NAVJBAI RATAN TATA TRUST, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX 17(2)), MUMBAI

ITA 2116/MUM/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7126 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 04-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Charitable institution; Maximum Marginal Rate; Benefit of exemption; Capital expenditure; Set aside; Capital Gains
• Section: 10; 11; 143(3); 244A; 234B; 80G; 12A; 208; 264; 13(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI G.S. PANNU, PRESIDENT AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No. 1301/Mum./2018 (Assessment Year : 2011–12) M/s. Navajbhai Ratan Tata Trust Bombay House, Homi Mody Street Mumbai 400 001 PAN – AAATN0202B ................ Appellant v/s Addl. Director of Income Tax (Exemp.) Range–II, (Now assessed by the Asstt. Commissioner of Income Tax Circle–17(2), Mumbai) ................ Respondent ITA no.1316/Mum./2018 (Assessment year : 2011–12) Asstt. Commissioner of Income Tax Circle–17(2), Mumbai ................ Appellant v/s M/s. Navajbhai Ratan Tata Trust Bombay House, Homi Mody Street Mumbai 400 001 PAN – AAATN0202B ................ Respondent ITA No. 1302/Mum./2018 (Assessment Year : 2012–13) M/s. Navajbhai Ratan Tata Trust Bombay House, Homi Mody Street Mumbai 400 001 PAN – AAATN0202B ................ Appellant v/s Addl. Director of Income Tax (Exemp.) Range–II, (Now assessed by the Asstt. Commissioner of Income Tax Circle–17(2), Mumbai) ................ Respondent M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 2 ITA No. 1314/Mum./2018 (Assessment Year : 2012–13) Asstt. Commissioner of Income Tax Circle–17(2), Mumbai ................ Appellant v/s M/s. Navajbhai Ratan Tata Trust Bombay House, Homi Mody Street Mumbai 400 001 PAN – AAATN0202B ................ Respondent ITA No. 2115/Mum./2018 (Assessment Year : 2013–14) M/s. Navajbhai Ratan Tata Trust Bombay House, Homi Mody Street Mumbai 400 001 PAN – AAATN0202B ................ Appellant v/s Asstt. Commissioner of Income Tax Circle–17(2), Mumbai ................ Respondent ITA No. 2161/Mum./2018 (Assessment Year : 2013–14) Asstt. Commissioner of Income Tax Circle–17(2), Mumbai ................ Appellant v/s M/s. Navajbhai Ratan Tata Trust Bombay House, Homi Mody Street Mumbai 400 001 PAN – AAATN0202B ................ Respondent ITA No. 2116/Mum./2018 (Assessment Year : 2014–15) M/s. Navajbhai Ratan Tata Trust Bombay House, Homi Mody Street Mumbai 400 001 PAN – AAATN0202B ................ Appellant v/s Asstt. Commissioner of Income Tax Circle–17(2), Mumbai ................ Respondent M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 3 ITA No. 2162/Mum./2018 (Assessment Year : 2014–15) Asstt. Commissioner of Income Tax Circle–17(2), Mumbai ................ Appellant v/s M/s. Navajbhai Ratan Tata Trust Bombay House, Homi Mody Street Mumbai 400 001 PAN – AAATN0202B ................ Respondent Assessee by : Shri Sukhsagar Syal, Advocate Revenue by : Shri Rajesh Damor, CIT DR Date of Hearing – 14.02.2022 Date of Order – 10.03.2022 O R D E R PER BENCH The aforesaid cross appeals have been filed by either parties challenging the orders passed by the Commissioner of Income Tax (Appeals)–6, Mumbai, (hereinafter referred to as “the CIT(A)”) under section 250 of the Income Tax Act, 1961 („the Act‟) for the assessment years 2011- 12, 2012-13, 2013-14 and 2014-15. 2. Since all the cross appeals pertain to the same assessee and issues involved are, inter-alia, common, therefore, these appeals were heard together as a matter of convenience and are being adjudicated by way of this consolidated order. Further, as the basic facts in all the appeals are same, we have elaborately mentioning only the facts for the first assessment year (i.e. 2011-12) before us for the sake of brevity. However, if any particular issue is arising in any assessment year for the first time, facts pertaining to same are discussed accordingly. M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 4 ITA no.1301/Mum./2018 Assessee’s Appeal – 2011–12 3. In this appeal, the assessee has raised the following grounds:– “1. On the facts and under the circumstances of the case and in law, the learned CIT(A) has erred in denying exemption under Section 11 of the Income-tax Act, 1961 ('the Act') to the assessee by alleging violation of the provisions of Section 13(1)(d) and 13(2)(h) of the Act The Appellant prays that the benefit of Section 11 of the Act be granted to it as there is no violation under Section 13(1)(d) and 13(2)(h) of the Act. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in not accepting the Appellant's contention that even if it were held to be violative of Section 13(1)(d) and/or 13(2)(h) of the Act then only income from prohibited investments should be denied benefits under section 11 of the Act. Without prejudice, the Appellant prays that only income from prohibited investments should be denied the benefits of Section 11 of the Act and the same be granted to income earned from non-prohibited investments. 