The ACIT, 1(2), Bhopal V. M/s Satya Sai Trust, M.P., Bhopal

ITA 517/IND/2010

• Counselvise Citation: 51722714 RSA 2010
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 27-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN; SSH KESHAVE SAXENA
• Assessee Lawyers: AJAY CHAJJED AND
• Keywords: Capital asset; Depreciation; Charitable institution; Cost of acquisition
• Section: 12A; 12AA; 32; 6; 56; 63; 12; 11; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.529/IND/2010 AY: 2007-08 ACIT-1(1), BHOPAL ..APPELLANT V/S. BHOPAL CAMPION SCHOOL SOCIETY, BHOPAL PAN AAATB 0913 F ..RESPONDENT ITA NO.531/IND/2010 AY: 2007-08 ACIT-1(1), BHOPAL ..APPELLANT V/S. BHOPAL SCHOOL OF SOCIAL SCIENCE, BHOPAL PAN AAATT 9879 Q ..RESPONDENT ITA NO.517/IND/2010 AY: 2007-08 ACIT-1(2), BHOPAL ..APPELLANT V/S. SRI SATYA SAI TRUST, M.P., BHOPAL 2 PAN AAATS 3999 N ..RESPONDENT DEPARTMENT BY : S/SH. KESHAVE SAXENA, CIT/DR & ARUN DEWAN, SR. DR ASSESSEE BY : SHRI AJAY CHAJJED, ADVOCATE AND, ITA NO.516/IND/2010 AY: 2007-08 ACIT-1(2), BHOPAL ..APPELLANT V/S. SHRINIWAS EDUCATION SOCIETY, BHOPAL PAN AAAAS 7068 B ..RESPONDENT DEPARTMENT BY : S/SH. KESHAVE SAXENA, CIT/DR & ARUN DEWAN, SR. DR ASSESSEE BY : SHRI ANIL KHABYA, CA DATE OF HEARING : 16.8.2011 DATE OF PRONOUNCEMENT : 17.8.2011 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THIS BUNCH OF FOUR APPEALS BY THE REVENUE IS DIRECTED AGAINST THE DIFFERENT ORDERS OF THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS)-I, BHOPAL, DAT ED 3 15.4.2010, 15,4,2010, 15.4.2010 AND 12.4.2010, RESPECTIVELY, ON THE COMMON GROUND THAT ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY ERRED IN DIRECTING THE ASSESSIN G OFFICER TO ALLOW DEPRECIATION OF RS.48,91,869/-, RS.49,71,180/-, RS.67,94,496/- & RS.1,96,75,742/-, RESPECTIVELY, AS CLAIMED BY THE RESPECTIVE ASSESSEE , WHICH WAS CORRECTLY DISALLOWED BY THE ASSESSING OFFICER R ELYING ON THE DECISION OF APEX COURT IN THE CASE OF ESCORT S LTD. VS. UNION OF INDIA (1993) REPORTED IN 199 ITR 43. 2. DURING THE HEARING OF THIS APPEAL, WE HAVE HEARD SHRI KESHAVE SAXENA, CIT/DR ALONG WITH SHRI ARUN DEWAN, LD. SR. DR AND SHRI AJAY CHAJJED, ADVOCATE A ND SHRI ANIL KHABYA, LD. COUNSEL FOR ASSESSEE. THE CRU X OF ARGUMENTS ON BEHALF OF THE REVENUE IS THAT IN VIEW OF THE DECISION FROM THE HONBLE APEX COURT IN THE CASE OF ESCORTS LTD. (SUPRA), NO DOUBLE DEDUCTION IS ALLOWA BLE TO THE PRESENT ASSESSEES. ON THE OTHER HAND, THE LD. 4 REPRESENTATIVES FOR THE RESPECTIVE ASSESSEE CONTEND ED THAT THE TRIBUNAL IN THE CASE OF NATIONAL CENTRE OF HUMAN SETTLEMENT AND ENVIRONMENT VS. JCIT (ITA NO.163/IND/2009 FOR ASSESSMENT YEAR 2006-07) & BHOPAL SCHOOL OF SOCIAL SCIENCE VS. ACIT (ITA NO.164/IND/2009) VIDE ORDER DATED 19.6.2009 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING TH E DECISION IN ACIT VS. M.P. MADHYAM (ITA NO.712/IND/2004, ASSESSMENT YEAR 2004-05) AND ACIT VS. M/S. SOCIETY OF PILLAR (ITA NO.59/IND/2008) ORD ER DATED 18.7.2008, WHEREIN, THE DECISION IN THE CASE OF ESCORTS LTD. VS. UNION OF INDIA (SUPRA), RELIED UP ON BY THE ASSESSEE, WAS ALSO CONSIDERED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. SINCE THE I SSUE INVOLVED IN ALL THE APPEALS IS IDENTICAL, AS CANVAS SED BY LD. REPRESENTATIVES OF BOTH SIDES, THESE APPEALS WE RE HEARD TOGETHER, THEREFORE, FOR THE SAKE OF CONVENIE NCE AND 5 BREVITY, THE IMPUGNED APPEALS CAN BE DISPOSED OF BY THIS COMMON AND CONSOLIDATED ORDER. THE BRIEF FACTS ARE THAT THE ASSESSEES ARE CHARITABLE SOCIETIES/INSTITUTIONS /TRUSTS CLAIMED DEPRECIATION ON THE FIXED ASSETS AMOUNTING AS MENTIONED HEREINABOVE (AS APPLICABLE TO THE RESPECT IVE APPEAL). THE ASSESSEES WERE ALSO GRANTED REGISTRATI ON U/S 12A OF THE ACT. IN THEIR INCOME & EXPENDITURE A/C, THESE ASSESSEES CLAIMED DEPRECIATION OF THE IMPUGNED AMOU NTS ON THE GROUND THAT THE ASSESSEE CLAIMED COST OF ASS ETS AS AN APPLICATION OF INCOME U/S 11 OF THE ACT. THE STA ND OF THE REVENUE IS THAT SUCH CLAIM OF DEPRECIATION ON S