M/s Gayatri Educational Society, Kakinada V. THE ITO, Ward-2, Kakinada., Kakinada

ITA 248/VIZ/2012

• Counselvise Citation: 24825314 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 11-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Keywords: Depreciation; Charitable institution; Diversion of income; Fair market value; Capital expenditure
• Section: 11

Judgement Text

1 I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL, VISHAKHAPATNA M BEFORE S/SHRI D.MANMOHAN (VP) & J.SUDHAKAR REDDY (A M) I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 GAYATRI EDUCATIONAL SOCIETY, D.NO.2-24-4/2, JANMABHOOMI PARK ROAD, SRINAGAR, KAKINADA. VS. ITO, WARD - 2, KAKINADA. PAN/GIR NO. : AAATG 5210 C ( APPELLANT ) .. ( RESPONDENT ) I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 ITO, WARD - 2, KAKINADA. VS. GAYATRI EDUCATIONAL SOCIETY, D.NO.2 - 24-4/2, JANMABHOOMI PARK ROAD, SRINAGAR, KAKINADA PAN/GIR NO. : AAATG 5210 C ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI G.V.N. HARI REVENUE BY : SHRI R.K.SINGH DATE OF HEARING : 27/11/2014 DATE OF PRONOUNCEMENT : 03/12/2014 O R D E R PER J.SUDHAKAR REDDY, AM: THE CROSS APPEALS ARE FILED FOR THE ASSESSMENT YEAR 2008-09 AGAINST ORDER DATED 25.2.2012 OF LD CIT(A)-VISAKHAPATNAM AND APPEALS FI LED BY THE ASSESSEE FOR 2 I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 ASSESSMENT YEARS 2009-2010 AND 2010-2011 ARE DIRECT ED AGAINST THE ORDER DT.28.2.2013 & 29.11.2013. 2. AS THE ISSUES ARISING OUT OF THESE APPEALS ARE COMM ON, THEY WERE CLUBBED AND HEARD TOGETHER AND, THEREFORE, WE DISPOSE OF THESE APPEAL S BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. FIRST WE TAKE UP THE CROSS APPEALS FOR THE ASSES SMENT YEAR 2008-09. 3. THE FACTS, AS BROUGHT OUT AT PAGES 1 & 2 OF THE IMPUGNED ORDER, ARE EXTRACTED AS FOLLOWS: THE ASSESSEE SOCIETY, ESTABLISHED IN 1993 WITH THE OBJECT OF PROMOTING EDUCATIONAL INSTITUTIONS AND OTHER CHARITABLE ACTIVITIES, WAS G RANTED REGISTRATION U/S.12A BY COMMISSIONER OF INCOME TAX, RAJAHMUNDRY. SUBSEQUENT LY, ASSESSEE SOCIETY WAS ALSO APPROVED U/S.10(23)(VI). RETURN OF INCOME FOR THE A .Y.2008-09 DECLARING NIL INCOME CLAIMING EXEMPTION U/S.10(23C) WAS FILED. SURVEY U/S.133A IS CONDUCTED ON THE ASSESSEE'S PREMISES ON 17.09.2010. BASED ON THE DISCREPANCIES FOUND DUR ING SURVEY, CHIEF COMMISSIONER OF INCOME TAX, VISAKHAPATNAM HAS WITHDRAWN EXEMPTION G RANTED U/S.10(23C) VIDE ORDER NO.CC/VSP/TECH/10(23C)/40/2010-LL, DT.07.12.2010. D URING THE SCRUTINY PROCEEDINGS, ASSESSEE IS ASKED TO EXPLAIN AS TO WHY EXEMPTION SH OULD NOT BE DENIED TO IT IN VIEW OF WITHDRAWAL OF APPROVAL U/S.10(23C). ASSESSEE CLAIME D THAT EXEMPTION U/S.11 MAY BE ALLOWED AS THE SOCIETY IS REGISTERED U/S.12A AND AP PLIED ITS INCOME FOR THE OBJECTS OF THE SOCIETY. CLAIM OF THE ASSESSEE IS REJECTED BY THE A O AS THE VERY GROUNDS ON WHICH THE APPROVAL U/S.10(23C) IS WITHDRAWN ARE SQUARELY APPL ICABLE IN CASE OF SECTION 11 EXEMPTION ALSO. AS MERE GRANT OF REGISTRATION U/S.I2A DOES N OT CONFER THE BENEFITS OF SECTION 11 AND AS THERE ARE MANY VIOLATIONS OF SECTION 11 AND 13, EXE MPTION UNDER SECTION 11 IS ALSO DENIED TO THE ASSESSEE AND THE EXCESS OF INCOME OVER EXPEN DITURE IS BROUGHT TO TAX UNDER THE NORMAL PROVISIONS OF THE ACT. AO ON VERIFICATION O F BOOKS OF ACCOUNT FOUND THAT THE FOLLOWING EXPENDITURE IS ALSO NOT ALLOWABLE AND HENCE, DISALL OWED THE SAME: (A) ADVERTISEMENT EXPENDITURE NOT RELATED TO ASSESSEE : RS.20,000/- (B) OFFICE MAINTENANCE EXPENDITURE NOT RELATED TO ASSESSEE: RS.30,200/- (C) CAPITAL EXPENDITURE : RS.57,500/- 3 I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 (D) DISALLOWANCE U/S.40(A)(IA) : RS.4,82,982 /- (E) DISALLOWANCE OF INTEREST U/S.36(.L)(III) : RS.1,02,022/- (F) DISALLOWANCE OF DEPRECIATION ON ASSETS WHICH WERE ALREADY ALLOWED IN THE EARLIER YEARS AS APPLICATION OF INCOME U/S.11 : R S.29,75,717/- 4. ON APPEAL, THE FIRST APPELLATE AUTHORITY GRANTED PART RELIEF. AGGRIEVED BY THE ORDER OF THE FIRST APPELLATE AUTHORITY, BOTH THE SIDES AR E IN APPEAL BEFORE US FOR ASSESSMENT YEAR 2008-09. 5. GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER: 1. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APP EALS) IS ERRONEOUS TO THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE APPELLANT IS NOT ENTITLED FOR EXEMPTION U/S 10(23C)(VI) OF TH E I.T. ACT ON THE GROUND THAT THE CHIEF COMMISSIONER OF INCOME-TAX WITHDREW THE APPROVAL VI DE HIS ORDER DATED 7.12.2010 WHICH, ACCORDING TO HIM, OPERATED RETROSPECTIVELY E VEN THOUGH THE SAID ORDER DOES NOT SPECIFICALLY MENTION THAT IT OPERATED RETROSPECTIVE LY. (B) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN HOLDING THAT CANCELLATION OF APPROVAL 'CAN BE EITHER PROSPECTIVE OR RETROSPEC TIVE' WHEREAS A WITHDRAWAL OF THE APPROVAL MEANS THAT THE APPROVAL 'HAD NEVER EXISTED AS SUCH'. THIS FLIES IN THE FACE OF THE BOARD'S CIRCULAR NO.7/2010 DATED 27.10.2010 IN WHICH IT WAS CLARIFIED THAT AN APPROVAL GRANTED U/S 10(23C) (VI) AFTER 1.12.2006 I S A 'ONE TIME APPROVAL WHICH WOULD BE VALID TILL IT IS WITHDRAWN'. (C) THE LEARNED CIT(APPEALS) OUGHT TO HAVE REALIZED THAT WITHDRAWAL OF AN APPROVAL IN TERMS OF 13 TH PROVISO TO SEC.L0(23C) IS AN EXECUTIVE ACTION AND SUCH ACTION CANNOT HAVE RETROSPECTIVE OPERATION EVEN IF SPECIFICALLY MENTIO NED UNLESS AUTHORIZED BY THE STATUTE AND THERE IS NO SUCH AUTHORIZATION IN THE PRESENT C ASE. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE SO CALLED VIOLATIONS UNDER SEC.L3(2)(G) AND SEC.L3(2)(H) DISE NTITLE THE APPELLANT FOR BEING GRANTED EXEMPTION U/S 10(23C)(VI) OF THE I.T. ACT WHEREAS T HE PROVISIONS OF SEC. 13 ARE RELEVANT ONLY FOR CONSIDERING EXEMPTION U/S 11 OF THE I.T. A CT AND HAVE NO RELEVANCE FOR CONSIDERING THE EXEMPTION U/S 10(23C)(VI). 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE PARTICIPATION BY THE APPELLANT SOCIETY IN A CHIT RU N BY M/S NAGARJUNA CHITS IS AN INVESTMENT WHICH IS VIOLATIVE OF THE PROVISIONS OF SEC. 11 (5) OF THE I.T. ACT, HE OUGHT TO HAVE REALIZED THAT THE HONBLE A.P. HIGH COURT IN T HE CASE OF PRIYADARSHINI EDUCATIONAL ACADEMY (333 ITR 347) DID NOT CONSIDER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SHRIRAM CHITS AND INVESTMENTS PVT. LTD. VS UNION OF INDIA (AIR 1993 SC 4 I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 2063) AND THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF SANJEEV KUMAR (123 ITR 187). 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE PROVISIONS OF SEC.L3(2)(G) AND 13(2)(H) AND 11(5) A RE VIOLATED AND SO EXEMPTION U/S 11 CANNOT BE GRANTED. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER IN WHICH CERTAIN TRANSACTIONS WITH SRI P. KRISHNA RAO, SRI M.V. HARINATHA BABU AND SMT. P. MALATHI WHICH DO NOT PER TAIN TO THE RELEVANT ACCOUNTING YEAR ARE CONSIDERED. HE OUGHT TO HAVE HELD THAT THE ORDE R IS VITIATED BECAUSE OF THE CONSIDERATION OF SUCH IRRELEVANT MATERIAL IN THE LI GHT OF THE DECISION OF THE APEX COURT IN THE CASE OF KIKABHAI PREMCHAND VS CIT (24 ITR 506). (B) THE LEARNED C1T (APPEALS) OUGHT TO HAVE CONSIDE RED THE SUBSTANCE OF THE TRANSACTIONS AND NOT MERELY THEIR FORM IN THE LIGHT OF THE FACT THAT THE IMMOVABLE PROPERTIES OF THE ABOVE THREE PARTIES WERE MORTGAGE D TO THE BANK FOR LOANS TAKEN BY THE APPELLANT SOCIETY APART FROM PERSONAL GUARANTEES GI VEN BY THEM AND THE BENEFIT RECEIVED BY THE ABOVE THREE PARTIES BY WAY OF SHORT TERM ACC OMMODATION LOANS WAS INSIGNIFICANT COMPARED TO THE RISK ASSUMED BY THEM FOR THE SAKE O F THE APPELLANT SOCIETY. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE PROVISIONS OF SEC.L3(2)(H) ARE VIOLATED WITHOUT REA LIZING THAT THE FUNDS OF THE APPELLANT SOCIETY ARE NOT 'INVESTED' IN THE NAMESAKE OF THE A PPELLANT SOCIETY I.E. GAYATRI EDUCATIONAL SOCIETY, DIWANCHERUVU AS IT HAS ADVANCE D ONLY AN ACCOMMODATION LOAN AND, AT ANY RATE, THE PERSONS SPECIFIED IN SEC. 13(3) DO NOT HAVE ANY SUBSTANTIAL INTEREST IN THE SAID SOCIETY WITHIN THE MEANING OF EXPLANATION 3 TO SEC. 13. 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE PROVISIONS OF SEC. 11 (5) ARE VIOLATED WITHOUT REAL IZING THAT THE SAID PROVISION IS ATTRACTED IN THE CONTEXT OF EXEMPTION U/S 11 (NOT U/S 10(23C) , ONLY IF THE APPELLANT SOCIETY HAD FAILED TO UTILIZE 85% OF ITS INCOME ON ITS OBJECTS AND THERE IS NO SUCH FAILURE ON THE PART OF APPELLANT SOCIETY AND SO SEC. 11(5) IS NOT ATTRA CTED. 6. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS: 1. THE CIT(A) ERRED ON FACTS AND IN LAW IN P ASSING THE ORDER. 2 THE CIT(A) ERRED IN NOT APPRECIATING THE FACT THA T ONCE THE ENTIRE COST OF ASSET WAS CLAIMED AS EXPENDITURE AND ALREADY CLAIMED AS APPLI CATION OF INCOME, DEPRECIATION ON SUCH COST OF ASSET IS NOT ALLOWABLE AS EXPENDITURE AS IT WILL DEFINITELY AMOUNT FOR DOUBLE DEDUCTION. 3 THE CIT(A) ERRED IN HOLDING THAT THE DECISION OF SUPREME COURT IN THE CASE OF ESCORTS LTD., 199 ITR 43 IS NOT RELEVANT IN THE TRUST CASE AND DEPRECIATION IS ALSO ALLOWABLE EVEN AFTER ALLOWING CAPITAL EXPENDITURE AS APPLICATION O F INCOME. 5 I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 7. GROUNDS SIMILAR TO ASSESSMENT YEAR 2008-09 HAVE BEEN TAKEN BY THE ASSESSEE FOR ASSESSMENT YEARS 2009-2010 AND 2010-20 11 IN ITA NO.313/VIZ/2013 AND 20/VIZ/2014. 8. LD COUNSEL FOR THE ASSESSEE, SHRI G.V.N. HARI SU BMITTED THAT THE REVENUES ALLEGATION THAT THERE IS VIOLATION OF SECTION 13(2) (G) OF THE ACT IS WRONG, FOR THE REASON THAT, THE ASSESSEE DURING ALL THE THREE FINANCIAL Y EARS, HAD UTILIZED THE AMOUNTS IN EXCESS OF THE SURPLUS AS PER THE INCOME AND EXPENDI TURE ACCOUNT AND UNDER THOSE CIRCUMSTANCES, THERE IS NO QUESTION OF ANY FUNDS BE ING AVAILABLE WITH THE ASSESSEE, WHICH HAD BEEN DIVERTED AS MENTIONED UNDER SECTION 13(2)(G) OF THE ACT. FOR THE PROPOSITION THAT WHEN THERE ARE NO FUNDS AVAILABLE, THE ASSESSEE CANNOT DIVERT THE SAME OR INVEST THE SAME, HE RELIED ON THE BOARD CIRCUL AR NO.335 DATED 13.4.1982 AS WELL AS THE DECISION OF THIS BENCH OF THE TRIBUNAL IN THE C ASE OF SRI SHIVANI EDUCATIONAL SOCIETY VS ITO (ITA NO.175/VIZ/2012 AND OTHERS). HE SUBMITTED THAT ON THIS GROUND, THE FINDINGS O F THE AO AND CONFIRMED BY THE LD CIT(A) HAVE TO BE VA CATED. 9. WITHOUT PREJUDICE, HE SUBMITTED THAT THE AOS AL LEGATION THAT THE ASSESSEE HAS VIOLATED SECTION 13(2)(G), AS FUNDS OF THE SOCIETY WERE DIVERTED FOR THE PERSONAL BENEFITS OF THE MEMBERS, IS WRONG FOR THE REASON THAT THE AM OUNTS IN QUESTION, AS IS EVIDENT FROM THE TABLE MENTIONED IN THE ASSESSMENT ORDER WAS IN THE POSSESSION OF THE MEMBERS FOR A VERY SHORT PERIOD AND THERE WAS NO OUTSTANDING AM OUNT DUE FROM THEM TO THE ASSESSEE SOCIETY. EVEN OTHERWISE, HE SUBMITS THAT THE PROMOTERS HAD PLEDGED THEIR PERSONAL ASSETS TO THE BANK AND HAD ALSO GIVEN PERS ONAL GUARANTEES TO ENABLE THE SOCIETY TO AVAIL LOAN AND WHEN THE SOCIETY HAS ADVA NCED CERTAIN MONEY TO THE MEMBERS FOR A VERY SHORT PERIOD, IT CANNOT BE CONSIDERED AS AMOUNTS GIVEN AS GRATIS OR WITHOUT CONSIDERATION. HE REFERRED TO PAGE 76 OF PAPER BOO K WHICH CONSIST OF CERTIFICATE FROM STATE BANK OF