3. On the facts and under the circumstances of the case and in law. the learned CIT(A) has erred in holding that no exemption under Section 11 of the Act will be allowed on interest income of INR 7,89.82,816 and other income of INR 13,32,306 (being income from non-prohibited investments) and that it shall be taxable at maximum marginal rate under section 164(2) read with section 2(29C) of the Act. The Appellant prays that exemption under Section 11 of the Act be granted on interest income and other income (being non-prohibited investments). 4. On the facts and under the circumstances of the case and in law, the learned CIT(A) has erred in denying deduction of the income applied towards charitable purposes in India on the objects of the Trust. The Appellant prays that income applied towards charitable purposes in India should be allowed as deduction while computing the total income. 5. On the facts and under the circumstances of the case and in law, the learned Assessing Officer has erred in disallowing carry forward of deficit for adjustment in subsequent years. The Appellant prays that the benefit of carry forward of the deficit to subsequent years be allowed. M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 5 6. On the facts and under the circumstances of the case and in law, the learned Assessing Officer has erred in levying interest under section 234B of the Act on the additions not envisaged by the Appellant. The Appellant prays that the learned Assessing Officer be directed to delete the interest levied under section 234B of the Act. 7. On the facts and under the circumstances of the case and in law, the learned Assessing Officer has erred in levying interest under section 234C of the Act on the assessed income as against the returned income The Appellant prays that the learned Assessing Officer be directed to delete the interest levied under section 234C of the Act 8. On the facts and under the circumstances of the case and in law, the learned Assessing Officer has erred in levying interest under section 234D of the Act. The Appellant prays that the learned Assessing Officer be directed to delete the interest levied under section 234D of the Act. 9. On the facts and under the circumstances of the case and in law, the learned Assessing Officer has erred in reversing the interest received by the Appellant under section 244A of the Act and adding it to the total tax liability of the Appellant The Appellant prays that the learned Assessing Officer be directed to delete the interest reversed under section 244A of the Act.” 4. Mr. Sukhsagar Syal, learned counsel appearing for the assessee, at the outset submitted that ground no.1, insofar as it pertains to violation of section 13(1)(d) of the Act, and ground no. 5 in assessee‟s appeal are not pressed. Accordingly, same are dismissed as not pressed. 5. The first issue to be decided in assessee‟s appeal is with regard to denial of exemption under section 11 to the assessee due to violation of provisions of section 13(2)(h) of the Act. 5.1 The brief facts of the case pertaining to this issue as emanating from record are: The assessee is registered as a Charitable Organization with M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 6 Director of Income Tax (Exemption), Mumbai, under section 12A of the Act vide registration no.TR/10925, dated 15 th March 1976, and with Charity Commissioner under registration no.E–5998(Mumbai). The assessee had also been issued certificate under section 80G of the Act for the period from 1 st April 2009 to 31 st March 2012. The assessee had accordingly claimed exemption under section 11 of the Act. 5.2 During the course of assessment proceedings, it was observed that the assessee had sold shares of Tata Consultancy Ltd., which were received as corpus donation in the earlier years. The capital gains realized were invested in redeemable preference shares of Tata Sons Ltd. The Assessing Officer (hereinafter referred to as “the AO”), vide order dated 18.03.2014 passed under section 143(3) of the Act observed that the assessee trust was founded by Shri Ratan Naval Tata and Late Shri Nani A. Palkhiwala. Shri Ratan N. Tata, was the Chairman of Tata Group from the year 1991 to 2012. He stepped down as a Chairman of Tata Sons Ltd. on 29 th February 2012, and now hold the position of Chairman Emeritus of the Group, which is a Honarary and Advisory position. The Assessing Officer further observed that during the period when the capital gain was invested in Tata Sons Ltd. i.e., during the assessment years 2008–09, 2009–10 and 2010–11, Shri Ratan N. Tata was a Chairman of Tata Sons Ltd. and thus also as a founder trustee of the assessee has invested funds in a concern where he was a Chairman. Accordingly, the AO held that by investing in shares of Tata Sons Ltd., the assessee has violated provisions of section 13(2)(h) of the Act. M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 7 5.3 In appeal, the CIT(A) vide order dated 18.12.2017 upheld the conclusion of the AO in respect of violation of provisions of section 13(2)(h) of the Act for denial of exemption under section 11 to the assessee. 