UCH ASSETS TANTAMOUNT TO DOUBLE DEDUCTION. THE LD. ASSESSING OFFICER OF THE RESPECTIVE APPEAL PLACED R ELIANCE UPON THE DECISION FROM HONBLE APEX COURT IN THE CA SE OF ESCORTS LTD. VS. UNION OF INDIA (SUPRA) AND DISALLO WED DEPRECIATION. THE RESPECTIVE ASSESSEE CARRIED THESE ASSESSMENTS IN APPEAL BEFORE THE LD. FIRST APPELLAT E AUTHORITY WHEREIN THE ISSUE WAS DECIDED IN FAVOUR O F THE ASSESSEES AND IS FURTHER UNDER CHALLENGE BEFORE THI S 6 TRIBUNAL BY THE REVENUE. BEFORE COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER SEC. 12A WHICH PRESCRIBES CONDITIONS FOR APPLICABILITY OF SE C. 11 & 12 OF THE ACT. 89 [ 90 [ CONDITIONS FOR APPLICABILITY OF SECTIONS 11 AND 12 . ] 91 12A. 92 [(1)] 93 THE PROVISIONS OF SECTION 11 AND SECTION 12 SHALL NOT APPLY IN RELATION TO THE INCOME OF ANY TR UST OR INSTITUTION UNLESS THE FOLLOWING CONDITIONS ARE FUL FILLED, NAMELY: ( A ) THE PERSON IN RECEIPT OF THE INCOME HAS MADE AN APPLICATION FOR REGISTRATION OF THE TRUST OR INS TITUTION IN THE PRESCRIBED FORM 94 AND IN THE PRESCRIBED MANNER TO THE 95 [***] COMMISSIONER BEFORE THE 1ST DAY OF JULY, 1973 , OR BEFORE THE EXPIRY OF A PERIOD OF ONE YEAR FROM THE DATE OF THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF T HE INSTITUTION, 96 [WHICHEVER IS LATER AND SUCH TRUST OR INSTITUTION IS REGISTERED UNDER SECTION 12AA ] : 97 [ PROVIDED THAT WHERE AN APPLICATION FOR REGISTRATION OF THE TRUST OR INSTITUTION IS MADE AF TER THE EXPIRY OF THE PERIOD AFORESAID, THE PROVISIONS OF SECTIONS 11 AND 12 SHALL APPLY IN RELATION TO THE INCOME OF SUCH TRUS T OR INSTITUTION, ( I ) FROM THE DATE OF THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION IF THE 98 [***] COMMISSIONER IS, FOR REASONS TO BE RECORDED IN WRITING, SATISFIE D THAT THE PERSON IN RECEIPT OF THE INCOME WAS PREVENTED FROM MAKING THE APPLICATION BEFORE THE EXPIRY OF THE PERIOD 99 AFORESAID FOR SUFFICIENT REASONS; ( II ) FROM THE 1ST DAY OF THE FINANCIAL YEAR IN WHICH THE APPLICATION IS MADE, IF THE 1 [***] COMMISSIONER IS NOT SO SATISFIED:] 2 [ PROVIDED FURTHER THAT THE PROVISIONS OF THIS CLAUSE SHALL NOT APPLY IN RELATION TO ANY APPLICATI ON MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007;] 2 [( AA ) THE PERSON IN RECEIPT OF THE INCOME HAS MADE AN APPLICATION FOR REGISTRATION OF THE TRUST OR INS TITUTION ON OR AFTER THE 1ST DAY OF JUNE, 2007 IN THE PRESCRIBE D FORM 3 AND MANNER TO THE COMMISSIONER AND SUCH TRUST OR INSTITUTION IS REGISTERED UNDER SECTION 12AA ;] 7 ( B ) WHERE THE TOTAL INCOME OF THE TRUST OR INSTITUTION AS COMPUTED UNDER THIS ACT WITHOUT GIVI NG EFFECT TO 4 [THE PROVISIONS OF SECTION 11 AND SECTION 12 EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TA X IN ANY PREVIOUS YEAR], THE ACCOUNTS OF THE TRUST OR IN STITUTION FOR THAT YEAR HAVE BEEN AUDITED BY AN ACCOUNTANT AS DEFINED IN THE EXPLANATION BELOW SUB-SECTION (2) OF SECTION 288 AND THE PERSON IN RECEIPT OF THE INCOME FURNISHES ALONG WITH THE RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR T HE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM 5 DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED.] ( C ) 6 [***] 7 [(2) WHERE AN APPLICATION HAS BEEN MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE PROVISIONS OF SECTIONS 11 AND 12 SHALL APPLY IN RELATION TO THE INCOME OF SUCH TRUST OR INSTITUTION FROM THE ASSESSMENT YEAR IMMEDIATELY FO LLOWING THE FINANCIAL YEAR IN WHICH SUCH APPLICATION IS MAD E.] WE ARE ALSO REPRODUCING HEREUNDER SEC. 11 OF THE I. T. ACT, 1961 WHICH DEALS WITH INCOME FROM PROPERTY HEL D FOR CHARITABLE OR FOR RELIGIOUS PURPOSES. 