DDIT, CHENNAI V. Vels Institute of Science, Technology & Advanced Studies, CHENNAI

ITA 1759/CHNY/2013

• Counselvise Citation: 175921714 RSA 2013
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 13-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S BHARATH
• Assessee Lawyers: R SIVARAMAN
• Keywords: Capital asset; Gift; Business income; Depreciation; Charitable institution; Scheme of amalgamation; Capital expenditure
• Section: 12AA; 32; 63; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1759/MDS/2013 & C.O. NO.15/MDS/2014 (IN I.T.A. NO.1759/MDS/2013) ' (' / ASSESSMENT YEAR : 2010-11 THE DEPUTY DIRECTOR OF INCOME- TAX (EXEMPTIONS), CHENNAI - 600 034. V. M/S VELS INSTITUTE OF SCIENCE, TECHNOLOGY & ADVANCED STUDIES, NO.521/2, ANNA SALAI, NANDANAM, CHENNAI - 600 034. PAN : AAATV 9804 F ( APPELLANT) ( RESPONDENT & CROSS OBJECTOR) *+ , - / APPELLANT BY : SHRI S. BHARATH, CIT ./*+ , - / RESPONDENT BY : SHRI R. SIVARAMAN, ADVOCATE 0 , 1$ / DATE OF HEARING : 19.08.2015 2!( , 1$ / DATE OF PRONOUNCEMENT : 28.10.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THE APPEAL BY THE REVENUE AND THE CROSS-OBJECTIO N BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMM ISSIONER OF 2 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 INCOME TAX (APPEALS)-VII, CHENNAI, DATED 31.05.2013 AND PERTAIN TO ASSESSMENT YEAR 2010-11. 2. SHRI S. BHARATH, THE LD. DEPARTMENTAL REPRESENTA TIVE, SUBMITTED THAT THE ASSESSEE-TRUST IS REGISTERED UND ER SECTION 12AA OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AN D CLAIMED EXEMPTION UNDER SECTION 11 OF THE ACT FOR THE YEAR UNDER CONSIDERATION. HOWEVER, THE ASSESSING OFFICER FOUN D THAT THE ASSESSEE-TRUST GIVES LOAN TO THE INTERESTED PERSONS IN VIOLATION OF SECTION 13(1)(C) R.W.S. 13(3) OF THE ACT. ACCORDIN G TO THE LD. D.R., DURING THE YEAR UNDER CONSIDERATION A SUM OF ` 15,76,00,000/- WAS OUTSTANDING AS LOAN AND ADVANCES. THE ASSESSING OF FICER ON VERIFICATION OF BALANCE SHEET, FOUND THAT THE SAID AMOUNT WAS PAID TO DR. ISHARI K. GANESH, THE FOUNDER AND MANAGING TRUS TEE OF THE ASSESSEE-TRUST. THEREFORE, THE ASSESSING OFFICER F OUND THAT THE TRANSACTION OF LOAN WAS IN VIOLATION OF SECTION 13( 1)(C) R.W.S. 13(3) OF THE ACT. REFERRING TO ASSESSMENT ORDER, THE LD. D .R. SUBMITTED THAT THE ASSESSING OFFICER BROUGHT OUT THE ENTIRE TRANSA CTION AT PAGES 2 AND 3 OF HIS ORDER. THE ASSESSEE CLAIMED BEFORE TH E ASSESSING OFFICER THAT THE TRANSACTION BEING A LOAN TRANSACTI ON, THE MONEY WAS RECEIVED IN PURSUANCE OF AGREEMENT FOR SALE. ACCOR DING TO THE LD. 3 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 D.R., THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFF ICER THAT IT INTENDED TO ESTABLISH A MEDICAL COLLEGE. THEREFORE , THE ASSESSEE ENTERED INTO AN AGREEMENT FOR PURCHASE OF LAND WITH THE MANAGING TRUSTEE. HOWEVER, AFTER CONSIDERING THE MATERIAL A VAILABLE ON RECORD, THE ASSESSING OFFICER FOUND THAT OUT OF THE TOTAL CONSIDERATION OF ` 20 CRORES, THE MANAGING TRUSTEE RECEIVED AN ADVANCE OF ` 16,91,00,000/-. THEREFORE, THE ASSESSING OFFICER F OUND THAT EVEN IF THE TRANSACTION OF PURCHASE OF PROPERT Y WAS CONSIDERED TO BE GENUINE, THE PAYMENT OF ADVANCE TO THE TRUSTE E, WHICH IS IN EXCESS OF THE MARKET VALUE OF THE LAND, WOULD MAKE THE ASSESSEE INELIGIBLE FOR MAKING CLAIM UNDER SECTION 11 OF THE ACT. THEREFORE, ACCORDING TO THE LD. D.R., THERE WAS A CLEAR VIOLAT ION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT, SINCE THE MONEY WAS AD VANCED TO THE MANAGING TRUSTEE WITHOUT ANY ADEQUATE SECURITY. 3. SHRI BHARATH, THE LD. D.R., FURTHER SUBMITTED TH AT THE ASSESSEE HAS RECEIVED DONATION FROM SRI BALAJI CHAR ITABLE AND EDUCATIONAL TRUST. ACCORDING TO THE LD. D.R., BY A GIFT DEED DATED 03.03.2010, SRI BALAJI CHARITABLE AND EDUCATIONAL T RUST HAS DONATED THREE OF ITS INSTITUTIONS TO THE ASSESSEE-TRUST, AL ONG WITH LAND, BUILDING AND OTHER INFRASTRUCTURES. THE ASSESSEE R ECOGNIZED THESE 4 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 EDUCATIONAL INSTITUTIONS AS ITS OWN INSTITUTIONS ON AND FROM 01.10.2009. SINCE THE ASSESSING OFFICER FOUND THAT THE LOAN WAS ADVANCED BY THE ASSESSEE-TRUST TO ITS MANAGING TRUS TEE AGAINST THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT, THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT. THEREFORE, THE CORPUS OF THE