5.4 During the course of hearing, the learned counsel submitted that Shri Ratan N. Tata, founder trustee of the assessee, was not having substantial interest in Tata Sons Ltd., as per the provisions of Explanation–3 to section 13 of the Act and thus assessee did not violate the provisions of section 13(2)(h) of the Act. In support of his submissions, the learned counsel also placed reliance on judicial precedences of the Co–ordinate Bench of the Tribunal. 5.5 On the other hand, Shri Rajesh Damor, learned Departmental Representative (hereinafter referred to as “learned D.R.”), appearing for the Revenue, vehemently relied upon the orders passed by the AO and the CIT(A). 5.6 We have considered the rival submissions and perused the material available on record. In order to decide this issue, it is relevant to analyse the provisions of section 13(2)(h) and Explanation–3 to section 13 of the Act. Section 13(2)(h) reads as under:– “Section 13- Section 11 not to apply in certain cases. (1).................... (2) Without prejudice to the generality of the provisions of clause (c) and clause (d) of sub-section (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in sub-section (3), - M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 8 ............. .......... (h) if any funds of the trust or institution are, or continue to remain, invested for any period during the previous year (not being a period before the 1st day of January, 1971), in any concern in which any person referred to in sub-section (3) has a substantial interest.” Further, as per the provisions of section 13(3) of the Act, „person‟, inter-alia, includes the author of the trust or the founder of the institution. Thus, in order to invoke the provisions of section 13(2)(h) of the Act, it is necessary that the funds of the trust are invested in a concern in which authors / founders of the trust are having substantial interest. The expression “substantial interest” has been explained in provisions of Explanation–3 to section 13 of the Act and the same reads as under:– “Explanation 3.—For the purposes of this section, a person shall be deemed to have a substantial interest in a concern,— (i) in a case where the concern is a company, if its shares (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than twenty per cent of the voting power are, at any time during the previous year, owned beneficially by such person or partly by such person and partly by one or more of the other persons referred to in sub-section (3); (ii) in the case of any other concern, if such person is entitled, or such person and one or more of the other persons referred to in sub-section (3) are entitled in the aggregate, at any time during the previous year, to not less than twenty per cent of the profits of such concern.” Therefore, in view of above, it is only when shares of the concern carrying not less than 20% of voting power are owned by authors / founders of the trust, such person shall be deemed to have a substantial interest in the concern. M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 9 5.7 It is evident from the facts of the present case, as also noted by the Assessing Officer, that Shri Ratan N. Tata, founder trustee of the assessee, was holding 3,368 ordinary shares of Tata Sons Ltd. constituting only 0.83% of the aggregate paid–up ordinary share capital of Tata Sons Ltd., which was much less than the threshold requirement of provision of Explanation–3 to section 13 of the Act. Therefore, Shri Ratan N. Tata cannot be held to be having „substantial interest‟ in Tata Sons Ltd. Accordingly, the investment by the assessee trust in shares of Tata Sons Ltd. is not affected by the vice of section 13(2)(h) of the Act. In the present case, the only basis for invoking the provisions of section 13(2)(h) of the Act by the AO was that Shri Ratan N. Tata, being the Chairman of Tata Sons Ltd., could have influenced the decision of Tata Sons Ltd. as well as of the assessee trust at the time of investment, is nothing but conjectures/surmises which is not even supported by the statutory requirements of section 13(2)(h) read with Explanation 3 to section 13 of the Act. 5.8 We are in agreement with similar views expressed by SMC Bench of Tribunal in the case of J.R.D. Tata Trust v. The Income Tax Officer: ITAs No. 3082/Mum/2018 and 3154/Mum/2018. Further, reliance placed by the CIT(A) on the decision of the Co-ordinate Bench in the case of Jamsetji Tata Trust v. JDIT (Exemption): ITA No. 7006/Mum/2013 is completely misplaced. As in a recent decision in the case of Sir Dorabji Tata Trust v. DCIT (Exemption): ITA No. 3909/Mum/2019, the Co-ordinate Bench of the Tribunal held that observation made in the said decision of Jamsetji Tata Trust (supra) is a sweeping observation based on conviction rather than M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 10 material available on record, as it observes that “As far as the violation of clause(h) of section 13(2) is concerned we find that the author of the assessee trust and its relative definitely have a substantial interest in the Tata Sons Ltd., therefore, the investment in the shares of Tata Sons Ltd. is clear violation of clause(h) of section 13(2)”. 5.9 Thus, in view of the above, we hold that by making investment in shares of Tata Sons Ltd., assessee trust didn‟t violate provisions of section 13(2)(h) of the Act. Accordingly, ground no.1 raised in assessee‟s appeal, insofar as it pertains to violation of section 13(2)(h) of the Act, is allowed. 6. The next issue to be decided in assessee‟s appeal is with regard to denial of benefits of section 11 of the Act only in respect of the income from prohibited investments. 6.1 The brief facts of the case pertaining to this issue as emanating from record are: During the course of assessment proceedings, assessee on without prejudice submitted that even if the assessee trust is held to violate any provision of section 13 of the Act, then in such a case only the income from prohibited investments be denied exemption benefit under section 11 of the Act instead of entire income of the assessee. 6.2 The AO vide order dated 18.03.2014 rejected the without prejudice submission of the assessee and held that when there is a violation of section 13 of the Act, benefit of section 11 and 12 shall be denied to the assessee trust on the entire income. M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 11 6.3 In appeal, the CIT(A) vide order dated 18.12.2017 held the issue to be mere academic in nature and not requiring specific adjudication. 6.4 During the course of hearing, learned counsel, submitted that this issue is no longer res integra and has been decided in favour of the taxpayer by Hon‟ble Jurisdictional High Court in the case of DIT(Exemption) v. Sheth Mafatlal Gagalbhai Foundation Trust: 249 ITR 533. 6.5 On the other hand, learned D.R. vehemently relied upon the order passed by the AO. 6.6 We have considered the rival submissions and perused the material available on record. In the present case, the assessee had made investment in redeemable preferential shares of Tata Sons Ltd. which the AO, inter-alia, held to be in violation of provision of section 13(1)(d) of the Act. The income that could be derived from such an investment would be dividend income or the capital gains on sale of such investment. However, due to violation of provisions of section 13, income derived from property held under trust is not exempted under section 11 of the Act. The issue which arises in the present case is whether the entire income of the trust shall become ineligible for exemption under section 11 of the Act or it is restricted to only the income derived from prohibited investments. 6.7 Similar issue arose for consideration before the Hon‟ble Jurisdictional High Court in the case of Sheth Mafatlal Gagalbhai Foundation Trust(supra), wherein the Hon‟ble Court observed as under: M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 12 “........the Legislature has clearly indicated its mind in the proviso to section 164(2) when it categorically refers to forfeiture of exemption for breach of section 13(1)(d), resulting in levy of maximum marginal rate of tax only to that part of the income which has forfeited exemption. It does not refer to the entire income being subjected to maximum marginal rate of tax.” Further, Hon‟ble Jurisdictional High Court in the case of CIT v. Audyogik Shikshan Mandal: 261 Taxmann 12 held that on a plain reading of sections 11 and 13 of the Act, it is clear that the legislature did not contemplate the denial of benefit of section 11 of the Act to the entire income of the Trust. Following the decisions of Hon‟ble Jurisdictional High Court, similar view was also expressed by the Co-ordinate Bench of the Tribunal in assessee‟s own case in ITAs No. 1317/Mum/2018 and 1299/Mum/2018 for the assessment year 2008-09. 6.8 Thus, respectfully following the aforesaid decisions of Hon‟ble Jurisdictional High Court, we direct the AO to only consider income from prohibited investments while denying the benefits of section 11, and, at the same time, grant the exemption under section 11 of the Act on interest income and income earned from non-prohibited investments by the assessee. Accordingly, ground nos. 2 to 4 raised in assessee‟s appeal are allowed. 