INDIA, COMMERCIAL BRANCH, KAKINADA TO DEMONSTRATE THAT SHRI M.V. HARANATHA BABU, SRI P KRISHNA RAO AND SMT. P. MALA THI HAD PLEDGED THEIR PROPERTIES AND HAVE GIVEN GUARANTEES FOR THE LOANS EXTENDED BY THE BANK TO THE SOCIETY. FOR THE PROPOSITION THAT THE VIOLATION UNDER SECTION 13(2)( G) CANNOT BE SAID TO HAVE TAKEN PLACE 6 I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 WHEN THE FAIR MARKET VALUE OF THE SERVICES RENDERE D BY THE MEMBERS TO THE SOCIETY BY PLEDGED ITS PROPERTY TO THE BANK IS IN EXCESS TO T HE FAIR MARKET VALUE OF BENEFIT DERIVED BY THEM FROM THE SOCIETY ADVANCES TEMPORARY MONEY TO THEM, HE RELIED ON THE DECISION OF THIS BENCH IN THE CASE OF SRINIVASA VID YA PARISHAD IN ITA NOS.604 TO 699/VIZ/2013 AND ITA NOS.633 TO 634/VIZ/2013, ORDER DT.7 TH MARCH, 2014. HE CONTENDED THAT THERE IS NO INCOME OR PROPERTY OF TH E TRUST HAS BEEN DIVERTED DURING THE YEAR BUT IT WAS ONLY A CASE OF TEMPORARY USE FOR AD EQUATE CONSIDERATION. 10. ON THE ALLEGATION OF DIVERSION OF FUNDS OF THE SOCIETY TO ANOTHER INSTITUTION, IN WHICH, MEMBERS HAVE SUBSTANTIAL INTEREST, THE LD CO UNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO VIOLATION OF PROVISIONS OF SECTION 13(2)(H), FOR THE REASON THAT THE SOCIETY TO WHICH AN ADVANCE IS GIVEN IS ALSO AN EDUCATIONAL SOCIETY WITH CHARITABLE OBJECTIVES AND MONEY ADVANCED TO SUCH SOCIETY CANNOT BE TERMED AS INVESTMENT. HE SUBMITTED THAT SECTION 13(2)(H) REFERRED TO INVESTMENT AND FO R THE PROPOSITION THAT WHEN AN ADVANCE IS GIVEN, IT CANNOT BE TERMED AS INVESTMENT , HE RELIED ON THE FOLLOWING CASE LAWS: I) DIT VS PARIWAR SEVA SANSTHAN, 254 ITR 268(DEL) II) CIT VS. SARLADEVI SARA BHAI TRUST NO.2(1988) 17 2 ITR 698 (GUJ) 11. ON THE ISSUE OF VIOLATION OF SECTION 13(1)(D) R .W.S 11(5) OF THE ACT FOR CONTRIBUTION TO CHIT FUND, HE RELIED ON THE ORDER OF THE CO-ORDI NATE BENCH OF THE TRIBUNAL IN THE CASE OF SRI SIVANI EDUCATIONAL SOCIETY (SUPRA). HE PRAYED THAT RELIEF BE GRANTED. 12. ON A QUERY FROM THE BENCH, HE SUBMITTED THAT FO R ASSESSMENT YEAR 2007-08, AN ORDER WAS PASSED BY THE ASSESSING OFFICER ON 15.9.2 009 GRANTING EXEMPTION U/S.10(23C)(VI) OF THE ACT AND SAME REMAINED UNDIST URBED TILL DATE. COPY OF THE ASSESSMENT ORDER IS PLACED ON RECORD. 7 I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 13. LD D.R. SHRI R.K.SINGH ON THE OTHER HAND SUBMIT TED THAT THE AO HAS LISTED A NUMBER OF VIOLATIONS OF BOTH SECTIONS I.E. 13(2)(G) & 13(2)(H) OF THE ACT. HE REFERRED TO SECTION 13(2)(G) AND SUBMITTED THAT THE SECTION SPE CIFICALLY REFERS TO THE PROPERTY OF THE ASSESSEE OR INSTITUTION BEING DIVERTED DURING THE P REVIOUS YEAR IN FAVOUR OF ANY PERSON REFERRED TO SUB-SECTION (3). HE POINTED OUT THAT T HE ONLY EXCEPTION CARVED OUT IN THIS SECTION IS WHEN THE AMOUNT DOES NOT EXCEED RS.1000 /- AND ARGUED THAT IN ALL OTHER SITUATIONS, THE ASSESSEE IS NOT ENTITLED TO EXEMPTI ON UNDER SECTION 11 OF THE ACT. HE ARGUED THAT THE PROMOTERS HAVING GIVEN CERTAIN ASS ETS AS SECURITIES TO THE BANK IS A IRRELEVANT CONSIDERATION. HE VEHEMENTLY CONTENDED THAT THE WORD TEMPORARILY USED IS NOT CONTEMPLATED IN THE STATUTE AND THE FACT REMAIN THAT THE PROPERTY OF THE ASSESSEE HAS BEEN USED BY THE PERSON REFERRED TO SUB-SECTION (3). 14. ON THE ISSUE OF ADVANCE NOT BEING AN INVESTMENT , HE SUBMITTED THAT IT IS NOT TRUE IN EACH AND EVERY CASE AND THAT ADVANCES AT A TIME TAKE THE FORM OF INVESTMENT. HE SUBMITTED THAT GIVING AN ADVANCE CREATES A TANGIBLE BENEFITS TO THE ASSESSEE AND THIS WOULD TENTAMOUNT TO INVESTMENT. HE RELIED ON THE O RDER OF THE LD CIT(A). 