INSTITUTION RECEIVED BY THE ASSESSEE AS DONATION FROM SRI BALAJI CHARITABLE AND EDUCATIONAL TRUST TO THE EXTENT OF ` 37,83,27,838/- WAS TAKEN AS INCOME OF THE ASSESSEE. ACCORDING TO THE LD. D.R., SINCE THERE WAS VIOLATION OF SECTI ON 13(1)(C) OF THE ACT, THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION UND ER SECTION 11 OF THE ACT, THEREFORE, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THA T THE MONEY WAS ADVANCED TO THE MANAGING TRUSTEE FOR PURCHASING THE LANDED PROPERTY SINCE THE TRUST HAD INTENDED TO ESTABLISH A MEDICAL COLLEGE. THEREFORE, THE CIT(APPEALS) ALLOWED THE CLAIM OF TH E ASSESSEE. ACCORDING TO THE LD. D.R., AS RIGHTLY OBSERVED BY T HE ASSESSING OFFICER, THE MONEY WAS ADVANCED TO THE MANAGING TRU STEE IN VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT. THEREFORE, THE CIT(APPEALS) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 5 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 4. ON THE CONTRARY, SHRI R. SIVARAMAN, THE LD.COUNS EL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE-TRUST HAS EST ABLISHED AND ADMINISTERING EDUCATIONAL INSTITUTIONS. THE EDUCATI ONAL INSTITUTION ESTABLISHED BY THE ASSESSEE WAS RECOGNIZED AS DEEME D UNIVERSITY BY UNIVERSITY GRANTS COMMISSION. FOR THE PURPOSE O F OBTAINING THE DEEMED UNIVERSITY STATUS, THE UNIVERSITY GRANTS COM MISSION PRESCRIBES CERTAIN GUIDELINES, INCLUDING INFRASTRUC TURE FACILITIES. DURING THE FINANCIAL YEAR 2009-10, THE ASSESSEE-TRU ST PLANNED TO START A MEDICAL COLLEGE AS PART OF ITS CHARITABLE A CTIVITY. AS PER THE GUIDELINES PRESCRIBED BY MEDICAL COUNCIL OF INDIA, THE MINIMUM LAND REQUIRED IS 25 ACRES. THEREFORE, THE ASSESSEE-TRUS T PROPOSED TO PURCHASE THE LAND BELONGING TO THE MANAGING TRUSTEE DR. ISHARI K. GANESH TO THE EXTENT OF 28.93 ACRES OF LAND. IN TH AT PROCESS, THE ASSESSEE-TRUST HAS PAID ` 15,76,00,000/- ON 31.03.2010. AN AGREEMENT WAS ALSO ENTERED INTO BETWEEN THE ASSESSE E-TRUST AND THE MANAGING TRUSTEE FOR PURCHASE OF LAND. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE-TRUST HAS ALSO TAKEN LO AN FROM THE MANAGING TRUSTEE AND THE RELATED PERSONS. IN FACT, THE CIT(APPEALS) EXTRACTED THE INTEREST-FREE LOAN RECEI VED BY THE ASSESSEE-TRUST FROM THE RELATED PERSONS AND MANAGIN G TRUSTEE. 6 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 5. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE, SE CTION 13 OF ACT IS NOT PROHIBITING ANY TRANSACTION BY THE TRUST WITH INTERESTED PERSONS. WHAT IS PROHIBITED BY SECTION 13 OF THE A CT IS ADVANCING OF MONEY WITHOUT ADEQUATE SECURITY OR ADEQUATE INTERES T. IN THE CASE BEFORE US, EVEN THOUGH THE MONEY WAS ADVANCED FOR P URCHASE OF PROPERTY AS PER THE AGREEMENT FOR SALE, AFTER CANCE LLATION OF AGREEMENT, THE MANAGING TRUSTEE HAS PAID INTEREST O N THE AMOUNT ADVANCED. IN FACT, THE MANAGING TRUSTEE HAS PAID ` 4,06,92,078/- AS INTEREST INCLUDING COMPENSATION OF ` 25,00,000/-. IN FACT, THE CIT(APPEALS) EXTRACTED THE VALUE OF THE INTEREST PA ID BY THE MANAGING TRUSTEE AT PAGE 49 OF HIS ORDER. THEREFOR E, ACCORDING TO THE LD. COUNSEL, IT CANNOT BE SAID THAT THE MONEY A DVANCED BY THE ASSESSEE IS WITHOUT ANY ADEQUATE SECURITY OR WITHOU T ANY INTEREST. IN FACT, THE ASSESSEE HAD PAID MORE INTEREST THAN T HE MARKET RATE. THEREFORE, THERE IS NO QUESTION OF VIOLATION OF SEC TION 13(1)(C) OF THE ACT. 6. REFERRING TO THE RECEIPT OF THREE INSTITUTIONS F ROM SRI BALAJI CHARITABLE AND EDUCATIONAL TRUST, THE LD.COUNSEL FO R THE ASSESSEE SUBMITTED THAT, IN FACT, THE ASSESSEE-TRUST RECEIVE D AS DONATION THREE INSTITUTIONS FROM SRI BALAJI CHARITABLE AND E DUCATIONAL TRUST. 7 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 NO FUNDS OF THE ASSESSEE-TRUST WERE TRANSFERRED TO SRI BALAJI CHARITABLE AND EDUCATIONAL TRUST. THE INSTITUTION HAS RECEIVED AS DONATION FROM THE INSTITUTION WHICH HAS SIMILAR OBJ ECT. THE DISALLOWANCE WAS MADE MERELY BECAUSE THE ASSESSEE-T RUST ADVANCED TO INTERESTED PERSONS. SINCE THE ADVANCE WAS MADE ONLY FOR THE PURPOSE OF PURCHASING THE LAND AND THE MANA GING TRUSTEE HAS ALSO REPAID THE AMOUNT WITH INTEREST, ACCORDING TO THE LD. COUNSEL, THERE IS NO VIOLATION OF SECTION 13(1)(C) OF THE ACT. THEREFORE, THE RECEIPT OF DONATION OF THREE INSTITU TIONS FROM SRI BALAJI CHARITABLE AND EDUCATIONAL TRUST CANNOT BE A REASON FOR REJECTING THE CLAIM OF THE ASSESSEE UNDER SECTION 11 OF THE A CT. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY ALLOWED THE CLAIM OF T HE ASSESSEE UNDER SECTION 11 OF THE ACT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE-TRUST IS REGISTERED UNDER SECTION 12AA OF THE ACT. IT IS ALSO NOT IN DISPUTE THAT THERE WAS AN AGREEMENT FOR SALE OF THE LAND BELONGING TO THE MANAGING TRUSTEE TO THE ASSESSEE-T RUST. THE ONLY OBJECTION OF THE REVENUE APPEARS TO BE THAT THE SAL E OF THE LAND IS NOT ON PAR WITH THE MARKET VALUE. FROM THE ORDER O F THE ASSESSING 8 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 OFFICER IT APPEARS THAT THE MARKET VALUE OF THE LAN D IS VERY LESS THAN WHAT WAS AGREE TO BE SOLD TO THE ASSESSEE-TRUST. T HE FACT REMAINS THAT THERE WAS AN AGREEMENT FOR SALE OF THE PROPERT Y AND THE ASSESSEE-TRUST ADVANCED THE FUNDS. THERE IS NO FIX ED PRICE FOR SALE OF LAND. THE PRICE OF A LAND IS FLEXIBLE, DEPENDIN G UPON VARIOUS FACTORS. THE URGENCY OF THE VENDOR TO SELL THE PRO PERTY, THE NECESSITY OF THE PURCHASER TO PURCHASE THE PROPERTY , THE LOCATION OF THE LAND, THE AREA OF THE LAND, INFRASTRUCTURES AVA ILABLE NEARER TO THE LAND AND FUTURE PROSPERITY FOR DEVELOPMENT OF THE L AND, ETC. NEED TO BE CONSIDERED WHILE DETERMINING THE MARKET VALUE OF A LAND. APART FROM THAT, IT IS WELL SETTLED PRINCIPLES OF LAW THA T MARKET VALUE IS NOTHING BUT A PRICE AGREED BETWEEN THE WILLING SELL ER AND WILLING PURCHASER. THEREFORE, WE CANNOT SAY THAT A PARTICU LAR LAND HAS TO BE SOLD BY A PARTICULAR PERSON FOR A PARTICULAR RAT E. IF TWO WILLING PERSONS AGREED TO SELL AND PURCHASE THE PROPERTY FO R A PARTICULAR PRICE, THEN THE ASSESSING OFFICER MAY NOT HAVE ANY ROLE TO DISMISS THE AGREED PRICE UNLESS THERE ARE SOME EVIDENCES FO UND THAT THE AGREED PRICE DISCLOSED IS NOT ACTUALLY THE AGREED P RICE. IN THE CASE BEFORE US, IT IS NOBODYS CASE THAT THE PRICE AGREE D BETWEEN THE MANAGING TRUSTEE AND THE TRUST IS NOT ACTUALLY THE AGREED PRICE. THEREFORE, THE OBSERVATION OF THE ASSESSING OFFICER IN THE 9 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 ASSESSMENT ORDER THAT THE VALUE OF THE LAND IS MUCH LESS THAN WHAT WAS AGREED BETWEEN THE PARTIES CANNOT STAND IN THE EYE OF LAW. WHEN THE ASSESSEE-TRUST INTENDED TO ESTABLISH A MED ICAL COLLEGE FOR WHICH IT REQUIRES MINIMUM 25 ACRES OF LAND AND THE MANAGING TRUSTEE HAS SUCH VAST AREA OF LAND, NOTHING WRONG I N PURCHASING THE LAND FROM THE MANAGING TRUSTEE BY PAYING THE MARKET VALUE. SUBSEQUENTLY, THE ASSESSEE-TRUST COULD NOT ESTABLIS H MEDICAL COLLEGE. THEREFORE, THE AGREEMENT WAS CANCELLED. IN FACT, THE MANAGING TRUSTEE REPAID THE PART AMOUNT ALONG WITH INTEREST. IT IS NOT THE CASE OF THE REVENUE THAT THE INTEREST PAID BY THE MANAGING TRUSTEE IS NOT IN MARKET RATE. 8. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 13 OF THE ACT. SECTION 13(1)(A) SAYS THAT IF ANY PART OF THE PROPERTY OR INCOME OF THE TRUST IS GIVEN TO THE INTERESTED PERS ON WITHOUT EITHER ADEQUATE SECURITY OR ADEQUATE INTEREST, FOR THE BEN EFIT OF THE PERSON INTERESTED, THEN THERE SHALL BE A DIVERSION OF FUND S FOR THE INTERESTED PERSON. SECTION 13(1)(C) SAYS THAT IF THE AMOUNT P AID IS EXCESS OF WHAT WAS REASONABLY PAID FOR THE SERVICE RENDERED H AS TO BE CONSIDERED AS USED OR APPLIED FOR THE BENEFIT OF PE RSON INTERESTED. IN THE CASE BEFORE US, THE MANAGING TRUSTEE HAS NOT RENDERED ANY 10 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 SERVICE. IN FACT, THERE WAS AN AGREEMENT FOR PURCH ASE OF PROPERTY. THEREFORE, THE QUESTION ARISES FOR CONSIDERATION IS WHETHER THE MONEY ADVANCED BY THE ASSESSEE TO THE EXTENT OF ` 15,76,00,000/- IS WITHOUT ADEQUATE SECURITY AND AFTER CANCELLING T HE AGREEMENT, WHETHER THE ASSESSEE HAS RECEIVED THE ADEQUATE INTE REST FROM THE MANAGING TRUSTEE. WE HAVE CAREFULLY GONE THROUGH T HE ORDER OF THE CIT(APPEALS). FROM THE ORDER OF THE CIT(APPEALS) I T APPEARS THAT THE ASSESSEE HAS RECEIVED ` 4,06,92,078/- BEING THE INTEREST FROM THE MANAGING TRUSTEE, IN ADDITION TO THE PRINCIPAL AMOUNT AFTER CANCELLATION OF AGREEMENT. THEREFORE, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTL Y FOUND THAT AFTER CANCELLATION OF AGREEMENT, THE ASSESSEE-TRUST WAS R ETURNED AND COMPENSATED BY WAY OF INTEREST. THEREFORE, THE TRA NSACTION BETWEEN THE ASSESSEE-TRUST AND THE MANAGING TRUSTEE CANNOT BE CONSTRUED AS WITHOUT ANY ADEQUATE SECURITY OR WITHO UT ANY ADEQUATE INTEREST. THEREFORE, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THE MONEY WAS IN FACT ADVANCED IN PURSUANCE OF THE AGREEMENT FOR SALE. AFTER CANCELLATION OF AGREEMENT, THE MONEY W AS RETURNED IN ITS ENTIRETY. SINCE THERE WAS DELAY IN REPAYMENT OF MO NEY RECEIVED AS ADVANCE FOR SALE OF THE LAND, THE MANAGING TRUSTEE HAS ALSO PAID INTEREST TO THE EXTENT OF ` 4,06,92,078/-. THEREFORE, AT ANY STRETCH OF 11 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 IMAGINATION, IT CANNOT BE SAID THAT THE MONEY WAS D IVERTED FOR INTEREST OF THE MANAGING TRUSTEE. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE IS NO VIOLATION OF SE CTION 13 OF THE ACT. 9. NOW COMING TO THE RECEIPT OF DONATION FROM SRI B ALAJI CHARITABLE AND EDUCATIONAL TRUST, WHAT WAS RECEIVED BY THE ASSESSEE IS CAPITAL ASSET BY WAY OF THREE INSTITUTI ONS AND ITS INFRASTRUCTURES. IT IS NOBODYS CASE THAT THE ASSES SEES FUNDS WERE DIVERTED TO ANY OTHER TRUST. WHEN THE ASSESSEE REC EIVED THREE INSTITUTIONS FOR CARRYING OUT ITS CHARITABLE ACTIVI TY, IT CANNOT BE SAID THAT THERE WAS A VIOLATION OF ANY OTHER PROVISIONS OF INCOME-TAX ACT. IN FACT, THE ASSESSING OFFICER HIMSELF DISALLOWED T HE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE MONEY WAS ADVANCED TO THE MANAGING TRUSTEE. SINCE THIS TRIBUNAL FOUND THAT T HERE WAS NO VIOLATION OF SECTION 13(1)(C) OF THE ACT IN RESPECT OF THE AGREEMENT ENTERED BETWEEN THE ASSESSEE-TRUST AND THE MANAGING TRUSTEE FOR PURCHASE OF PROPERTY AND IT IS NOT IN DISPUTE THAT THE MANAGING TRUSTEE RETURNED ENTIRE AMOUNT WITH INTEREST OF ` 4,06,92,078/-, THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 11 OF THE ACT. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(APPEALS) AND ACCORDINGLY, CONFIRMED. 12 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 10. THE ASSESSEE HAS FILED THE CROSS-OBJECTION CLAI MING DEPRECIATION TO THE EXTENT OF ` 5,25,30,554/-. 11. ADMITTEDLY, THE ASSESSEE-TRUST IS REGISTERED AS CHARITABLE INSTITUTION AND IT IS CLAIMING EXEMPTION UNDER SECT ION 11 OF THE ACT. THE CLAIM OF THE ASSESSEE UNDER SECTION 11 OF THE A CT IS ALLOWED BY THE CIT(APPEALS) WHICH WAS CONFIRMED BY THIS TRIBUN AL IN THE EARLIER PART OF THIS ORDER. IT IS NOT THE CASE OF THE ASSE SSEE THAT IT IS NOT DOING ANY BUSINESS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE IS NOT ENTITLED FOR ANY D EPRECIATION UNDER SECTION 32 OF THE ACT. IN FACT, THIS BENCH OF THE TRIBUNAL IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION V. DDIT(EXEMPTION S) HAD AN OCCASION TO CONSIDER AN IDENTICAL ISSUE. THIS TRIB UNAL, VIDE ITS ORDER DATED 14 TH AUGUST, 2015 IN I.T.A. NOS.1535 TO 1537/MDS/2014, RECORDED ITS FINDING WHICH IS AS FOLLOWS: 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. LETS FIR ST TAKE ASSESSMENT YEAR 2008-09. THE ASSESSEE IS CLAIMING DEPR ECIATION UNDER SECTION 32 OF THE ACT. FOR THE PURPOSE OF CON VENIENCE, WE ARE REPRODUCING SECTION 32 HEREUNDER:- 32 (1) IN RESPECT OF DEPRECIATION OF-- (I) BUILDINGS, MACHINERY, PLANT OR FURNITURE BEING TANGIBLE ASSETS ; 13 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 (II) KNOW-HOW, PATENTS, COPYRIGHTS, TRADE MARKS, LI CENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMIL AR NATURE, BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1ST DAY OF APRIL, 1998, OWNED, WHOLLY OR PARTLY, BY THE ASSESSEE AND USED F OR THE PURPOSES OF THE BUSINESS OR PROFESSION THE FOLLOWING DEDUCTI ONS SHALL BE ALLOWED-- (I) IN THE CASE OF ASSETS OF AN UNDERTAKING ENGAGED IN GENERATION OR GENERATION AND DISTRIBUTION OF POWER, SUCH PERCENTA GE ON THE ACTUAL COST THEREOF TO THE ASSESSEE AS MAY BE PRESCRIBED. (II) IN THE CASE OF ANY BLOCK OF ASSETS, SUCH PERCE NTAGE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED: PROVIDED THAT NO DEDUCTION SHALL BE ALLOWED UNDER T HIS CLAUSE IN RESPECT OF--(A) ANY MOTOR CAR MANUFACTURED OUTSIDE INDIA, WHERE SUCH MOTOR CAR IS ACQIRED BY THE ASSESSEE AFTER THE 28TH DAY OF FEBRUARY, 1975 5BUT BEFORE THE 1ST DAY OF APRIL, 20 01, UNLESS IT IS USED--(I) IN A BUSINESS OF RUNNING IT ON HIRE FOR T OURISTS; OR(II) OUTSIDE INDIA IN HIS BUSINESS OR PROFESSION IN ANOT HER COUNTRY ; AND(B) ANY MACHINERY OR PLANT IF THE ACTUAL COST TH EREOF IS ALLOWED AS A DEDUCTION IN ONE OR MORE YEARS UNDER AN AGREEM ENT