7. The next issue to be decided in assessee‟s appeal is with regard to levy of interest under section 234C of the Act. 7.1 The brief facts of the case pertaining to this issue as emanating from record are: The AO vide order dated 18.03.2014 passed under section M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 13 143(3) levied interest amounting to Rs. 1,31,82,694 under section 234C of the Act. 7.2 During the course of hearing, learned counsel submitted that assessee trust had filed NIL return of income on 28.09.2011 and therefore no interest is leviable under section 234C of the Act. On the other hand, learned D.R. vehemently opposed such submission. 7.3 We have considered the rival submissions and perused the material available on record. As per provisions of section 234C of the Act, interest is levied either on failure to pay the advance tax by the assessee or on shortfall in payment of advance tax as compared to tax due on returned income. Further, under the provisions of section 208 or section 209 of the Act, advance tax is to be computed on the estimated current income of the assessee and in case such income is not taxable, there is no liability imposed on the assessee to pay any advance tax. In the present case, as the assessee trust at the relevant time of deposit of advance tax had NIL taxable income, there was no liability to deposit any advance tax. Consequently, no default can be attributed to the assessee for non-deposit of advance tax while estimating its income. Further, it is pertinent to note that section 234C refers to the term „returned income‟ in comparison to section 234B which refers to the term „assessed tax‟ for imposing interest. In the present case, it is not in dispute that returned income in case of assessee trust was NIL. As only in the case of default / shortfall in payment of advance tax as compared to tax due on returned income, interest is chargeable under sections 234C of M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 14 the Act. Thus, we hold that no interest is chargeable under section 234C of the Act in the present case. The AO is directed to delete the interest levied under section 234C of the Act. Accordingly, ground no. 7 raised in assessee‟s appeal is allowed. 8. Insofar as ground nos. 6 and 8 in assessee‟s appeal are concerned, same pertains to levy of interest under section 234B / 234D of the Act. While ground no. 9 in assessee‟s appeal pertains to addition of interest received under section 244A of the Act. During the course of hearing, learned counsel submitted that all these grounds are consequential in nature. Thus, the AO is directed to compute the interest under sections 234B and 234D, if leviable, in accordance with law. Further, the AO may grant the interest under section 244A of the Act in accordance with law. Accordingly, ground nos. 6, 8 and 9 in assessee‟s appeal are allowed for statistical purpose. 9. In the result, appeal by the assessee being ITA No. 1301/Mum/2018 is partly allowed in terms of our aforesaid findings. ITA no.1316/Mum./2018 Revenue’s Appeal – 2011–12 10. In this appeal, the Revenue has raised the following grounds:– “(i) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing exemption u/s.10(34) of the Income tax Act to the tune of Rs.115,47,80,338/- on the dividend received on shares without appreciating the fact that the income derived by the assessee trust is from the properties held under the trust and claimed exemption u/s. 11 of the I.T. Act. M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 15 (ii) On the facts and circumstances of the case and in law, the Ld CIT(A) erred in allowing exemption u/s.10(34) of the Income tax Act to the tune of Rs. 115,47,80,338/- on the dividend received on shares without appreciating the fact that the income derived by the assessee trust is from the properties held under the trust and claimed exemption u/ S. 11 of the I T Act which is denied by the AO due to violation of provisions of section 13(l)(d) and 13(2)(h) of the Act. The violation of section 13 has not changed the status of the Trust i.e, from being Trust to private person. The violation of section 13 has changed the nature of the income i.e. from being the income derived from the property held under Trust to Private Income. The assessee claimed alternative exemption u/s. 10(34) which was not allowed by the AO because section 10(34) does not deal with income derived from property held under trust. (iii) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing exemption u/s.10(34) of the Income tax Act to the tune of Rs.115,47,80,338/- on the dividend received on shares without appreciating the fact that the income derived by the assessee trust is from the properties held under the trust and claimed exemption u/s. 11 of the I T Act. Section 11 starts with the words "income derived from property held under Trust" which means that section which exclusively deals with income derived from property held under trust is section 11 and not any other section. The assessee trust cannot claim alternative exemption under section 10(34) because section 10(34) does not deal with income derived from property held under trust. (iv) On the facts and circumstances of the case and in law, the Ld CIT(A) erred in allowing depreciation without appreciating the fact that the assessee has claimed the deduction twice. The assessee trust claimed depreciation and also capital expenditure viz addition to fixed assets in the computation of income which amounted to double deduction. (v)The appellant prays that the order of the A.O. should be restored and order of the CIT(A) should be set aside." 