15. ON THE VIOLATION OF SECTION 13(1)(D) R.W.S 11(5 ) OF THE ACT, HE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 16. RIVAL CONTENTIONS HEARD. ON CAREFUL CONSIDERATI ON OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF PAPERS ON RECORD AND THE ORDERS OF AUTHORITIES BELOW AND CASE LAWS CITED, WE HOLD AS FOLLOWS: 16.1 THE CONTENTION OF THE ASSESSEE IS THAT THE UTI LIZATION OF FUNDS DURING THE YEAR IS IN EXCESS OF THE INCOME OF THE YEAR IS BORNE OUT FR OM THE FOLLOWING TABLE: 8 I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 DESCRIPTION A.Y. 2008-09 A.Y. 2009-2010 A.Y.2010-11 SURPLUS AS PER INCOME & EXPENDITURE ACCOUNT 15956795 13248939 9519161 LESS:INVESTMENT IN FIXED ASSETS 20855456 18128429 20051104 EXCESS OF UTILIZATION 4898661 4879490 10531943 16.2 IN THESE CIRCUMSTANCES, THE PROPOSITION LAID D OWN BY THIS BENCH OF THE TRIBUNAL IN THE CASE OF SRI SIVANI EDUCATIONAL SOCIETY (SUPRA) IS SQUARELY APPLICABLE. THIS BENCH, IN THIS DECISION HAS, AFTER DISCUSSING VARIOUS CLAUSES AT P AGES 39 & 40, HELD AS UNDER: 39. THUS THE REQUIREMENT OF INVESTING OR DEPOSITIN G, U/S 11(5) OF THE ACT IS CONFINED TO MONEY IN HAND OR CASH. WHEN THE ENTIRE INCOME OF TH E YEAR HAS ALREADY BEEN SPENT TOWARDS THE OBJECTS OF THE SOCIETY, THERE CANNOT BE SAID TO BE ANY FUNDS REMAINING OUT OF THE FUNDS RECEIVED BY WAY OF INCOME. A PERSON CAN I NVEST ONLY THE MONEY WHICH IS IN HIS HANDS. IF THE ENTIRE MONEY IN HAND IS ALREADY SPENT FOR A PARTICULAR PURPOSE THEN THE QUESTION OF SPENDING THE SAME AMOUNT FOR ANOTHER PU RPOSE AS WELL DOES NOT ARISE. THUS THE INTERPRETATION OF THE TERM ANY FUNDS BY THE H ONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SRI SRIRAM FOUNDATION 250 ITR 55, THOUGH MA DE IN THE CONTEXT OF SECTION 13(2)(H), IS ON ALL FOURS APPLICABLE, WHILE INTERPRETING SECT ION 13(1)(D) OF THE ACT. EVEN THE CBDT CIRCULAR NO.335 DT.13.4.1982 EXPLAINS THE SAME POSI TION. THE EXAMPLE GIVEN THEREIN CLEARLY EXPLAINS THAT IN A CASE WHERE THE TRUST DERIVES INC OME OF RS.40,000 IN A YEAR, AS PER S.11(1)(A) IT HAS TO SPEND AT LEAST RS.30,000 ON CH ARITABLE PURPOSE AND THE BALANCE OF RS.10,000 WILL HAVE TO BE INVESTED IN THE FORMS OR MODES PRESCRIBED U/S 13(5)(NOW S.11(5)). THEREFORE, IN A CASE WHERE THE ENTIRE INC OME OF RS.40,000 IS SPENT FOR CHARITABLE PURPOSES EXEMPTION U/S 11(1)(A) HAS TO BE GRANTED A ND THERE IS NO NEED TO FURTHER EXAMINE WHETHER ANY INVESTMENTS WERE MADE IN VIOLAT ION OF S.11(5) OF THE ACT IN AS MUCH AS THE TRUST IS LEFT WITH NO MORE FUNDS OUT OF THE INCOME OF RS.40,000 RECEIVED. IN THE CASE OF BOTH THE ASSESSEES, AS PER THE CHARTS SUBMITTED BY THE ASSESSEES IT IS EVIDENT THAT THEY HAVE INCURRED DEFICIT IN EVERY YEAR AND THUS ENTIRE INCOME OF EACH ASSESSMENT YEAR WAS FULLY SPENT TOWARDS THE CHARITABLE OBJECTS. 40. AS WE HAVE HELD THAT CONTRIBUTION TO CHIT FUND IN THIS CASE, IS NOT AN INVESTMENT, AND MUCH LESS AN INVESTMENT WITH SOMEONE ELSE, AND FURT HER THAT THE PROVISIONS OF S.11(1)(A) HAVE BEEN COMPLIED BY INVESTING THE ENTIRE INCOME O F THE YEAR TOWARDS CHARITABLE PURPOSES, WE CONCLUDE THAT THERE IS NO VIOLATION OF SECTION 13(1)(D) R.W.S. 11(5) OF THE ACT. 9 I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 16.3 CONSISTENT WITH THE VIEW TAKEN THEREIN, WE HAV E TO HOLD THAT, WHEN THE ASSESSEE IS NOT HAVING ANY FUNDS REMAINING WITH IT OUT OF TH E AMOUNTS RECEIVED BY WAY OF INCOME, THEN THE STIPULATION LAID DOWN IN THE ACT FOR UTILI ZATION OF FUND, ETC. DO NOT APPLY. 17. AS FAR AS VIOLATION U/S.13(2)(G) ARE CONCERNED, IT IS NOT IN DISPUTE THAT THE AMOUNT IN QUESTION WAS ADVANCED FOR A SHORT PERIOD TO ALL THE THREE PERSONS REFERRED TO BY THE ASSESSING OFFICER. IT IS NOT IN DISPUTE THAT NO AM OUNT IS DUE TO THE ASSESSEE FROM ANY OF THESE PERSONS. IT WAS A CASE OF TEMPORARY USE OF AM OUNTS OF THE SOCIETY BY THE MEMBERS. WHEN THE AMOUNTS HAVE BEEN RETURNED, IT C ANNOT BE TERMED AS A DIVERSION OF INCOME OR PROPERTY. IN SUCH CASES, WHAT HAS TO BE SEEN IS WHETHER THE SOCIETY HAS BEEN ADEQUATELY COMPENSATED FOR SUCH USE OF SOCIETY PROPERTY FOR A SHORT PERIOD. IT IS NOT ALSO IN DISPUTE THAT ALL THESE THREE PERSONS HA VE GIVEN THEIR PERSONAL PROPERTIES AS COLLATERAL SECURITY TO THE STATE BANK OF INDIA AND THEY HAVE ALSO STOOD AS THIRD PARTY GUARANTOR TO THE LOAN OF RS.300 LAKHS GRANTED BY TH E SBI TO THE ASSESSEE SOCIETY. IN THESE CIRCUMSTANCES, WE HAVE TO EXAMINE WHETHER THE TEMPORARY TRANSFER OF FUNDS FROM THE SOCIETY TO THESE THREE PERSONS COULD BE CONSIDE RED AS USE OF THE PROPERTY OF THE ASSESSEE FOR ADEQUATE CONSIDERATION OR NOT. TEMPOR ARY USE OF AN ASSET OF THE SOCIETY BY THE MEMBERS CANNOT BE TERMED DIVERSION AND WHEN PROPER CONSIDERATION IS PAID TO THE SOCIETY FOR SUCH USE. IN OUR VIEW, THE TEMPORAR Y TRANSFER OF AMOUNTS, ON THE FACTS OF THE CASE, CANNOT BE CONSIDERED GRATUITOUS OR WITHOU T CONSIDERATION PAYMENT. THE ASSESSEE RELIED ON THE DECISION DATED 7.3.2014 OF THE TRIBUNAL IN THE CASE OF SRI SRINIVASA VIDHYAPARISHAD (ITA NO.604/VIZ/2013 & ORS ). I N THIS DECISION THE TRIBUNAL RELIED ON THE JUDGEMENT OF HONBLE ALLAHABAD HIGH COURT IN TH E CASE OF CIT VS. FOUNDATION FOR SOCIAL CARE (2013) 86 CCH 044 (ALL). THE PROPOSITIO N OF LAW LAID DOWN BY THE HONBLE COURT IS THAT WHEN THE FAIR MARKET VALUE OF THE PAR TICULAR ACTS OR SERVICES RENDERED BY THE MEMBERS OF THE SOCIETY, TO THE SOCIETY IS TO B E MEASURED AND IF THE BENEFITS DERIVED BY SUCH MEMBERS FROM THE SOCIETY, IS IN EXCESS OF S UCH FAIR MARKET VALUE OF SERVICES RENDERED, THEN IN SUCH SITUATION ONLY THE PROVISION OF THE SECTION 13(1)(C) WOULD STAND 10 I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 VIOLATED. THIS BENCH HAD AT PARA 6.9 AND 6.10 AT PA GE 19 OF THE JUDGEMENT, HELD AS FOLLOWS: 6.9 IN OUR CONSIDERED VIEW, THE PAYMENTS IN QUESTI ON IS LESS THAN THE FAIR MARKET VALUE OF THE SERVICES AVAILED BY THE SOCIETY FROM I TS FOUNDER MEMBER AND ON FACTS THERE IS NO PERSONAL BENEFIT THAT ACCRUED TO THE ME MBER AND HENCE THERE IS NO VIOLATION OF SECTION 13(1)(C) OF THE ACT. 6.10 SIMILARLY IN THE CASE OF ADVANCES TO SRI RAJEN DRA, SECRETARY OF THE SOCIETY, WE FIND THAT HE WORKS FULL TIME WITH THE SOCIETY AN D DOES NOT DREW ANY REMUNERATION OR SALARY NOR HAS HE CHARGED ANY FEE. UNDER SUCH CIRCUMSTANCES, EVEN IF AN ADVANCE OF RS.15,254 IS OUTSTANDING FROM HIM, IT CANNOT BE TAKEN THAT CERTAIN PERSONAL BENEFIT HAS ACCRUED TO SRI RAJENDR A FROM THE SOCIETY. IT IS BROUGHT TO OUR NOTICE THAT THE SECRETARY HAS ARRANG ED FUNDS FOR THE SOCIETY BY MORTGAGING HIS PERSONAL PROPERTY AND ALSO GIVING PE RSONAL GUARANTEE. THE LOANS TAKEN, AS WELL AS THE GUARANTEES GIVEN ARE RUNNING INTO LAKHS OF RUPEES AND WHEREAS THE ADVANCES IN QUESTION REMAINS OUTSTANDIN G AGAINST SRI RAJENDRA'S ACCOUNT IS IN THOUSANDS, WHICH IS MINUSCULE AS COMP ARED TO THE FAIR MARKET VALUE OF THE SERVICES RENDERED AS WELL AS THE FINANCIAL G UARANTEES GIVEN, ETC. IN OUR VIEW, SUCH OUTSTANDING ADVANCE DOES NOT TANTAMOUNT TO PERSONAL BENEFIT TO THE MEMBER IN TERMS OF SECTION 13(1)(C). THE TOTALITY O F THE FACTS AND CIRCUMSTANCES OF THE CASE HAS TO BE SEEN AND THEN ONLY THEN A DEC ISION SHOULD BE TAKEN AS TO WHETHER THERE IS VIOLATION OF SEC.13(1)(C) OR NOT. ON FACTS ALSO, THE ASSESSEE HAS DEMONSTRATED THAT THE SECRETARY HAS TAKEN MOST OF T HE ADVANCES FOR THE PURPOSE OF INCURRING EXPENDITURE AS TRAVELLING ETC. FOR THE SOCIETY AND EVEN AS THIS COUNT, THERE IS NO PERSONAL BENEFIT AS CONTEMPLATED U/S 13 (1)(C) OF THE ACT. 18. APPLYING THE PROPOSITION LAID DOWN IN THAT CASE LAW TO THE FACTS OF THE CASE, IF THE FAIR MARKET VALUE OF THE SERVICE RENDERED BY THE TH REE MEMBERS OF THE SOCIETY BY WAY OF PLEDGING THEIR PERSONAL PROPERTIES AS COLLATERAL S ECURITIES TO THE BANK AND ALSO GIVING PERSONAL GUARANTEE FOR A LOAN OF RS.300 LAKHS IS AS CERTAINED AND THEN THE INTEREST FROM THE AMOUNT ADVANCED TO THEM FOR A SHORT PERIOD BY T HE SOCIETY IS CALCULATED AND WHEN THOSE FIGURES WERE COMPARED, WE HAVE COME TO THE CO NCLUSION THAT THE BENEFIT DERIVED BY THESE THREE PERSONS IS MUCH LESSER THAN THE FAIR MARKET VALUE OF THE SERVICES RENDERED BY THESE THREE PERSONS, TO THE SOCIETY. WH EN THESE THREE MEMBERS HAD PLEDGED THEIR PERSONAL PROPERTIES TO THE BANK FOR E NABLING THE SOCIETY TO OBTAIN THE LOANS, THEN THE BORROWING CAPACITY OF THESE THREE M EMBERS FOR ANY OTHER PURPOSE IS IMPOSED. IF THESE MEMBERS REQUIRED TO RAISE CERTAI N AMOUNTS FOR WHATEVER PURPOSES, 11 I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 FOR TEMPORARY PERIOD OR OTHERWISE, THEY ARE HANDICA PPED. THESE PERSONS RUN A PERSONAL RISK BY THIS ACT OF STANDING AS A GUARANTO R. THE SOCIETY STOOD GREATLY BENEFITED BY SUCH SERVICE. FOR GIVING COLLATERAL SECURITY, THE FAIR MARKET VALUE MAY BE AT THE LEST BE FIXED AT 1% OF RS.300 LAKHS PER YEAR. THIS IS I N EXCESS OF THE LIKELY INTEREST THAT THE SOCIETY WOULD HAVE EARNED FOR TEMPORARY ADVANCE OF LOAN TO THE MEMBERS, WHICH AT BEST CAN BE FIXED AT 18% P.A. IN SUCH A SITUATION, IT CANNOT BE HELD THAT THE INCOME OR PROPERTY OF THE ASSESSEE WAS DIVERTED IN THE PREVIO US YEAR, IN FAVOUR OF PERSONS REFERRED TO IN SUB-SECTION (3). HENCE, IN OUR VIEW, THERE IS NO DIVERSION OF INCOME OF THE PROPERTY OF THE TRUST AND HENCE, THERE IS NO VIOLATION OF SE CTION 13(2)(G). IN FACT, THERE ARE NO AMOUNTS DUE TO SOCIETY FROM ANY OF THE THREE PERSON S AT THE END OF FINANCIAL YEAR. IN VIEW OF THE ABOVE DISCUSSION, WE UPHOLD THE CONTENT ION OF THE ASSESSEE AND ALLOW THIS GROUND BY HOLDING THAT THERE IS NO VIOLATION OF SEC TION 13(2)(G) OF THE ACT. 19. ON THE ISSUE OF VIOLATION OF SECTION 13(2)(H), WE FIND THAT THE ADVANCE GIVEN BY EDUCATIONAL INSTITUTION TO ANOTHER EDUCATIONAL INST ITUTION CANNOT BE CONSIDERED AS AN INVESTMENT. THE HONBLE DELHI HIGH COURT IN THE CAS E OF DIRECTOR OF INCOME TAX (EXEMPTION) VS ACME EDUCATIONAL SOCIETY (2010) 326 ITR 146 (DEL) HELD AS FOLLOWS: ADVANCING OF INTEREST FREE TEMPORARY LOAN BY ASSES SEE SOCIETY TO ANOTHER SOCIETY HAVING SIMILAR OBJECTS IS NOT AN INVESTMEN T OR A DEPOSIT, HENCE THERE WAS NO VIOLATION OF PROVISION OF SECTION 13(1 )(D) R.W.S 11(5) TO RENDER WITHDRAWAL OF EXEMPTION UNDER SECTION 11. 20. SIMILAR IS THE VIEW OF THE HONBLE GUJURAT HIGH COURT IN THE CASE OF CIT VS. SARALA DEVI SARABHAI TRUST, 172 ITR 698 (GUJ) WHERE IN IT IS HELD AS FOLLOWS CBDT CIRCULAR NO.45 DT.2 ND SEPTEMBER, 1970 CLEARLY INDICATES THAT S.13(2)(H) WILL COVER ONLY THOSE CASES IN WHICH INV ESTMENTS ARE MADE BY THE ASSESSEE TRUST IN THE CAPITAL OF THE CONCERNS T O WHICH S.13(2) APPLIES. THE CIRCULAR FURTHER INDICATES THAT IN CASE OF LEND ING BY TRUST, PROVISION OF CL.(A) OF SUB-S.(2) OF S.13 WILL APPLY AND NOT S.13 (2)(H) AND ANY CONTRARY INTERPRETATION WOULD NOT A HARMONIOUS INTERPRETATIO N OF CLS.(A) AND (H) OF SUB-S/.(2) OF SEC.13. IT IS, THEREFORE, OBVIOUS TH AT ON THE FACTS OF SUCH CASES, IF AT ALL, CL.(A) OF SUB-S.(2) OF SEC.13 WIL L APPLY AND NOT CL.(H)THEREOF, 12 I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 IF IT IS SHOWN THAT LENDING WAS WITHOUT ADEQUATE SE CURITY OR ADEQUATE INTEREST OR BOTH. UNDER THESE CIRCUMSTANCES, IF DE POSITS ARE MADE BY A TRUST IN SUCH CONCERN, SUCH DEPOSITS WILL NOT BE CO VERED BY SEC.13(2)(H) AND IF AT ALL IT IS ONLY SE.13(2) WHICH WOULD APPLY TO SUCH DEPOSITS. CONSEQUENTLY, THE CASE OF THE REVENUE THAT TO SUCH DONATION MADE BY THE ASSESSEE TRUST S.13(2)(H) WILL APPLY CANNOT BE COUN TENANCED . 21. RESPECTFULLY FOLLOWING THE ABOVE PROPOSITIONS L AID DOWN BY THE HONBLE HIGH COURTS WE UPHOLD THE CONTENTION OF THE ASSESSEE AND HOLD THAT THERE IS NO VIOLATION OF SECTION 13(2)(H) OF THE ACT. 22. COMING TO THE ISSUE AS TO WHETHER THERE WAS VIO LATION OF SECTION 13(1)(D) R.W.S. 11(5) OF THE ACT, WE FIND THAT THE ISSUE IS COVERE D BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHIVANI EDUCA TIONAL SOCIETY (SUPRA), WHICH WAS APPLIED BY US TO THE CASE OF THE ASSESSEE SOCIETY I N THE EARLIER ASSESSMENT YEAR. 23. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE UPHO LD THE CONTENTION OF THE ASSESSEE THAT THERE IS NO VIOLATION OF SECTION 13(1)(D) R.W S 11(5) OF THE ACT. HENCE, WE DIRECT THE A.O. TO GRANT THE EXEMPTION U/S. 11 OF THE ACT TO T HE ASSESSEE FOR ALL THE THREE ASSESSMENT YEARS. 24. AS REGARDS TO REVENUES APPEAL, AFTER HEARING T HE RIVAL CONTENTIONS, WE FIND THAT THE LD CIT(A) RELIED ON THE DECISION OF HONBLE SUP REME COURT IN THE CASE OF ESCORTS LTD., 199 ITR 43 (SC) AND ALLOWED THE CLAIM OF THE ASSESSEE. IN PARA 13.3 OF THE IMPUGNED ORDER, THE LD CIT(A) HAS HELD AS FOLLOWS: I HAVE CONSIDERED THE ARGUMENTS OF THE ASSESSEE AN D HAVE GONE THROUGH THE FACTS OF THE CASE. AO RESTRICTED DEPRECIATION TO THE ASSETS PUR CHASED DURING THE YEAR ONLY. IT IS NOT DISPUTED THAT THE ASSESSEE IS TREATED AS A NORMAL B USINESS CONCERN DURING THE YEAR UNDER CONSIDERATION AND HENCE DEPRECIATION ON THE B LOCK OF ASSETS EXISTING AND PUT TO USE AS ON THE END OF PREVIOUS YEAR HAS TO BE ALLOWE D IRRESPECTIVE OF THE FACT THAT THE ASSESSEE WAS ALLOWED DEDUCTION OF ENTIRE INCOME ON PURCHASE OF SUCH ASSETS IN THE EARLIER YEARS. ALLOWING OF CAPITAL EXPENDITURE AS PART OF APPLICATION OF INCOME U/S.11 IN THE PREVIOUS YEAR AND ALLOWING DEPRECIATION U/S.32 AFTER DENIAL OF EXEMPTION ARE TWO DIFFERENT ISSUES PERTINENT TO TWO DIFFERENT YEARS A ND HENCE DEPRECIATION FOR THE YEAR UNDER 13 I.T.A. NOS. 248/VIZ/2012: ASSESSMENT YEAR:2008-09 I.T.A. NO.313/VIZ/2013: ASSESSMENT YEAR: 2009-2010 I.T.A. NO.20/VIZ/2014: ASSESSMENT YEAR: 2010-2011 I.T.A. NO.264/VIZ/2012: ASSESSMENT YEAR: 2008-09 CONSIDERATION CANNOT BE DENIED BASED ON THE EXEMPTI ON GIVEN IN THE EARLIER YEARS. IT IS HELD BY VARIOUS COURTS THAT THE DECISION OF SUPREME COURT IN THE CASE OF ESCORTS LTD., 199 ITR 43 IS NOT RELEVANT IN THE TRUST CASES AND DEPRE CATION IS ALSO ALLOWABLE EVEN AFTER ALLOWING CAPITAL EXPENDITURE AS APPLICATION OF INCO ME. IN VIEW OF THE ABOVE AND ALSO AS THE ALLOWANCE OF CAPITAL EXPENDITURE IN THE EARLIER YEARS IS NO MORE RELEVANT FACTOR FOR ALLOWING DEPRECIATION IN THE YEAR UNDER CONSIDERATI ON, I DIRECT THE AO ALLOW THE DEPRECIATION CLAIMED IN FULL. 25 . WE FIND NO INFIRMITY IN THE ORDER OF LD CIT(A) AND DISMISS THE GROUND TAKEN BY THE REVENUE. 26. IN THE RESULT, APPEALS FILED BY THE ASSESSEE FO R ASSESSMENT YEARS 2008-09, 2009-2010 AND 2010-2011 ARE ALLOWED AND THE APPEAL FILED BY T HE REVENUE FOR ASSESSMENT YEAR 2008-09 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/12/20 14 . SD/- SD//- (D.MANMOHAN ) (J.SUDHAKAR REDDY) VICE PRESIDENT ACCOUNTANT MEMBER VISHAKHAPATNAM DATED 03/ 12/2014 PARIDA , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE : GAYATRI EDUCATIONAL SOCIETY, D.NO.2 - 24 - 4/2, JANMABHOOMI PARK ROAD, SRINAGAR, KAKINADA 2. THE REVENUE . : ITO, WARD - 2, KAKINADA 3. THE CIT(A) - VISAKHAPATNAM 4. CIT , VISAKHAPATNAM 5. DR, ITAT, VISHAKHAPATNAM 6. GUARD FILE. BY ORDER SR.PS, ITAT, VISHAKHAPATNAM