33 INCOME 34 FROM PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES. 35 11. (1) SUBJECT TO THE PROVISIONS OF SECTIONS 60 TO 63 , THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOME 36 [( A ) INCOME DERIVED FROM PROPERTY 34 HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURP OSES, TO THE EXTENT TO WHICH SUCH INCOME 34 IS APPLIED 34 TO SUCH PURPOSES IN INDIA; AND, WHERE ANY SUCH INCOME 34 IS ACCUMULATED 34 OR SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOM E SO ACCUMULATED OR SET APART 37 IS NOT IN EXCESS OF 38 [FIFTEEN] PER CENT OF THE INCOME FROM SUCH PROPERTY; ( B ) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST IN PART 37 ONLY FOR SUCH PURPOSES, THE TRUST HAVING BEEN CREATED BEFORE THE COMMENCEMENT OF THIS ACT, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO 8 SUCH PURPOSES IN INDIA; AND, WHERE ANY SUCH INCOME IS FINALLY SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOME SO SET APA RT IS NOT IN EXCESS OF 38 [FIFTEEN] PER CENT OF THE INCOME FROM SUCH PROPERTY; ( C ) INCOME 39 [DERIVED] FROM PROPERTY HELD UNDER TRUST ( I ) CREATED ON OR AFTER THE 1ST DAY OF APRIL, 1952, FOR A CHARITABLE PURPOSE WHICH TENDS TO PROMO TE INTERNATIONAL WELFARE IN WHICH INDIA IS INTERESTED, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURP OSES OUTSIDE INDIA, AND ( II ) FOR CHARITABLE OR RELIGIOUS PURPOSES, CREATED BEFORE THE 1ST DAY OF APRIL, 1952, TO THE E XTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES OUTSIDE INDIA: PROVIDED THAT THE BOARD, BY GENERAL OR SPECIAL ORDER, HAS DIRECTED IN EITHER CASE THAT IT SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PERSON IN RE CEIPT OF SUCH INCOME; 40 [( D ) INCOME IN THE FORM OF VOLUNTARY CONTRIBUTIONS MADE WITH A SPECIFIC DIRECTION THAT T HEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTI TUTION.] 41 [ EXPLANATION. FOR THE PURPOSES OF CLAUSES ( A ) AND ( B ), ( 1 ) IN COMPUTING THE 42 [FIFTEEN] PER CENT OF THE INCOME WHICH MAY BE ACCUMULATED OR SET APART, A NY SUCH VOLUNTARY CONTRIBUTIONS AS ARE REFERRED TO IN SECTION 12 SHALL BE DEEMED TO BE PART OF THE INCOME; ( 2 ) IF, IN THE PREVIOUS YEAR, THE INCOME APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES IN INDI A FALLS SHORT OF 43 [EIGHTY-FIVE] PER CENT OF THE INCOME DERIVED DURING THAT YEAR FROM PROPERTY HELD UNDER TRUST, OR , AS THE CASE MAY BE, HELD UNDER TRUST IN PART, BY ANY AMOUNT ( I ) FOR THE REASON THAT THE WHOLE OR ANY PART OF THE INCOME HAS NOT BEEN RECEIVED DURING THAT YEA R, OR ( II ) FOR ANY OTHER REASON, THEN ( A ) IN THE CASE REFERRED TO IN SUB-CLAUSE ( I ), SO MUCH OF THE INCOME APPLIED TO SUCH PURPOSES IN INDIA DURING THE PREVIOUS YEAR IN WHICH THE INCOME IS RECEIVED OR DURING THE PREVIOUS YEAR IMMEDIATELY FOLLOWING AS DOES NOT EXCEED THE SAID AMOUNT, AND ( B ) IN THE CASE REFERRED TO IN SUB-CLAUSE ( II ), SO MUCH OF THE INCOME APPLIED TO SUCH PURPOSES IN 9 INDIA DURING THE PREVIOUS YEAR IMMEDIATELY FOLLOWIN G THE PREVIOUS YEAR IN WHICH THE INCOME WAS DERIVED A S DOES NOT EXCEED THE SAID AMOUNT, MAY, AT THE OPTION OF THE PERSON IN RECEIPT OF THE INCOME (SUCH OPTION TO BE EXERCISED IN WRITING BEFORE THE EXPIRY OF THE TIME ALLOWED UNDER SUB- SECTION (1) 44 [* * *] OF SECTION 139 45 [* * *] FOR FURNISHING THE RETURN OF INCOME) BE DEEMED TO BE INCOME APPLIED TO SUCH PURPOSES DURING THE PREVIOUS YEAR IN WHICH THE INCOME WAS DERIVED; AND THE INCOM E SO DEEMED TO HAVE BEEN APPLIED SHALL NOT BE TAKEN I NTO ACCOUNT IN CALCULATING THE AMOUNT OF INCOME APPLIED TO SUCH PURPOSES, IN THE CASE REFERRED TO IN SUB-CLAUS E ( I ), DURING THE PREVIOUS YEAR IN WHICH THE INCOME IS RECEIVED OR DURING THE PREVIOUS YEAR IMMEDIATELY FOLLOWING, AS THE CASE MAY BE, AND, IN THE CASE REF ERRED TO IN SUB-CLAUSE ( II ), DURING THE PREVIOUS YEAR IMMEDIATELY FOLLOWING THE PREVIOUS YEAR IN WHICH TH E INCOME WAS DERIVED.] 