11. The first issue to be decided in Revenue‟s appeal is with regard to the claim of exemption under section 10(34) of the Act on dividend income received on shares by the assessee. 11.1 The brief facts of the case pertaining to this issue as emanating from record are: During the year under consideration, the assessee trust had M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 16 received dividend income of Rs. 115,47,80,338 which was claimed as exempted under section 10(34) of the Act. 11.2 The AO vide order dated 18.03.2014 held that the assessee trust is not entitled to claim exemption under section 10(34) as assessee‟s entire income derived from the property held under trust is governed by the provision of section 11 of the Act. The AO further held that once there is violation under section 13 and as a result of same exemption under section 11 is denied, assessee cannot claim alternative exemption under section 10(34) because section 10(34) of the Act does not deal with income derived from property held under trust. 11.3 In appeal against the aforesaid disallowance, the CIT(A) vide order dated 18.12.2017 following the decision of Hon‟ble Jurisdictional High Court in the case of DIT (Exemption) v. Jasubhai Foundation: 374 ITR 315, inter- alia, allowed the appeal of the assessee and directed the AO to grant benefit of provision of section 10(34) of the Act in respect of dividend income of Rs. 115,47,80,338. 11.4 Being aggrieved by aforesaid findings of the CIT(A), Revenue is in appeal before us. It is pertinent to note that section 10 and section 11 of the Act fall under the Chapter III which deals with “Incomes which do not form part of Total Income”. Section 10 deals with incomes not included in total income whereas section 11 deals with income from property held for charitable or religious purpose. Accordingly, where income is already required to be excluded by virtue of section 10 (in case of dividend), the M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 17 same cannot be brought within the ambit of section 11 of the Act. In respect of similar issue, Hon‟ble Jurisdictional High Court in the case of Jasubhai Foundation (supra), observed as under:- “.....We have not found anything in the language of the two provisions nor was Mr. Malhotra able to point out as to how when certain income is not to be included in computing total income of a previous year of any person, then, that which is excluded from section 10 could be included in the total income of the previous year of the person/assessee. That may be a person who receives or derives income from property held under trust wholly for charitable or religious purposes.” 11.5 It is pertinent to note that vide Finance (No.2) Act, 2014, sub-section (7) was inserted in section 11 of the Act whereby it has been provided that benefits of exemption provided in section 10 shall not be available to any Trust/Institution registered and claiming the benefit of section 11 of the Act. This amendment was brought w.e.f. 1 st April, 2015 and therefore, is only applicable to assessment year 2015-16 and onwards. Thus, respectfully following the aforesaid decision of Hon‟ble Jurisdictional High Court, order passed by the CIT(A), inter-alia, granting benefit of exemption under section 10(34) of the Act in respect of dividend income received by assessee is upheld. Accordingly, ground nos. (i) to (iii) raised in Revenue‟s appeal are dismissed. 12. The next issue to be decided in Revenue‟s appeal is with regard to the claim of depreciation by the assessee trust. 12.1 The brief facts of the case pertaining to this issue as emanating from record are: During the assessment year under consideration, assessee had claimed depreciation and also capital expenditure viz. addition to fixed M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 18 assets in the computation of income. The AO vide order passed under section 143(3) of the Act rejected the claim of the assessee on the ground that same tantamount to double deduction. Firstly, by way of claiming the capital expenditure towards the purchase of the fixed assets and secondly by way of depreciation. Accordingly, the AO disallowed depreciation of Rs. 4,40,898 claimed by the assessee. 