ENTERED INTO BY THE CENTRAL GOVERNMENT UNDER SECTION 42: PROVIDED FURTHER THAT WHERE ANY ASSET REFERRED TO I N CLAUSE (I) 6OR CLAUSE (II) OR CLAUSE (IIA), AS THE CASE MAY BE, IS ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND IS PUT TO USE FOR THE PURPOSES OF BUSINESS OR PROFESSION FOR A PERIOD OF LESS THAN ONE HUNDRED AND EIGHTY DAYS IN THAT PREVIOUS YEAR, THE DEDUCTION UN DER THIS SUB- SECTION IN RESPECT OF SUCH ASSET SHALL BE RESTRICTE D TO FIFTY PER CENT. OF THE AMOUNT CALCULATED AT THE PERCENTAGE PRESCRIB ED FOR AN ASSET UNDER CLAUSE (I) 6OR CLAUSE (II) OR CLAUSE (IIA), A S THE CASE MAY BE: PROVIDED ALSO THAT WHERE AN ASSET BEING COMMERCIAL VEHICLE IS ACQUIRED BY THE ASSESSEE ON OR AFTER THE 1ST DAY OF OCTOBER, 1998, BUT BEFORE THE 1ST DAY OF APRIL, 1999, AND IS PUT T O USE BEFORE THE 1ST DAY OF APRIL, 1999, FOR THE PURPOSES OF BUSINES S OR PROFESSION, THE DEDUCTION IN RESPECT OF SUCH ASSET SHALL BE ALL OWED ON SUCH PERCENTAGE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED. EXPLANATION FOR THE PURPOSES OF THIS PROVISO,-- (A) THE EXPRESSION 'COMMERCIAL VEHICLE' MEANS 'HEAV Y GOODS VEHICLE', 'HEAVY PASSENGER MOTOR VEHICLE', 'LIGHT M OTOR VEHICLE', 'MEDIUM GOODS VEHICLE' AND 'MEDIUM PASSENGER MOTOR VEHICLE' BUT DOES NOT INCLUDE 'MAXI CAB', 'MOTOR-CAB', 'TRACTOR' AND 'ROAD-ROLLER' ; (B) THE EXPRESSIONS 'HEAVY GOODS VEHICLE', 'HEAVY P ASSENGER MOTOR VEHICLE', 'LIGHT MOTOR VEHICLE', 'MEDIUM GOODS VEHI CLE', 'MEDIUM PASSENGER MOTOR VEHICLE', 'MAXI-CAB', 'MOTOR-CAB', 'TRACTOR' AND 'ROAD-ROLLER' SHALL HAVE THE MEANINGS RESPECTIVELY AS ASSIGNED TO THEM IN SECTION 2 OF THE MOTOR VEHICLES ACT, 1988 ( 59 OF 1988). PROVIDED ALSO THAT, IN RESPECT OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1991, THE 14 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 DEDUCTION IN RELATION TO ANY BLOCK OF ASSETS UNDER THIS CLAUSE SHALL, IN THE CASE OF A COMPANY, BE RESTRICTED TO SEVENTY- FIVE PER CENT. OF THE AMOUNT CALCULATED AT THE PERCENTAGE, ON THE WRI TTEN DOWN VALUE OF SUCH ASSETS, PRESCRIBED UNDER THIS ACT IMMEDIATE LY BEFORE THE COMMENCEMENT OF THE TAXATION LAWS (AMENDMENT) ACT, 1991. PROVIDED ALSO THAT THE AGGREGATE DEDUCTION, IN RESP ECT OF DEPRECIATION OF BUILDINGS, MACHINERY, PLANT OR FURN ITURE, BEING TANGIBLE ASSETS OR KNOW-HOW, PATENTS, COPYRIGHTS, T RADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMME RCIAL RIGHTS OF SIMILAR NATURE, BEING INTANGIBLE ASSETS ALLOWABLE T O THE PREDECESSOR AND THE SUCCESSOR IN THE CASE OF SUCCESSION REFERRE D TO IN CLAUSE (XIII), CLAUSE (XIIIB) AND CLAUSE (XIV) OF SECTION 47 OR SECTION 170 OR TO THE AMALGAMATING COMPANY AND THE AMALGAMATED COM PANY IN THE CASE OF AMALGAMATION, OR TO THE DEMERGED COMPAN Y AND THE RESULTING COMPANY IN THE CASE OF DEMERGER, AS THE C ASE MAY BE, SHALL NOT EXCEED IN ANY PREVIOUS YEAR THE DEDUCTION CALCULATED AT THE PRESCRIBED RATES AS IF THE SUCCESSION OR THE AMALGA MATION OR THE DEMERGER, AS THE CASE MAY BE, HAD NOT TAKEN PLACE, AND SUCH DEDUCTION SHALL BE APPORTIONED BETWEEN THE PREDECES SOR AND THE SUCCESSOR, OR THE AMALGAMATING COMPANY AND THE AMAL GAMATED COMPANY, OR THE DEMERGED COMPANY AND THE RESULTING COMPANY, AS THE CASE MAY BE, IN THE RATIO OF THE NUMBER OF DAYS FOR WHICH THE ASSETS WERE USED BY THEM. EXPLANATION 1. WHERE THE BUSINESS OR PROFESSION OF THE ASSESSEE IS CARRIED ON IN A BUILDING NOT OWNED BY HIM BUT IN RESPECT OF WHICH THE ASSESSEE HOLDS A LEASE OR OTHER RIGHT OF OCCUPA NCY AND ANY CAPITAL EXPENDITURE IS INCURRED BY THE ASSESSEE FOR THE PURPOSES OF THE BUSINESS OR PROFESSION ON THE CONSTRUCTION OF A NY STRUCTURE OR DOING OF ANY WORK, IN OR IN RELATION TO, AND BY WAY OF RENOVATION OR EXTENSION OF, OR IMPROVEMENT TO, THE BUILDING, THEN , THE PROVISIONS OF THIS CLAUSE SHALL APPLY AS IF THE SAID STRUCTURE OR WORK IS A BUILDING OWNED BY THE ASSESSEE. EXPLANATION 2. FOR THE PURPOSES OF THIS SUB-SECTION 'WRITTEN DO WN VALUE OF THE BLOCK OF ASSETS' SHALL HAVE THE SAME M EANING AS IN CLAUSE (C) OF SUB-SECTION (6) OF SECTION 43; EXPLANATION 3. FOR THE PURPOSES OF THIS SUB-SECTION, 10THE EXPRESSIONS 'ASSETS' SHALL MEAN-- (A) TANGIBLE ASSETS, BEING BUILDINGS, MACHINERY, PL ANT OR FURNITURE ; (B) INTANGIBLE ASSETS, BEING KNOW-HOW, PATENTS, COP YRIGHTS, TRADE MARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS O R COMMERCIAL RIGHTS OF SIMILAR NATURE. EXPLANATION 4. FOR THE PURPOSES OF THIS SUB-SECTION, THE EXPRESSION 'KNOW-HOW' MEANS ANY INDUSTRIAL INFORMAT ION OR TECHNIQUE LIKELY TO ASSIST IN THE MANUFACTURE OR PR OCESSING OF GOODS OR IN THE WORKING OF A MINE, OIL-WELL OR OTHER SOUR CES OF MINERAL DEPOSITS (INCLUDING SEARCHING FOR DISCOVERY OR TEST ING OF DEPOSITS FOR THE WINNING OF ACCESS THERETO) ; 15 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 EXPLANATION 5. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE PROVISIONS OF THIS SUB-SECTION SHALL APPLY WHETHER OR NOT THE ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF DE PRECIATION IN COMPUTING HIS TOTAL INCOME ; (IIA) IN THE CASE OF ANY NEW MACHINERY OR PLANT (OT HER THAN SHIPS AND AIRCRAFT), WHICH HAS BEEN ACQUIRED AND INSTALLE D AFTER THE 31ST DAY OF MARCH, 2005, BY AN ASSESSEE ENGAGED IN THE B USINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING, A FURTHER SUM EQUAL TO TWENTY PER CENT. OF THE ACTUAL COST OF SUC H MACHINERY OR PLANT SHALL BE ALLOWED AS DEDUCTION UNDER CLAUSE (I I) : PROVIDED THAT NO DEDUCTION SHALL BE ALLOWED IN RESP ECT OF-(A) ANY MACHINERY OR PLANT WHICH, BEFORE ITS INSTALLATION B Y THE ASSESSEE, WAS USED EITHER WITHIN OR OUTSIDE INDIA BY ANY OTHE R PERSON ; OR(B) ANY MACHINERY OR PLANT INSTALLED IN ANY OFFICE PREM ISES OR ANY RESIDENTIAL ACCOMMODATION, INCLUDING ACCOMMODATION IN THE NATURE OF A GUEST-HOUSE ; OR(C) ANY OFFICE APPLIANCES OR R OAD TRANSPORT VEHICLES ; OR(D) ANY MACHINERY OR PLANT, THE WHOLE OF THE ACTUAL COST OF WHICH IS ALLOWED AS A DEDUCTION (WHETHER BY WAY OF DEPRECIATION OR OTHERWISE) IN COMPUTING THE INCOME CHARGEABLE UN DER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' OF AN Y ONE PREVIOUS YEAR ; (III) IN THE CASE OF ANY BUILDING, MACHINERY, PLANT OR FURNITURE IN RESPECT OF WHICH DEPRECIATION IS CLAIMED AND ALLOWE D UNDER CLAUSE (I) AND WHICH IS SOLD, DISCARDED, DEMOLISHED OR DES TROYED IN THE PREVIOUS YEAR (OTHER THAN THE PREVIOUS YEAR IN WHIC H IT IS FIRST BROUGHT INTO USE), THE AMOUNT BY WHICH THE MONEYS P AYABLE IN RESPECT OF SUCH BUILDING, MACHINERY, PLANT OR FURNI TURE, TOGETHER WITH THE AMOUNT OF SCRAP VALUE, IF ANY, FALL SHORT OF TH E WRITTEN DOWN VALUE THEREOF : PROVIDED THAT SUCH DEFICIENCY IS ACTUALLY WRITTEN O FF IN THE BOOKS OF THE ASSESSEE. EXPLANATION FOR THE PURPOSES OF THIS CLAUSE,-- (1) 'MONEYS PAYABLE' IN RESPECT OF ANY BUILDING, MA CHINERY, PLANT OR FURNITURE INCLUDES (A) ANY INSURANCE, SALVAGE OR COMPENSATION MONEYS P AYABLE IN RESPECT THEREOF ; (B) WHERE THE BUILDING, MACHINERY, PLANT OR FURNITU RE IS SOLD, THE PRICE FOR WHICH IT IS SOLD, SO, HOWEVER, THAT WHERE THE ACTUAL COST OF A MOTOR CAR IS, IN ACCORDANCE WITH THE PROVISO TO CLAUSE (1) OF SECTIO N 43, TAKEN TO BE TWENTY-FIVE THOUSAND RUPEES, THE MONEYS PAYABLE IN RESPECT OF SUCH MOTOR CAR SHALL BE TAKEN TO BE A SUM WHICH BEARS TO THE AMOUNT FOR WHICH THE MOTOR CAR IS SOLD OR, AS THE CASE MAY BE, THE AMOUNT OF ANY INSURANCE, SALVAGE OR COMPENSATION MONEYS PAYAB LE IN RESPECT THEREOF (INCLUDING THE AMOUNT OF SCRAP VALUE, IF AN Y) THE SAME PROPORTION AS THE AMOUNT OF TWENTY-FIVE THOUSAND RU PEES BEARS TO THE ACTUAL COST OF THE MOTOR CAR TO THE ASSESSEE AS IT WOULD HAVE BEEN COMPUTED BEFORE APPLYING THE SAID PROVISO ; 16 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 (2) 'SOLD' INCLUDES A TRANSFER BY WAY OF EXCHANGE O R A COMPULSORY ACQUISITION UNDER ANY LAW FOR THE TIME BEING IN FOR CE BUT DOES NOT INCLUDE A TRANSFER, IN A SCHEME OF AMALGAMATION, OF ANY ASSET BY THE AMALGAMATING COMPANY TO THE AMALGAMATED COMPANY WHERE THE AMALGAMATED COMPANY IS 8AN INDIAN COMPANY OR IN A SCHEME OF AMALGAMATION OF A BANKING COMPANY, AS REFERRED TO I N CLAUSE (C) OF SECTION 5 OF THE BANKING REGULATION ACT, 1949 (10 O F 1949), WITH A BANKING INSTITUTION AS REFERRED TO IN SUB-SECTION ( 15) OF SECTION 45 OF THE SAID ACT, SANCTIONED AND BROUGHT INTO FORCE BY THE CENTRAL GOVERNMENT UNDER SUB-SECTION (7) OF SECTION 45 OF T HAT ACT, OF ANY ASSET BY THE BANKING COMPANY TO THE BANKING INSTITU TION. (2) WHERE, IN THE ASSESSMENT OF THE ASSESSEE, FULL EFFECT CANNOT BE GIVEN TO ANY ALLOWANCE UNDER SUB-SECTION (1) IN ANY PREVIOUS YEAR, OWING TO THERE BEING NO PROFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR, OR OWING TO THE PROFITS OR GAINS CHARGEABLE B