46 [(1A) FOR THE PURPOSES OF SUB-SECTION (1), ( A ) WHERE A CAPITAL ASSET, BEING PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, IS TRANSFERRED AND THE WHOLE OR ANY PART OF THE NET CONSIDERATION IS UTILISED FOR ACQUIRING ANOTHER CAPITAL ASSET TO BE SO HELD, THEN, THE CAPITAL GAIN ARISING FROM THE TRANSFER SHALL BE DEEMED TO HAVE BEEN APPL IED TO CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT SPECIFIED HEREUNDER, NAMELY: ( I ) WHERE THE WHOLE OF THE NET CONSIDERATION IS UTILISED IN ACQUIRING THE NEW CAPITAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN ; ( II ) WHERE ONLY A PART OF THE NET CONSIDERATION IS UTILISED FOR ACQUIRING THE NEW CAP ITAL ASSET, SO MUCH OF SUCH CAPITAL GAIN AS IS EQUAL TO THE AMOUNT, IF ANY, BY WHICH THE AMOUNT SO UTILISED EXC EEDS THE COST OF THE TRANSFERRED ASSET; ( B ) WHERE A CAPITAL ASSET, BEING PROPERTY HELD UNDER TRUST IN PART ONLY FOR SUCH PURPOSES, IS TRANSFERRED AND THE WHOLE OR ANY PART OF THE NET CONSIDERATION IS UTILISED FOR ACQUIRING ANOTHER CAP ITAL ASSET TO BE SO HELD, THEN, THE APPROPRIATE FRACTION OF THE CAPITAL GAIN ARISING FROM THE TRANSFER SHALL BE DEE MED TO HAVE BEEN APPLIED TO CHARITABLE OR RELIGIOUS PURPOS ES TO THE EXTENT SPECIFIED HEREUNDER, NAMELY: ( I ) WHERE THE WHOLE OF THE NET CONSIDERATION IS UTILISED IN ACQUIRING THE NEW CAPITAL ASSET, THE WHOLE OF THE APPROPRIATE FRACTION OF SUCH CAPITAL GAIN; 10 ( II ) IN ANY OTHER CASE, SO MUCH OF THE APPROPRIATE FRACTION OF THE CAPITAL GAIN AS IS EQUA L TO THE AMOUNT, IF ANY, BY WHICH THE APPROPRIATE FRACTION O F THE AMOUNT UTILISED FOR ACQUIRING THE NEW ASSET EXCEEDS THE APPROPRIATE FRACTION OF THE COST OF THE TRANSFERRED ASSET. EXPLANATION. IN THIS SUB-SECTION, ( I ) APPROPRIATE FRACTION MEANS THE FRACTION WHICH REPRESENTS THE EXTENT TO WHICH THE INCOME DERIVED FROM THE CAPITAL ASSET TRANSFERRED WAS IMMEDIATELY BEFORE SUCH TRANSFER APPLICABLE TO CHARITABLE OR RELIGIOUS PURPOSES; ( II ) COST OF THE TRANSFERRED ASSET MEANS THE AGGREGATE OF THE COST OF ACQUISITION (AS ASCERTAINE D FOR THE PURPOSES OF SECTIONS 48 AND 49 ) OF THE CAPITAL ASSET WHICH IS THE SUBJECT OF THE TRANSFER AND THE COST O F ANY IMPROVEMENT THERETO WITHIN THE MEANING ASSIGNED TO THAT EXPRESSION IN SUB-CLAUSE ( B ) OF CLAUSE ( 1 ) OF SECTION 55 ; ( III ) NET CONSIDERATION MEANS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESU LT OF THE TRANSFER OF THE CAPITAL ASSET AS REDUCED BY ANY EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER.] 47 [(1B) WHERE ANY INCOME IN RESPECT OF WHICH AN OPTION IS EXERCISED UNDER CLAUSE ( 2 ) OF THE EXPLANATION TO SUB-SECTION (1) IS NOT APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES IN INDIA DURING THE PERIOD REFER RED TO IN SUB-CLAUSE ( A ) OR, AS THE CASE MAY BE, SUB-CLAUSE ( B ), OF THE SAID CLAUSE, THEN, SUCH INCOME SHALL BE DEEM ED TO BE THE INCOME OF THE PERSON IN RECEIPT THEREOF ( A ) IN THE CASE REFERRED TO IN SUB-CLAUSE ( I ) OF THE SAID CLAUSE, OF THE PREVIOUS YEAR IMMEDIATELY FOLLOWING THE PREVIOUS YEAR IN WHICH THE INCOME WAS RECEIVED; OR ( B ) IN THE CASE REFERRED TO IN SUB-CLAUSE ( II ) OF THE SAID CLAUSE, OF THE PREVIOUS YEAR IMMEDIATEL Y FOLLOWING THE PREVIOUS YEAR IN WHICH THE INCOME WAS DERIVED.] 48 [(2) 49 [WHERE 50 [EIGHTY-FIVE] PER CENT OF THE INCOME REFERRED TO IN CLAUSE ( A ) OR CLAUSE ( B ) OF SUB-SECTION (1) READ WITH THE EXPLANATION TO THAT SUB-SECTION IS NOT APPLIED, OR IS NOT DEEMED TO HAVE BEEN APPLIED, TO CHARITABLE OR RELIGIOUS PURPOSES IN INDIA DURING TH E PREVIOUS YEAR BUT IS ACCUMULATED OR SET APART, EITH ER IN WHOLE OR IN PART, FOR APPLICATION TO SUCH PURPOSES IN INDIA, SUCH INCOME SO ACCUMULATED OR SET APART SHAL L NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEA R OF 11 THE PERSON IN RECEIPT OF THE INCOME, PROVIDED THE FOLLOWING CONDITIONS ARE COMPLIED WITH, NAMELY:] ( A ) SUCH PERSON SPECIFIES, BY NOTICE IN WRITING GIVEN TO THE 51 [ASSESSING] OFFICER IN THE PRESCRIBED 52 MANNER 53 , THE PURPOSE FOR WHICH THE INCOME IS BEING ACCUMULATED OR SET APART AND THE PE RIOD FOR WHICH THE INCOME IS TO BE ACCUMULATED OR SET AP ART, WHICH SHALL IN NO CASE EXCEED TEN YEARS; 54 [( B ) THE MONEY SO ACCUMULATED 55 OR SET APART IS INVESTED OR DEPOSITED IN THE FORMS OR MODES SPEC IFIED IN SUB-SECTION (5)]:] 56 [ PROVIDED THAT IN COMPUTING THE PERIOD OF TEN YEARS REFERRED TO IN CLAUSE ( A ), THE PERIOD DURING WHICH THE INCOME COULD NOT BE APPLIED FOR THE PURPOSE FOR WHI CH IT IS SO ACCUMULATED OR SET APART, DUE TO AN ORDER OR INJUNCTION OF ANY COURT, SHALL BE EXCLUDED:] 57 [ PROVIDED FURTHER THAT IN RESPECT OF ANY INCOME ACCUMULATED OR SET APART ON OR AFTER THE 1ST DAY OF APRIL, 2001, THE PROVISIONS OF THIS SUB-SECTION SHALL HAVE EFFECT AS IF FOR THE WORDS TEN YEARS AT BOTH THE PLACES WHERE THEY OCCUR, THE WORDS FIVE YEARS HAD BEEN SUBSTITUTED.] 