12.2 In appeal against the aforesaid disallowance, the CIT(A), inter-alia, following decision of Hon‟ble Jurisdictional High Court in the case of CIT v. Institute of Banking Personnel Selection: 131 Taxmann 386 directed the AO to grant the claim of depreciation on fixed assets to the assessee. 12.3 Being aggrieved by aforesaid findings of the CIT(A), Revenue is in appeal before us. We find that on similar issue Hon‟ble Supreme Court in the case of CIT v. Rajasthan & Gujarati Charitable Foundation Poona: 402 ITR 441, dismissing the Revenue‟s appeal against Hon‟ble Jurisdictional High Court‟s decision rendered in ITA No. 1562 of 2012 vide order dated 28 th January 2013, held that in case of charitable institution registered under section 12A, even though expenditure incurred for acquisition of capital assets was treated as application of income for charitable purpose under section 11(1)(a), yet depreciation would be allowed on assets so purchased. 12.4 It is also pertinent to note that vide Finance (No.2) Act, 2014, sub- section (6) was inserted in section 11 of the Act whereby it has been provided that benefits of depreciation shall not be available to any Trust/Institution registered and claiming the benefit of section 11 of the Act. M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 19 This amendment was brought w.e.f. 1 st April, 2015 and therefore, is only applicable to assessment year 2015-16 and onwards. In view of the above, respectfully following the aforesaid decision of Hon‟ble Supreme Court, we, inter-alia, upheld the order passed by the CIT(A) allowing the claim of depreciation on fixed assets to the assessee. Accordingly, ground no. (iv) raised in Revenue‟s appeal is dismissed. 13. Insofar as ground no. (v) raised in Revenue‟s appeal is concerned, same is general in nature and is also dismissed in view of our aforesaid findings in Revenue‟s appeal. 14. In the result, appeal by the Revenue being ITA no. 1316/Mum/2018 is dismissed in terms of our aforesaid findings. ITA no.1302/Mum./2018 Assessee’s Appeal – 2012–13 15. The issues arising in this appeal for our consideration pertains to (i) denial of exemption under section 11 due to violation of section 13(1)(d) of the Act; (ii) denial of exemption under section 11 due to violation of section 13(2)(h) of the Act; (iii) levy of interest under section 234B of the Act; and (iv) levy of interest under section 234C of the Act. 16. As all these issues are similar to assessee‟s appeal for assessment year 2011-12, our findings/conclusion in assessee‟s appeal being ITA No. 1301/Mum/2018 for assessment year 2011-12 shall apply mutatis mutandis to this appeal. M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 20 17. In the result, appeal by the assessee being ITA No. 1302/Mum/2018 is partly allowed. ITA no.1314/Mum./2018 Revenue’s Appeal – 2012–13 18. The issue arising in ground nos. (i) to (iii) in Revenue‟s appeal pertaining to claim of exemption under section 10(34) of the Act is similar to Revenue‟s appeal for assessment year 2011-12. Thus, our findings/conclusion in Revenue‟s appeal being ITA No. 1316/Mum/2018 for assessment year 2011-12 shall apply mutatis mutandis. Accordingly, ground nos. (i) to (iii) raised in Revenue‟s appeal are dismissed. 19. The next issue to be decided in Revenue‟s appeal is with regard to carry forward of excess application/ deficit to subsequent assessment year. 19.1 The brief facts of the case pertaining to this issue as emanating from records are: During the year under consideration, the assessee claimed deficit of Rs. 86,77,63,963 in the return of income to be carried forward to subsequent years being excess of expenditure over income earned during the year under consideration. 19.2 The AO vide order dated 05.03.2015 passed under section 143 of the Act held that there is no provision under section 11 of the Act under which the assessee can claim set off of excess expenditure incurred in earlier year against the income of the relevant assessment year. Thus, the loss / deficit of current year was not allowed to be carried forward for adjustment in subsequent years. M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 21 19.3 In appeal, the CIT(A) vide order dated 19.12.2017, inter-alia, following decision of Hon‟ble Jurisdictional High Court in the case of CIT v. Institute of Banking Personnel Selection: 264 ITR 110 directed the AO to allow carry forward of the deficit as may be available. 19.4 Being aggrieved by aforesaid findings of the CIT(A), Revenue is in appeal before us. We find that on similar issue Hon‟ble Supreme Court in the case of CIT(Exemption) v. Subros Education Society: [2018] 303 CTR 1 held that any excess expenditure incurred by trust/charitable institution in earlier assessment year would be allowed to be set off against income of subsequent years by invoking section 11 of the Act. 19.5 Respectfully following the aforesaid decision of Hon‟ble Supreme Court, we, inter-alia, upheld the order passed by the CIT(A) allowing the carry forward of deficit. Accordingly, ground no. (iv) raised in Revenue‟s appeal is dismissed. 