EING LESS THAN THE ALLOWANCE, THEN, SUBJECT TO THE PROVISIONS OF SUB-S ECTION (2) OF SECTION 72 AND SUB-SECTION (3) OF SECTION 73, THE A LLOWANCE OR THE PART OF THE ALLOWANCE TO WHICH EFFECT HAS NOT BEEN GIVEN, AS THE CASE MAY BE, SHALL BE ADDED TO THE AMOUNT OF THE ALLOWAN CE FOR DEPRECIATION FOR THE FOLLOWING PREVIOUS YEAR AND DE EMED TO BE PART OF THAT ALLOWANCE, OR IF THERE IS NO SUCH ALLOWANCE FOR THAT PREVIOUS YEAR, BE DEEMED TO BE THE ALLOWANCE FOR THAT PREVIO US YEAR, AND SO ON FOR THE SUCCEEDING PREVIOUS YEARS. IN VIEW OF SECTION 32 OF THE ACT, DEPRECIATION HAS T O BE ALLOWED ONLY IN RESPECT OF AN ASSET OWNED BY THE ASSESSEE A ND USED FOR THE PURPOSE OF BUSINESS OR PROFESSION. IN THIS CASE, I T IS NOT A CASE OF THE ASSESSEE THAT THEY ARE NOT DOING ANY BUSINESS O R PROFESSION. THE ASSESSEE IS CATEGORICALLY MAKING A STATEMENT TH AT THEY ARE CHARITABLE ORGANIZATION ENGAGED ITSELF IN PUBLIC UT ILITY SERVICE. ONCE THE ASSESSEE CLAIMS THAT IT IS A CHARITABLE OR GANIZATION AND NOT ENGAGED IN BUSINESS OR PROFESSION, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THE PROVISIONS OF SECTION 32 HAVE NO APPLICATION AT ALL. THE PROVISIONS OF SECTION 32 IN FACT WERE NOT BROUGHT TO THE NOTICE OF THIS TRIBUNAL WHILE DECIDI NG THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007-08 AND ALSO THE DECISI ON OF SRI MARIAMMAN EDUCATIONAL HEALTH AND CHARITABLE TRUST ( SUPRA). IN FACT, THIS TRIBUNAL EXAMINED THE ISSUE ELABORATELY IN THE ANJUMAN- E-HIMAYATH-E-ISLAM V. ADIT IN I.T.A. NO.2271/MDS/2014 BY ORDER DATED 2 ND JULY, 2015 AND FOUND THAT WHEN THE ASSESSEE IS ELIGI BLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT, IT IS NOT ELIGIBLE FOR DEPRECIATION UNDER SECTION 32 OF THE ACT. FOR THE P URPOSE OF CONVENIENCE, WE ARE REPRODUCING THE DECISION TAKEN BY THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE ANJUMAN-E-HIM AYATH-E- ISLAM (SUPRA):- 17 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 5.2 WE FIND THIS ISSUE IS ELABORATELY DISCUSSED IN T HE CASE OF LISSIE MEDICAL INSTITUTION VS. CIT REPORTED IN [2012] 348 ITR 344(KER.) AND HELD THE ISSUE AGAINST THE ASSESSEE. WHILE DOI NG SO, THE HONBLE KERALA HIGH COURT HAD CONSIDERED THE CIRCULAR NO.5P(LLX-6) DATED 19.06.1968 WHICH HAS NOT BEEN CONSIDERED BY THE OTHER DECISIONS. THE CIRCULAR NO. 5P(LLX-6) IS RE PRODUCED HEREIN BELOW FOR REFERENCE:- 1. CIRCULAR NO. 5-P (LXX-6) OF 1968, DATED 19-6-196 8. SUBJECT : SECTION 11CHARITABLE TRUSTSINCOME REQUI RED TO BE APPLIED FOR CHARITABLE PURPOSEINSTRUCTIONS REGARDI NG. IN BOARD'S CIRCULAR NO. 2-P(LXX-5) OF 1963, DATED T HE 15TH MAY, 1963, IT WAS EXPLAINED THAT A RELIGIOUS OR CHARITAB LE TRUST CLAIMING EXEMPTION UNDER SECTION 11(1) OF THE INCOME- TAX AC T, 1961, MUST SPEND AT LEAST 75 PER CENT OF ITS TOTAL INCOME, FOR RELIGIOUS OR CHARITABLE PURPOSES. IN OTHER WORDS, IT WAS NOT PER MITTED TO ACCUMULATE MORE THAN 25 PER CENT OF ITS TOTAL INCOM E. THE QUESTION HAS BEEN RECONSIDERED BY THE BOARD AND THE CORRECT LEGAL POSITION IS EXPLAINED BELOW. 2. SECTION 11(1) PROVIDES THAT SUBJECT TO THE PROVI SIONS OF SECTIONS 60 TO 63 'THE FOLLOWING INCOME SHALL NOT BE INCLUDED I N THE TOTAL INCOME OF THE PREVIOUS YEAR . . . '. THE REFERENCE IN SUB- SECTION (A) IS INVARIABLY TO 'INCOME' AND NOT TO 'TOTAL INCOME'. THE EXPRESSION 'TOTAL INCOME' HAS BEEN SPECIFICALLY DEFINED IN SECTION 2(45) OF THE ACT AS 'THE TOTAL AMOUNT OF INCOME . . . COMPUTED I N THE MANNER LAID DOWN IN THIS ACT'. IT WOULD ACCORDINGLY BE INCORRECT TO ASSIGN TO THE WORD 'INCOME' USED IN SECTION 11(1)(A), THE SAM E MEANING AS HAS BEEN SPECIFICALLY ASSIGNED TO THE EXPRESSION 'TOTAL INCOME' VIDE SECTION 2(45). 3. IN THE CASE OF A BUSINESS UNDERTAKING HELD UNDER TRUST, ITS 'INCOME' WILL BE THE INCOME AS SHOWN IN THE ACCOUNT S OF THE 18 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 UNDERTAKING. UNDER SECTION 11(4), ANY INCOME OF THE BUSINESS UNDERTAKING DETERMINED BY THE INCOME-TAX OFFICER IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, WHICH IS IN EXCESS OF TH E INCOME AS SHOWN IN ITS ACCOUNTS, IS TO BE DEEMED TO HAVE BEEN APPLI ED TO PURPOSES OTHER THAN CHARITABLE OR RELIGIOUS, AND HENCE IT WI LL BE CHARGED TO TAX UNDER SUB-SECTION (3). AS ONLY THE INCOME DISCLOSED BY THE ACCOUNT WILL BE ELIGIBLE FOR EXEMPTION UNDER SECTION 11(1), THE PERMITTED ACCUMULATION OF 25 PER CENT WILL ALSO BE CALCULATED WITH REFERENCE TO THIS INCOME. 4. WHERE THE TRUST DERIVES INCOME FROM HOUSE PROPER TY, INTEREST ON SECURITIES, CAPITAL GAINS, OR OTHER SOURCES, THE WO RD 'INCOME' SHOULD BE UNDERSTOOD IN ITS COMMERCIAL SENSE, I.E., BOOK INCOME , AFTER ADDING BACK ANY APPROPRIATIONS OR APPLICATIONS THER EOF TOWARDS THE PURPOSES OF THE TRUST OR OTHERWISE, AND ALSO AFTER ADDING BACK ANY DEBITS MADE FOR CAPITAL EXPENDITURE INCURRED FOR TH E PURPOSES OF THE TRUST OR OTHERWISE. IT SHOULD BE NOTED, IN THIS CON NECTION, THAT THE AMOUNTS SO ADDED BACK WILL BECOME CHARGEABLE TO TAX UNDER SECTION 11(3) TO THE EXTENT THAT THEY REPRESENT OUTGOINGS F OR PURPOSES OTHER THAN THOSE OF THE TRUST. THE AMOUNTS SPENT OR APPLI ED FOR THE PURPOSES OF THE TRUST FROM OUT OF THE INCOME COMPUT ED IN THE AFORESAID MANNER, SHOULD BE NOT LESS THAN 75 PER CE NT OF THE LATTER, IF THE TRUST IS TO GET THE FULL BENEFIT OF THE EXEMPTI ON UNDER SECTION 11(1). 5. TO SUM UP, THE BUSINESS INCOME OF THE TRUST AS DISC LOSED BY THE ACCOUNTS PLUS ITS OTHER INCOME COMPUTED ABOVE, WILL BE THE 'INCOME' OF THE TRUST FOR PURPOSES OF SECTION 11(1) . FURTHER, THE TRUST MUST SPEND AT LEAST 75 PER CENT OF THIS INCOM E AND NOT ACCUMULATE MORE THAN 25 PER CENT THEREOF. THE EXCES S ACCUMULATION, IF ANY, WILL BECOME TAXABLE UNDER SEC TION 11(1). 19 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 AFTER CONSIDERING THE CIRCULAR, THE HONBLE KERALA HIGH COURT HELD AS FOLLOWS:- HELD, THAT AFTER WRITING OFF THE FULL VALUE OF THE CAPITAL EXPENDITURE ON ACQUISITION OF ASSETS AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES AND WHEN THE ASSESSEE AGAIN CLAIMED THE SAME AMOUNT IN THE F ORM OF DEPRECIATION, SUCH NOTIONAL CLAIM BECAME A CASH SURPLUS AVAILABLE WITH THE ASSESSEE, WHICH WAS OUTSIDE THE BOOKS OF ACCOUNT OF THE TRUST UNLESS IT WAS WRITTEN BACK WHICH WAS NOT DONE BY THE ASSESSEE. IT WAS NOT PERMISSIBLE FO R A CHARITABLE INSTITUTION TO GENERATE INCOME OUTSIDE THE BOOKS IN THIS FASHION A ND THERE WOULD BE VIOLATION OF SECTION 11(1)(A). IT WAS FOR THE ASSESSEE TO WRITE BACK THE DEPRECIATION AND IF THAT WAS DONE, THE ASSESSING OFFICER WOULD MODIFY T HE ASSESSMENT DETERMINING HIGHER INCOME AND ALLOW RECOMPUTED INCOME WITH THE DEPRECIATION WRITTEN BACK BY THE ASSESSEE TO BE CARRIED FORWARD FOR SUBSEQUEN T YEARS FOR APPLICATION FOR CHARITABLE PURPOSES. FURTHER HONBLE CALCUTTA HIGH COURT HAS HELD IN THE CASE DCIT VS. GIRDHARILAL SHEWNARAIN TANTIA TRUST REPORTED IN [1993] 199 ITR 15(CAL.) THAT THE INCOME CONTEMPLATED BY THE PROVISIONS OF SECTION 11 IS THE REAL INCOME AND NOT THE INCOME A S ASSESSED OR ASSESSABLE. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBL E KERALA HIGH COURT AND TAKING CUE FROM THE DECISION OF THE HONBLE CALCUTTA HIGH COURT, WE DO NOT FIND ANY HESITATION TO CONFIRM THE ORDER OF THE LD. CIT(A) AND ALSO THE VIEWS EXPRESSED BY HIM IN HIS ORDER. ACCORDINGLY THIS APPEAL IS HELD IN FAVOUR OF THE REVENUE . 12. APART FROM THAT, WHEN THE ASSESSEE CLAIMS THE C OST OF THE CAPITAL EXPENDITURE AS EXEMPTION UNDER SECTION 11 OF THE ACT, THEN THE COST OF THE CAPITAL ASSET BECOMES NIL. ADMITTE DLY, DEPRECIATION UNDER SECTION 32 OF THE ACT HAS TO BE AL LOWED ONLY ON WRITTEN DOWN VALUE OF THE ASSET. WHEN THE WRITTEN DOWN VALUE OF THE ASSET BECOMES NIL SINCE THE ENTIRE COST WAS ALL OWED AS APPLICATION OF INCOME UNDER SECTION 11 OF THE ACT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE CANNOT BE ANY FURTHER CLAIM FOR DEDUCTION UNDER SECTION 32 OF THE ACT. IN VIEW O F THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 32 OF THE ACT TO WARDS DEPRECIATION. HOWEVER, IT IS MADE CLEAR THAT THE A SSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT F OR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. 20 I.T.A. NO.1759/MDS/13 C.O. NO.15/MDS/14 12. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEPRE CIATION. 13. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE A ND THE CROSS- OBJECTION OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED ON 28 TH OCTOBER, 2015 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 28 TH OCTOBER, 2015. KRI. , .156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ./*+ /RESPONDENT 3. 0 81 () /CIT(A)-VII, CHENNAI-34 4. DIRECTOR OF INCOME TAX (EXEMPTIONS), CHENNAI 5. 69 .1 /DR 6. :' ; /GF.