58 [ EXPLANATION. ANY AMOUNT CREDITED OR PAID, OUT OF INCOME REFERRED TO IN CLAUSE ( A ) OR CLAUSE ( B ) OF SUB- SECTION (1), READ WITH THE EXPLANATION TO THAT SUB- SECTION, WHICH IS NOT APPLIED, BUT IS ACCUMULATED O R SET APART, TO ANY TRUST OR INSTITUTION REGISTERED UNDER SECTION 12AA OR TO ANY FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION REFERRED TO I N SUB- CLAUSE ( IV ) OR SUB-CLAUSE ( V ) OR SUB-CLAUSE ( VI ) OR SUB- CLAUSE ( VIA ) OF CLAUSE ( 23C ) OF SECTION 10 , SHALL NOT BE TREATED AS APPLICATION OF INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES, EITHER DURING THE PERIOD OF ACCUMULATION OR THEREAFTER.] 59 [(3) ANY INCOME REFERRED TO IN SUB-SECTION (2) WHICH ( A ) IS APPLIED TO PURPOSES OTHER THAN CHARITABLE OR RELIGIOUS PURPOSES AS AFORESAID OR CE ASES TO BE ACCUMULATED OR SET APART FOR APPLICATION THERETO , OR 60 [( B ) CEASES TO REMAIN INVESTED OR DEPOSITED IN ANY OF THE FORMS OR MODES SPECIFIED IN SUB-SECTION (5), OR] ( C ) IS NOT UTILISED 61 FOR THE PURPOSE FOR WHICH IT IS SO ACCUMULATED OR SET APART DURING THE PERIOD REFERRED TO IN CLAUSE ( A ) OF THAT SUB-SECTION OR IN THE YEAR IMMEDIATELY FOLLOWING THE EXPIRY THEREOF, 12 62 [( D ) IS CREDITED OR PAID TO ANY TRUST OR INSTITUTION REGISTERED UNDER SECTION 12AA OR TO ANY FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER ME DICAL INSTITUTION REFERRED TO IN SUB-CLAUSE ( IV ) OR SUB-CLAUSE ( V ) OR SUB-CLAUSE ( VI ) OR SUB-CLAUSE ( VIA ) OF CLAUSE ( 23C ) OF SECTION 10 ,] SHALL BE DEEMED TO BE THE INCOME OF SUCH PERSON OF THE PREVIOUS YEAR IN WHICH IT IS SO APPLIED OR CEASES T O BE SO ACCUMULATED OR SET APART OR CEASES TO REMAIN SO INV ESTED OR DEPOSITED OR 62 [CREDITED OR PAID OR], AS THE CASE MAY BE, OF THE PREVIOUS YEAR IMMEDIATELY FOLLOWING THE EXPIRY OF THE PERIOD AFORESAID.] 63 [(3A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB- SECTION (3), WHERE DUE TO CIRCUMSTANCES BEYOND THE CONTROL OF THE PERSON IN RECEIPT OF THE INCOME, ANY INCOME INVESTED OR DEPOSITED IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE ( B ) OF SUB-SECTION (2) CANNOT BE APPLIED FOR THE PURPOSE FOR WHICH IT WAS ACCUMULATE D OR SET APART, THE 64 [ASSESSING] OFFICER MAY, ON AN APPLICATION MADE TO HIM IN THIS BEHALF, ALLOW SUCH PERSON TO APPLY SUCH INCOME FOR SUCH OTHER CHARITAB LE OR RELIGIOUS PURPOSE IN INDIA AS IS SPECIFIED IN TH E APPLICATION BY SUCH PERSON AND AS IS IN CONFORMITY WITH THE OBJECTS OF THE TRUST; AND THEREUPON THE PROVISI ONS OF SUB-SECTION (3) SHALL APPLY AS IF THE PURPOSE SPECI FIED BY SUCH PERSON IN THE APPLICATION UNDER THIS SUB-SE CTION WERE A PURPOSE SPECIFIED IN THE NOTICE GIVEN TO THE 64 [ASSESSING] OFFICER UNDER CLAUSE ( A ) OF SUB-SECTION (2):] 65 [ PROVIDED THAT THE ASSESSING OFFICER SHALL NOT ALLOW APPLICATION OF SUCH INCOME BY WAY OF PAYMENT OR CRE DIT MADE FOR THE PURPOSES REFERRED TO IN CLAUSE ( D ) OF SUB- SECTION (3) OF SECTION 11 :] 66 [ PROVIDED FURTHER THAT IN CASE THE TRUST OR INSTITUTION, WHICH HAS INVESTED OR DEPOSITED ITS INCOME IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE ( B ) OF SUB- SECTION (2), IS DISSOLVED, THE ASSESSING OFFICER MA Y ALLOW APPLICATION OF SUCH INCOME FOR THE PURPOSES REFERRED TO IN CLAUSE ( D ) OF SUB-SECTION (3) IN THE YEAR IN WHICH SUCH TRUST OR INSTITUTION WAS DISSOLVED.] (4) FOR THE PURPOSES OF THIS SECTION PROPERTY HELD UNDER TRUST INCLUDES A BUSINESS UNDERTAKING SO HEL D, AND WHERE A CLAIM IS MADE THAT THE INCOME OF ANY SU CH UNDERTAKING SHALL NOT BE INCLUDED IN THE TOTAL INCO ME OF THE PERSONS IN RECEIPT THEREOF, THE 67 [ASSESSING] OFFICER SHALL HAVE POWER TO DETERMINE THE INCOME OF SUCH UNDERTAKING IN ACCORDANCE WITH THE PROVISIONS OF TH IS ACT RELATING TO ASSESSMENT; AND WHERE ANY INCOME SO DETERMINED IS IN EXCESS OF THE INCOME AS SHOWN IN T HE 13 ACCOUNTS OF THE UNDERTAKING, SUCH EXCESS SHALL BE DEEMED TO BE APPLIED TO PURPOSES OTHER THAN CHARITA BLE OR RELIGIOUS PURPOSES 68 [* * *]. 69 [(4A) SUB-SECTION (1) OR SUB-SECTION (2) OR SUB-SEC TION (3) OR SUB-SECTION (3A) SHALL NOT APPLY IN RELATION TO ANY INCOME OF A TRUST OR AN INSTITUTION, BEING PROFITS AND GAINS OF BUSINESS, UNLESS THE BUSINESS IS INCIDENTA L TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST OR, A S THE CASE MAY BE, INSTITUTION, AND SEPARATE BOOKS OF ACC OUNT ARE MAINTAINED BY SUCH TRUST OR INSTITUTION IN RESP ECT OF SUCH BUSINESS.] 70 [ 71 (5) THE FORMS AND MODES OF INVESTING OR DEPOSITING THE MONEY REFERRED TO IN CLAUSE ( B ) OF SUB-SECTION (2) SHALL BE THE FOLLOWING, NAMELY : ( I ) INVESTMENT IN SAVINGS CERTIFICATES AS DEFINED IN CLAUSE ( C ) OF SECTION 2 72 OF THE GOVERNMENT SAVINGS CERTIFICATES ACT, 1959 (46 OF 1959), AND AN Y OTHER SECURITIES OR CERTIFICATES ISSUED BY THE CENT RAL GOVERNMENT UNDER THE SMALL SAVINGS SCHEMES OF THAT GOVERNMENT; ( II ) DEPOSIT IN ANY ACCOUNT WITH THE POST OFFICE SAVINGS BANK; ( III ) DEPOSIT IN ANY ACCOUNT WITH A SCHEDULED BANK OR A CO-OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING (INCLUDING A CO-OPERATIVE L AND MORTGAGE BANK OR A CO-OPERATIVE LAND DEVELOPMENT BANK). EXPLANATION. IN THIS CLAUSE, SCHEDULED BANK MEANS THE STATE BANK OF INDIA CONSTITUTED UND ER THE STATE BANK OF INDIA ACT, 1955 (23 OF 1955), A SUBSIDIARY BANK AS DEFINED IN THE STATE BANK OF IND IA (SUBSIDIARY BANKS) ACT, 1959 (38 OF 1959), A CORRESPONDING NEW BANK CONSTITUTED UNDER SECTION 3 OF THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1970 (5 OF 1970), OR UNDER SECTI ON 3 OF THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1980 (40 OF 1980), OR ANY OTHER BANK BEING A BANK INCLUDED IN THE SECOND SCHEDULE T O THE RESERVE BANK OF INDIA ACT, 1934 (2 OF 1934); ( IV ) INVESTMENT IN UNITS OF THE UNIT TRUST OF INDIA ESTABLISHED UNDER THE UNIT TRUST OF INDIA ACT , 1963 (52 OF 1963); ( V ) INVESTMENT IN ANY SECURITY FOR MONEY CREATED AND ISSUED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT; ( VI ) INVESTMENT IN DEBENTURES ISSUED BY, OR ON BEHALF OF, ANY COMPANY OR CORPORATION BOTH THE 14 PRINCIPAL WHEREOF AND THE INTEREST WHEREON ARE FULL Y AND UNCONDITIONALLY GUARANTEED BY THE CENTRAL GOVERNMEN T OR BY A STATE GOVERNMENT; ( VII ) INVESTMENT OR DEPOSIT IN ANY 73 [PUBLIC SECTOR COMPANY]: 74 [ PROVIDED THAT WHERE AN INVESTMENT OR DEPOSIT IN ANY PUBLIC SECTOR COMPANY HAS BEEN MADE AND SUCH PUBLIC SECTOR COMPANY CEASES TO BE A PUBLI C SECTOR COMPANY, ( A ) SUCH INVESTMENT MADE IN THE SHARES OF SUCH COMPANY SHALL BE DEEMED TO BE AN INVESTMENT MADE UNDER THIS CLAUSE FOR A PERIOD OF THREE YEARS FROM THE DATE ON WHICH SUCH PUBLIC SECTOR COMPANY CEASES TO BE A PUBLIC SECTOR COMPANY; ( B ) SUCH OTHER INVESTMENT OR DEPOSIT SHALL BE DEEMED TO BE AN INVESTMENT OR DEPOSIT MADE UNDER TH IS CLAUSE FOR THE PERIOD UP TO THE DATE ON WHICH SUCH INVESTMENT OR DEPOSIT BECOMES REPAYABLE BY SUCH COMPANY;] ( VIII ) DEPOSITS WITH OR INVESTMENT IN ANY BONDS ISSUED BY A FINANCIAL CORPORATION WHICH IS ENGAGED IN PROVIDING LONG-TERM FINANCE FOR INDUSTRIAL DEVELOPM ENT IN INDIA AND 75 [WHICH IS ELIGIBLE FOR DEDUCTION UNDER CLAUSE ( VIII ) OF SUB-SECTION (1) OF SECTION 36 ]; ( IX ) DEPOSITS WITH OR INVESTMENT IN ANY BONDS ISSUED BY A PUBLIC COMPANY FORMED AND REGISTERED IN INDIA WITH THE MAIN OBJECT OF CARRYING ON THE BUSIN ESS OF PROVIDING LONG-TERM FINANCE FOR CONSTRUCTION OR PURCHASE OF HOUSES IN INDIA FOR RESIDENTIAL PURPOSE S AND 75 [WHICH IS ELIGIBLE FOR DEDUCTION UNDER CLAUSE ( VIII ) OF SUB-SECTION (1) OF SECTION 36 ]; 76 [( IXA ) DEPOSITS WITH OR INVESTMENT IN ANY BONDS ISSUED BY A PUBLIC COMPANY FORMED AND REGISTERED IN INDIA WITH THE MAIN OBJECT OF CARRYING ON THE BUSIN ESS OF PROVIDING LONG-TERM FINANCE FOR URBAN INFRASTRUC TURE IN INDIA. EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE, ( A ) LONG-TERM FINANCE MEANS ANY LOAN OR ADVANCE WHERE THE TERMS UNDER WHICH MONEYS ARE LOANED OR ADVANCED PROVIDE FOR REPAYMENT ALONG WITH INTEREST THEREOF DURING A PERIOD OF NOT LESS THAN F IVE YEARS; ( B ) PUBLIC COMPANY 77 SHALL HAVE THE MEANING ASSIGNED TO IT IN SECTION 3 OF THE COMPANIE S ACT, 1956 (1 OF 1956); 15 ( C ) URBAN INFRASTRUCTURE MEANS A PROJECT FOR PROVIDING POTABLE WATER SUPPLY, SANITATION AND SEWERAGE, DRAINAGE, SOLID WASTE MANAGEMENT, ROADS, BRIDGES AND FLYOVERS OR URBAN TRANSPORT;] ( X ) INVESTMENT IN IMMOVABLE PROPERTY. EXPLANATION. IMMOVABLE PROPERTY DOES NOT INCLUDE ANY MACHI-NERY OR PLANT (OTHER THA N MACHINERY OR PLANT INSTALLED IN A BUILDING FOR THE CONVENIENT OCCUPATION OF THE BUILDING) EVEN THOUGH ATTACHED TO, OR PERMANENTLY FASTENED TO, ANYTHING ATTACHED TO THE EARTH;] 78 [( XI ) DEPOSITS WITH THE INDUSTRIAL DEVELOPMENT BANK OF INDIA ESTABLISHED UNDER THE INDUSTRIAL DEVELOPMENT BANK OF INDIA ACT, 1964 (18 OF 1964);] 79 [( XII ) ANY OTHER FORM OR MODE OF INVESTMENT OR DEPOSIT AS MAY BE PRESCRIBED. 80 ] IF BOTH THE AFOREMENTIONED SECTIONS ARE KEPT IN JUXTAPOSITION AND ANALYSED, SUB-SEC. (2) TO SEC. 11 SPEAKS ABOUT APPLICATION OF 85% OF INCOME REFERRED TO IN CLAUSE (A) OR CLAUSE (B) OF SUB-SEC. (1) READ WITH EXPLANATION TO THAT SUB-SEC. TO CHARITABLE OR RELIG IOUS PURPOSES OUT OF ACCUMULATED INCOME MEANING THEREBY THE SOCIETY/INSTITUTION OR THE TRUST, AS THE CASE M AY BE, HAS TO APPLY 85% OF INCOME OF THE PREVIOUS YEAR. IF THIS PROVISION IS APPLIED TO THE PRESENT APPEALS, WE FIN D THAT THE LD. ASSESSING OFFICERS HIMSELF/HERSELF HAVE MEN TIONED THAT THE STATEMENT OF INCOME & EXPENDITURE A/C WAS 16 FURNISHED BY ASSESSEE WHEREIN UTILISATION OF FUNDS WAS SHOWN TO BE MORE THAN 85% BEFORE CLAIM OF DEPRECIATION . THE RELEVANT PORTION OF THE SAME IS REPRODUCED HEREUNDER: DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF DEPRECIATION CLAIMED. THE ASSESSEE HAS SUBMITTED THAT THE SOCIETY IS REGISTERED U/S 12AA OF THE IT ACT. A STATEMENT SHOWING RECEIPTS AND UTILIZATION OF FUNDS IS ENCLOSED. THE UTILIZATION OF THE INCOME IS MORE THAN 85% BEFORE CLAIM OF DEPRECIATION. HOWEVER, THE ASSESSING OFFICER DID NOT CONTROVERT ASSESSEES CLAIM OF UTILISATION OF FUND AS PER PROV ISIONS OF SEC. 11 FOR THE OBJECT OF ASSESSEES SOCIETY. WE OU RSELVES HAVE VERIFIED THE APPLICATION OF INCOME, FOR THE OB JECTS OF ASSESSEES SOCIETY, AND FOUND THAT SAME WAS IN ORDE R IN TERMS OF SEC. 11 OF I.T. ACT. IN VIEW OF THE AFOREM ENTIONED UNCONTROVERTED FINDING, ONE CLEAR FACT IS OOZING OU T THAT THE ASSESSEES HAVE DULY COMPLIED WITH THE PROVISION S OF SEC. 11(2) OF THE ACT. SO FAR AS CHARITABLE NATURE IS CONCERNED, THE PRESENT ASSESSEES HAVE ALREADY BEEN GRANTED REGISTRATION U/S 12A OF THE ACT AND THE SAM E IS STILL CONTINUING. IT IS NOT THE CASE THAT DEPRECIAT ION HAS BEEN CLAIMED BY THE ASSESSEE TO COVER UP THE APPLIC ATION 17 OF INCOME AS SPECIFIED UNDER THE ACT. IF THAT WOULD HAVE BEEN CASE THEN THE CONTENTION RAISED BY THE REVENUE WOULD HAVE SOME FORCE. WE ARE HUNDRED PERCENT IN AGREEMENT WITH THE CONTENTION OF THE LD. CIT/DR THA T THERE SHOULD BE NO DOUBLE DEDUCTION BUT IN THE PRES ENT APPEALS, THERE IS NO DOUBLE DEDUCTION BECAUSE THE REQUIREMENT OF THE ACT IS APPLICATION OF INCOME WIT HIN SPECIFIED LIMIT BUT IN THE PRESENT APPEALS, THE CLA IM OF DEPRECIATION IS AFTER APPLICATION OF MORE THAN 85% OF THE INCOME, THEREFORE, THE CLAIM OF DEPRECIATION HAS RE MAINED FOR ACADEMIC INTEREST ONLY. 4. EVEN OTHERWISE, DEPRECIATION ALLOWANCE IS A CONCESSION GRANTED BY THE STATE IN THE COMPUTATION OF INCOME BASED ON MANY FACTORS RELEVANT TO THE WHOLES OME FISCAL ADMINISTRATION. DEPRECIATION REPRESENTS THE DIMINUTION IN THE VALUE OF AN ASSET WHEN APPLIED TO THE PURPOSE OF MAKING PROFIT OR GAIN. DEPRECIATION IS T HUS RELATED TO AN ASSET AND IS A NOTIONAL LOSS AS AGAIN ST ACTUAL LOSS IN THE SENSE OF OUTGOING OF A BUSINESS, MEANING THEREBY, DEPRECIATION IS A STATUTORY ALLOWA NCE NOT CONFINED EXPRESSLY TO DIMINUTION IN VALUE OF TH E ASSET 18 BY THE REASON OF WEAR & TEAR ONLY. A CHARITABLE TRU ST IS ENTITLED TO DEPRECIATION IN RESPECT OF ASSET HELD B Y IT. OUR VIEW IS FORTIFIED BY THE DECISION FROM HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RA IPUT POLLOTTINE SOCIETY (80 CTR (MP) 127). EXPLANATION 5 TO SEC. 32 (1) TAKES EFFECT ONLY ON & FROM 1.4.2002 WH ICH WAS INSERTED BY THE FINANCE ACT, 2001. 5. WE FURTHER FIND FROM THE APPLICATION OF INCOME, WHILE DENYING DEPRECIATION TO THE ASSESSEES BY THE LD. ASSESSING OFFICER, THAT IN THE CASE OF BHOPAL COMPA NION SCHOOL SOCIETY, AS PER INCOME & EXPENDITURE A/C, THOUGH TOTAL INCOME IS RS.5,21,92,490/-. THE EXPENDITURE IS RS.3,70,75,013/- AND ADDITION TO FIX ED ASSET IS RS.1,67,55,570/-, THUS, THE ONLY AMOUNT REMAINED WITH THE ASSESSEE IS RS.16,38,093/-. THUS, AT THIS STAGE ITSELF, THE ASSESSEE HAS APPLIED MORE TH AN 85% OF THE INCOME AND THE DISALLOWANCE OF DEPRECIATION IS TO THE TUNE OF RS.48,91,869/- WHICH IS AFTER CLAIM OF 19 APPLICATION OF INCOME THEREBY IT IS NOT A CASE OF D OUBLE DEDUCTION. IDENTICAL IS THE SITUATION IN THE CASE O F REMAINING ASSESSEES. IN VIEW OF THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT SINCE THERE IS NO DOUBLE DEDUCTION, THEREFORE, THE DECISION IN THE CASE OF E SCORT LTD. (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT APPEALS. THE LD. CIT(A) WHILE COMING TO A PARTICULA R CONCLUSION HAS FOLLOWED VARIOUS DECISIONS FROM THE TRIBUNAL AND EVEN DISCUSSED THE DECISION IN THE CAS E OF ESCORTS LTD. (SUPRA), THEREFORE, WE FIND NO INFIRMI TY IN THE STAND OF THE LD. CIT(A). 6. EVEN OTHERWISE, WE ARE AWARE THAT IF SEC. 11(1)( A) HAS BEEN FULLY EXPLOITED AND THERE IS STILL ACCUMULATED INCOME LACK TO BE DEALT WITH SUB-SEC. (2) OF SEC. 1 1 CAN BE PRESSED IN SERVICE AND IF IT IS COMPLIED WITH, SUCH ADDITIONAL ACCUMULATED INCOME BEYOND THE PRESCRIBED PERCENTAGE CAN ALSO EARN EXEMPTION U/S 11(2) OF THE ACT AS WAS HELD IN ADDL. CIT VS. ALN RAO CHARITABLE TRU ST 20 (216 ITR 697) (SC). IT IS NOT CORRECT TO EQUATE THE WORD APPLIED WITH THE WORD SPENT. IF THE LEGISLATURE INTENDED THAT THE AMOUNT ACTUALLY BE SPENT, THERE W AS NOTHING PREVENTING IT FROM USING THAT WORD AS WAS H ELD IN CIT VS. TRUSTEES OF HEH, THE NIZAMS CHARITABLE TRUS T (131 ITR 497) (AP) & CIT VS. RADHASWAMI SATSANG SAB HA (25 ITR 472) (ALL). THE ACCUMULATION CONTEMPLATED U/S 11 (1) (A) HAS TO BE A CONSCIOUS ACCUMULATION AND N OT JUST A MASS OF UNSPENT OR UNAPPLIED PROFIT. ADDITIO NAL CONDITION BY WAY OF EXPLANATION TO SEC. 11 (2) INSE RTED W.E.F. 1.4.2003 IS INTENDED TO APPLY ONLY TO ACCUMULATIONS IN EXCESS OF 15% U/S 11 (2) AND NOT T O ACCUMULATIONS UP TO 15% U/S 11 (1) (A). THIS VIEW I S FORTIFIED BY THE RATIO LAID DOWN IN DIT VS. BAGRI FOUNDATION (2010) 192 TAXMAN 309 (DEL), THE RATIO L AID DOWN IN CIT VS. PROGRAMME FOR COMMUNITY ORGANISATIO N (248 ITR 1) (SC) AND THE RATIO LAID DOWN IN SRMMCTM TIRUPANI TRUST (230 ITR 636) (SC). IN ORDER TO SATI SFY THE REQUIREMENT OF SEC. 11 (2) (B), THE INVESTMENT MUST 21 NECESSARILY COME OUT TO THE CURRENT YEARS INCOME. AN INVESTMENT MADE IN THE PAST OBVIOUSLY CANNOT SATISF Y THIS REQUIREMENT. THIS VIEW IS FURTHER FORTIFIED FR OM THE DECISION IN CIT VS. INDIAN NATIONAL THEATRE TRUST ( 305 ITR 149) (DEL). THEREFORE, IN VIEW OF UNCONTROVERTE D FINDING THAT THE RESPECTIVE ASSESSEE DULY COMPLIED WITH SEC. 11 (2) OF THE ACT AND THE DEPRECIATION WAS CLA IMED AFTER APPLICATION OF MORE THAN 85% OF INCOME, THERE FORE, WE FIND NO INFIRMITY IN THE STAND OF THE LD. CIT(A) , CONSEQUENTLY, THESE APPEALS OF THE REVENUE ARE HAVI NG NO MERIT, THEREFORE, DISMISSED. FINALLY, THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.8.2011. (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17.8.2011 COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE !VYS!