20. Insofar as ground no. (v) and (vi) raised in Revenue‟s appeal are concerned, same are general in nature and are also dismissed in view of our aforesaid findings in Revenue‟s appeal. 21. In the result, appeal by the Revenue being ITA no. 1314/Mum/2018 is dismissed in terms of our aforesaid findings. M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 22 ITA no.2115/Mum./2018 Assessee’s Appeal – 2013–14 22. The ground no.1 raised in this appeal is similar to assessee‟s appeal for assessment year 2011-12, our findings/conclusion in assessee‟s appeal being ITA No. 1301/Mum/2018 for assessment year 2011-12 shall apply mutatis mutandis to this ground. Accordingly, ground no.1 raised in assessee‟s appeal, insofar as it pertains to violation of section 13(2)(h) of the Act, is allowed. While ground pertaining to violation of section 13(1)(d) of the Act is dismissed as not pressed. 23. The next issue to be decided in assessee‟s appeal is with regard to levy of interest under section 234A of the Act. 23.1 The brief facts of the case pertaining to the issue as emanating from record are: The AO vide order dated 31.03.2016 passed under section 143(3) levied interest amounting to Rs. 87,11,646 under section 234A of the Act. In appeal, the CIT(A) vide order dated 15.01.2018 directed the AO to compute the interest, in accordance with law, after giving effect to its order. 23.2 Being aggrieved, assessee is in appeal before us. The interest under section 243A of the Act is levied for default / delay in furnishing the return of income. In the present case, it is not in dispute that assessee filed the return of income for the relevant assessment year. Thus, the only aspect which needs examination is whether there is any delay in filing the return of income in order to levy interest under section 234A of the Act. In view of the above, we deem it fit to direct the AO to carry out necessary verification M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 23 whether the return of income was filed by assessee within time and levy interest under section 234A of the Act, in case of delay, in accordance with law. Thus, ground no. 2 raised in assessee‟s appeal is allowed for statistical purpose. 24. In the result, appeal by the assessee being ITA No. 2115/Mum/2018 is partly allowed. ITA no.2161/Mum./2018 Revenue’s Appeal – 2013–14 25. The issues arising in present appeal for our consideration pertains to (i) claim of exemption under section 10(34) of the Act; and (ii) carry forward of excess application/ deficit to subsequent assessment year. 26. As all these issues are similar to Revenue‟s appeal for assessment year 2012-13, our findings/conclusion in Revenue‟s appeal being ITA No. 1314/Mum/2018 for assessment year 2012-13 shall apply mutatis mutandis to this appeal. 27. In the result, appeal by the Revenue being ITA No. 2161/Mum/2018 is dismissed. ITA no.2116/Mum./2018 Assessee’s Appeal – 2014–15 28. The issues arising in this appeal for our consideration pertains to (i) denial of exemption under section 11 due to violation of section 13(1)(d) of the Act and (ii) denial of exemption under section 11 due to violation of section 13(2)(h) of the Act. M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 24 29. As all these issues are similar to assessee‟s appeal for assessment year 2011-12, our findings/conclusion in assessee‟s appeal being ITA No. 1301/Mum/2018 for assessment year 2011-12 shall apply mutatis mutandis to this appeal. 30. In the result, appeal by the assessee being ITA No. 2116/Mum/2018 is partly allowed. ITA no.2162/Mum./2018 Revenue’s Appeal – 2014–15 31. The issues arising in present appeal for our consideration pertains to (i) claim of exemption under section 10(34) of the Act; (ii) carry forward of excess application/ deficit to subsequent assessment year: and (iii) denial of benefits of section 11 of the Act only in respect of the income from prohibited investments. 32. As, similar issues have already been decided in earlier paragraphs of this consolidated order, our findings/conclusion on same shall apply mutatis mutandis to this appeal. 33. In the result, appeal by the revenue being ITA No. 2162/Mum/2018 is dismissed. Order pronounced in the open court on 10/03/2022. Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER Sd/- G.S. PANNU PRESIDENT MUMBAI, DATED: 10/03/2022 M/s. Navajbhai Ratan Tata Trust Assessment Years: 2011-12, 2012-13, 2013-14 and 2014-15 25 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Mumbai City concerned; (5) The DR, ITAT, Mumbai; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai