FOR DETERMINING THE PERCENTAGE OF F UNDS WHICH HAD TO BE APPLIED FOR THE PURPOSES OF THE TRUST. THERE WAS THUS NO DOUBLE DEDUCTION CLAIMED BY THE ASSESSEE. IN COMING TO THI S CONCLUSION THE PUNJAB & HARYANA HIGH COURT, INTER ALIA, FOLLOWED T HE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT CITED ABOVE AND DISTINGUI SHED THE JUDGMENT OF THE SUPREME COURT CITED SUPRA. IN THIS VIEW OF THE MATTER, AND RESPECTFULLY FOLLOWING THE JUDGMENT OF THE PUNJ AB & HARYANA HIGH COURT AND THE BOMBAY HIGH COURT CITED ABOVE, WE AFF IRM THE DECISION OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE R EVENUE WITH NO ORDER AS TO COSTS . 20. THERE ARE OTHER CATENA OF CASE LAWS WHEREIN IT HAS BEEN CATEGORICALLY HELD THAT ALLOWING OF DEPRECIATION IS APPLICATION O F MONEY AND IT DOES NOT AMOUNT TO DOUBLE DEDUCTION. IT HAS NOW BEEN SETTLED PRINCIPLE OF LAW THAT WHEN THERE ARE TWO DIFFERENT DECISIONS OF HIGH COUR TS, ONE FAVOURABLE TO THE ASSESSEE SHOULD BE FOLLOWED. THUS, RESPECTFULLY FOL LOWING THE AFORESAID JUDGMENTS, WE ARE UNABLE TO AGREE WITH THE CONTENTI ONS RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AND THE FINDING S OF THE ASSESSING OFFICER. THUS, THE FINDING OF THE LEARNED COMMISSIO NER (APPEALS), ON THIS SCORE, IS ALSO UPHELD AND GROUND NO.2, RAISED BY TH E REVENUE IS DISMISSED. 21. THE LAST ISSUE RELATES TO APPLICATION OF INCOME ON REPAYMENT OF LOAN OF ` 29,15,70,500. THIS ISSUE HAS BEEN DECIDED BY THE A SSESSING OFFICER ON THE SAME LINE AND REASONING, AS HAS BEEN RAISED IN THE SECOND ISSUE I.E., ALLOWABILITY OF DEPRECIATION. FROM THE PERUSAL OF T HE ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS), IT CAN BE SEEN THAT THE LEARNED COMMISSIONER (APPEALS) HAS TAKEN NOTE OF VARIOUS CA SE LAWS DIRECTLY ON THIS POINT WHICH HAVE BEEN DISCUSSED AT PAGE12 OF THE A PPELLATE ORDER. THE CBDT, VIDE CIRCULAR NO.100, DATED 24 TH JANUARY 1973, HAS HELD THAT RE PAYMENT OF LOAN ORIGINALLY TAKEN TO FULFILL ONE OF THE OBJECTS OF THE TRUST WILL AMOUNT TO AN APPLICATION OF INCOME FOR CHARITABLE A ND RELIGIOUS PURPOSES. THE HONBLE GUJARAT HIGH COURT IN SHRI PLOT SWETAMBER MURTI PUJAK JAIN MANDAL (SUPRA) , AFTER TAKING NOTE OF CBDT CIRCULAR, HELD THAT LOA N TAKEN IN THE EARLIER YEARS AND REPAID IN SUBSEQUENT YEAR OUT OF THE INCOME OF THE TRUST IN THAT YEAR WILL AMOUNT TO APPLICATION OF INCOME FOR THE PURPOSE OF SECTION M/S. G.K.R. CHARITIES 15 11(I)(A) OF THE ACT. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE RAJASTHAN HIGH COURT IN MAHARANA OF MEWAR CHARITABLE FOUNDATION (SUPRA) . THUS, RESPECTFULLY FOLLOWING THE AFORESAID JUDGMENTS, WE UPHOLD THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) AND DISMISS THE GROU ND RAISED BY THE REVENUE. 22. 8 '< ( 6 18 6 ' => ? 24. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 23. WE NOW TAKE UP CROSS OBJECTION PREFERRED BY THE ASS ESSEE. THE ASSESSEE HAS TAKEN ALTERNATIVE GROUNDS ON VARIOUS I SSUES. SINCE WE HAVE ALREADY DISMISSED THE GROUNDS RAISED BY THE REVENUE , THE GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION BECOME PURELY A CADEMIC AND, THEREFORE, DISMISS THE SAME AS INFRUCTUOUS. 24. 8 '< %* +8' 6 /0) 18 6 ' => ? 25. IN THE RESULT, ASSESSEES CROSS OBJECTION IS DISMIS SED. ')# 6 :, 1) @ A'*< 10 TH AUGUST 2012 : 6 B ? ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST 2012 SD/- . .. . . . . . G.E. VEERABHADRAPPA PRESIDENT SD/- !' !' !' !' #$ #$ #$ #$ % &'( % &'( % &'( % &'( AMIT SHUKLA JUDICIAL MEMBER MUMBAI, A'* A'* A'* A'* DATED: 10 TH AUGUST 2012 M/S. G.K.R. CHARITIES 16 ')# 6 /%'!C D)C,' / COPY OF THE ORDER FORWARDED TO : (1) %* +8' / THE ASSESSEE; (2) ( / THE REVENUE; (3) E () / THE CIT(A); (4) E / THE CIT, MUMBAI CITY CONCERNED; (5) CB /%'%* , , / THE DR, ITAT, MUMBAI; (6) BH+ I / GUARD FILE. &0C' /%' / TRUE COPY ')#*& / BY ORDER /' ). JK / PRADEEP J. CHOWDHURY 8L %* & J / SR. PRIVATE SECRETARY 3 / &= / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI