DCIT (Exemption), New Delhi V. M/s. Nav Nirman Sewa Samiti, Delhi

ITA 645/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5365 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 03-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure; TDS
• Section: 143(3); 12A; 12AA; 201; 264; 13; 10(23C); 32; 28; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: E NEW DELHI BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.645/DEL./2017 ASSESSMENT YEAR: 2012-13 DCIT (EXEMPTION), CIRCLE-2(1), NEW DELHI VS. NAV NIRMAN SEWA SAMITI, BN-9(EAST), SHALIMAR BAGH, DELHI PAN :AAAAN6370R (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORD ER DATED 25/11/2016 PASSED BY THE LEARNED CIT(APPEALS)-40, N EW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 201 2-13 RAISING FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT(A) HAS ERRED IN LAW IN ALLOWING THE CLAIM OF CARRY FOR WARD OF LOSSES DISREGARDING THE FACT THAT SET-OFF AND CARRY FORWAR D OF LOSSES ARE APPELLANT BY MS. PRAMITA M. BISWAS, CIT(DR) RESPONDENT BY NONE DATE OF HEARING 13.04.2021 DATE OF PRONOUNCEMENT 11.05.2021 2 ITA NO.645/DEL./2017 DEALT WITH BY THE PROVISIONS OF SECTION 70 TO 74 OF THE INCOME TAX ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT(A) HAS ERRED IN LAW AND FACT THAT ALLOWING DEPRECIATIO N OF FIXED ASSETS IS TANTAMOUNT DOUBLE DEDUCTION AS THE EXPEND ITURE ON FIXED ASSETS IS ALREADY ALLOWED. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR A MEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSES SEE SOCIETY IS REGISTERED UNDER SECTION 12A OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT) WITH EFFECT FROM 16/10/2008. THE A IMS AND OBJECTS OF THE SOCIETY INCLUDE DEVELOP AND PRESCRIB E FOR A WIDE SPECTRUM OF COURSES OF STUDY FOR PURPOSE OF GENERAL VOCATIONAL AND CONTINUING EDUCATION. FOR THE YEAR UNDER CONSID ERATION, THE ASSESSEE FILED RETURN OF INCOME ON 30/09/2012 DECLA RING NIL INCOME. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT. THE SCRUTINY ASSESSMENT UN DER SECTION 143(3) OF THE ACT WAS COMPLETED ON 26/03/2015, WHER EIN, DEPRECIATION OF 2,59,19,069/- AND CARRY FORWARD OF THE DEFICIT OF 22,14,49,902/- WAS DECLINED TO THE ASSESSEE BY THE ASSESSING OFFICER. THE ASSESSEE PREFERRED APPEAL BEFORE THE L D. CIT(A), WHO ALLOWED BOTH ABOVE CLAIM OF THE ASSESSEE FOLLOWING JUDICIAL PRECEDENTS. AGGRIEVED, WITH THE FINDING OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE INCOME TAX APPELLAT E TRIBUNAL [IN SHORT THE TRIBUNAL] RAISING THE GROUNDS AS REPROD UCED ABOVE. 3. BEFORE US, NONE APPEARED ON BEHALF OF THE ASSESSEE . 4. WE HAVE HEARD SUBMISSION OF THE LEARNED DEPARTMENT AL REPRESENTATIVE AND PERUSED THE RELEVANT MATERIAL ON RECORD. 3 ITA NO.645/DEL./2017 REGARDING THE GROUND NO. 1 OF THE APPEAL, THE FINDI NG OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 4.1 GROUND NO. 1 OF THE APPEAL CHALLENGES THE DI SALLOWANCE OF CLAIM OF DEPRECIATION AMOUNTING TO RS. 2,59,19,069/ -. 4.1.1 I HAVE CONSIDERED THE ORDER OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE APPELLANT. PROVISIONS RELATING T O ALLOWABILITY OF DEPRECIATION UNDER THE INCOME-TAX ACT AND PROVISION S GOVERNING INCOME FROM PROPERTY HELD FOR CHARITABLE OR RELIGIO US PURPOSES HAVE ALSO BEEN REFERRED. 4.1.2 DEPRECIATION IS AN ALLOWANCE FOR REDUCTION IN THE VALUE OF ASSETS ARISING OUT OF THE WEAR AND TEAR OF A CAPITA L ASSET DUE TO THE ASSET BEING PUT TO USE AND PASSAGE OF TIME. DEPRECI ATION IS ALLOWED UNDER THE INCOME-TAX ACT WHILE COMPUTING INCOME UND ER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' SUBJE CT TO FULFILLMENT OF TWO BASIC CONDITIONS: (I) THE ASSESSEE OWNS THE ASSET; AND (II) THE ASSET IS PUT TO USE FOR THE PURPOSE OF BUS INESS OR PROFESSION. 4.1.3 CHARITABLE TRUSTS OR INSTITUTIONS ARE GOVERNE D BY THE PROVISIONS OF SECTIONS 11, 12, 12A, 12AA AND 13 UNDER CHAPTER III OF THE INCOME-TAX ACT. THESE SECTIONS CONSTITUTE A COMPLET E CODE GOVERNING THE GRANT, CANCELLATION OR WITHDRAWAL OF REGISTRATI ON, PROVIDING EXEMPTION OF INCOME AND ALSO CONDITIONS SUBJECT TO WHICH A CHARITABLE TRUST OR INSTITUTION IS REQUIRED TO FUNC TION IN ORDER TO BE ELIGIBLE FOR EXEMPTION. SECTION LL(L)(A) PROVIDES F OR EXEMPTION TO THE EXTENT INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST IS APPLIED FOR CHARITABLE PURPOSES. SUBJECT TO FULFILLMENT OF CONDITIONS LAID DOWN IN SECTION 11, EXEMPTION IS AVAILABLE IN RESPECT OF INCOME IRRESPECTIVE OF WHETHER THE EXPENDITURE INCURRED IS REVENUE OR C APITAL IN NATURE. HENCE, EXEMPTION IS AVAILABLE EVEN WHEN THE INCOME IS APPLIED FOR ACQUIRING A CAPITAL ASSET. IN VIEW OF THIS, CHARITA BLE INSTITUTIONS WERE NOT ELIGIBLE FOR DEPRECIATION. 4.1.4 THIS VIEW HAS BEEN CLARIFIED IN PARA 7.5 OF T HE EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE (NO. 2) ACT, 2014 ISSUED VIDE CIRCULAR NO. 1/2015 DATED 21ST JANUARY, 2015. SECTI ON 11 WAS AMENDED BY THE FINANCE (NO. 2) ACT, 2014 WHEREBY A NEW SUB- SECTION' HAS BEEN INSERTED WHICH PROVIDES THAT UNDE R SECTION 11, INCOME FOR THE PURPOSES OF ITS APPLICATION SHALL BE DETERMINED WITHOUT ANY DEDUCTION OR ALLOWANCE BY WAY OF DEPREC IATION OR OTHERWISE IN RESPECT OF ANY ASSET, ACQUISITION OF W HICH HAS BEEN 4 ITA NO.645/DEL./2017 CLAIMED AS AN APPLICATION OF INCOME UNDER SECTION 1 1 IN THE SAME OR ANY OTHER PREVIOUS YEAR. PARA 7.5 OF THE SAID EXPLA NATORY NOTES IS REPRODUCED AS UNDER: '7.5 THE SECOND ISSUE WHICH HAD ARISEN WAS THAT THE EXISTING SCHEME OF SECTION 11 AS WELL AS SECTION 10(23C) OF THE INCOME- TAX ACT PROVIDED EXEMPTION IN RESPECT OF INCOME WHE N IT IS APPLIED TO ACQUIRE A CAPITAL ASSET. SUBSEQUENTLY, W HILE COMPUTING THE INCOME FOR PURPOSES OF THESE SECTIONS , NOTIONAL DEDUCTION BY WAY OF DEPRECIATION ETC. WAS BEING CLA IMED AND SUCH AMOUNT OF NOTIONAL DEDUCTION WAS NOT BEING APP LIED FOR CHARITABLE PURPOSE. AS A RESULT, DOUBLE BENEFIT WAS BEING CLAIMED BY THE TRUSTS AND INSTITUTIONS. THEREFORE, THESE PROIHSIONS WERE REQUIRED TO BE RATIONALIZED TO ENSU RE THAT DOUBLE BENEFIT IS NOT CLAIMED AND SUCH NOTIONAL AMO UNT DOES NOT GET EXCLUDED FROM THE CONDITION OF APPLICATION OF INCOME FOR CHARITABLE PURPOSE.' 4.1.5 THERE ARE MANY CONFLICTING JUDGMENTS OF VAR IOUS HON'BLE HIGH COURTS, INCLUDING OF THE JURISDICTIONAL HIGH COURT, BOTH IN FAVOUR AND AGAINST ALLOWABILITY OF DEPRECIATION. THE HON'BLE D ELHI HIGH COURT, IN THE CASE OF DIRECTOR OF INCOME TAX (EXEMPTION) VS. CHARANJIV CHARITABLE TRUST [2014] 267 CTR 305, HAVE HELD THAT IF THE COST OF THE ASSET HAS BEEN ALLOWED AS DEDUCTION BY WAY OF A PPLICATION OF INCOME, THEN DEPRECIATION ON THE SAME ASSET CANNOT BE ALLOWED IN COMPUTATION OF INCOME OF THE TRUST (PARA 30). HOWEV ER, IN A SUBSEQUENT DECISION, THE HON'BLE DELHI HIGH COURT, IN THE CASE OF DIT(EXEMPTION) VS. INDRAPRASTHA CANCER SOCIETY IN I T A NO. 240, 348, 406, 463 & 464/2014 VIDE THE ORDER DATED 18.11 .2014, HAVE HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION IN THE CASE OF CHARITABLE OR RELIGIOUS INSTITUTION ALSO. 4.1.6 A BARE READING OF THE PROVISIONS RELATING T O INCOME FROM PROPERTY HELD FOR CHARITABLE PURPOSES SHOWS THAT DE PRECIATION PER SE WAS NOT ALLOWED AS A DEDUCTION IN THE CASE OF CHARI TABLE OR RELIGIOUS INSTITUTIONS. THIS ISSUE HAS BEEN LAID TO REST BY A MENDMENT TO SECTION 11 BY THE FINANCE (NO. 2) ACT, 2014 WHICH I S EFFECTIVE FROM THE ASSESSMENT YEAR 2015-16 AND SUBSEQUENT YEARS. H OWEVER, RELYING ON THE LATEST DECISION OF THE HON'BLE DELHI HIGH COURT IN THE MATTER OF DIT (EXEMPTION) VS. INDRAPRASTHA CANCER S OCIETY (SUPRA), THE CLAIM OF DEPRECIATION OF THE APPELLANT IS ALLOW ED. GROUND OFP APPEAL NO. 1 HENCE, ALLOWED. 4.1 WE FIND THAT THE LD. CIT(A) FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT (EXEMPTION) VS INDRAPRASTHA CANCER SOCIETY (SUPRA) , HAS ALLOWED THE CLAIM 5 ITA NO.645/DEL./2017 OF THE ASSESSEE OF THE DEPRECIATION, DESPITE CLAIMI NG BY ASSESSEE OF CAPITAL EXPENDITURE CORRESPONDING TO THE DEPRECI ATION AS APPLICATION OF FUNDS FOR CHARITABLE PURPOSES WHILE CALCULATING EXCESS OF INCOME OVER EXPENDITURE IN TERMS OF SECTI ON 11 OF THE ACT. WE MAY ALSO LIKE TO MENTION THAT HONBLE SUPRE ME COURT IN THE CASE OF RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA REPORTED IN 402 ITR 441(SC) HAS ALLOWED BENEFIT OF THE DEPRECIATION WHILE CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT. THE RELEVANT FINDING OF THE HONBLE SUPREME CO URT IS REPRODUCED AS UNDER: 1. THESE ARE THE PETITIONS AND APPEALS FILED BY TH E INCOME TAX DEPARTMENT AGAINST THE ORDERS PASSED BY VARIOUS HIG H COURTS GRANTING BENEFIT OF DEPRECIATION ON THE ASSETS ACQU IRED BY THE RESPONDENTS-ASSESSEES. IT IS A MATTER OF RECORD THA T ALL THE ASSESSEES ARE CHARITABLE INSTITUTIONS REGISTERED UN DER SECTION 12A OF THE INCOME TAX ACT (HEREINAFTER REFERRED TO AS 'ACT '). FOR THIS REASON, IN THE PREVIOUS YEAR TO THE YEAR WITH WHICH WE ARE CONCERNED AND IN WHICH YEAR THE DEPRECIATION WAS CLAIMED, THE ENTIRE EXPENDITURE INCURRED FOR ACQUISITION OF CAPITAL ASSETS WAS TREA TED AS APPLICATION OF INCOME FOR CHARITABLE PURUPOSES UNDER SECTION 11 (1)(A) OF THE ACT. THE VIEW TAKEN BY THE ASSESSING OFFICER IN DISALLOW ING THE DEPRECIATION WHICH WAS CLAIMED UNDER SECTION 32 OF THE ACT WAS THAT ONCE THE CAPITAL EXPENDITURE IS TREATED AS APP LICATION OF INCOME FOR CHARITABLE PURPOSES, THE ASSESSEES HAD VIRTUALL Y ENJOYED A 100 PER CENT WRITE OFF OF THE COST OF ASSETS AND, THERE FORE, THE GRANT OF DEPRECIATION WOULD AMOUNT TO GIVING DOUBLE BENEFIT TO THE ASSESSEE. THOUGH IT APPEARS THAT IN MOST OF THESE CASES, THE CIT (APPEALS) HAD AFFIRMED THE VIEW, BUT THE ITAT REVERSED THE SAME A ND THE HIGH COURTS HAVE ACCEPTED THE DECISION OF THE ITAT THERE BY DISMISSING THE APPEALS OF THE INCOME TAX DEPARTMENT. FROM THE JUDGMENTS OF THE HIGH COURTS, IT CAN BE DISCERNED THAT THE HIGH COURTS HAVE PRIMARILY FOLLOWED THE JUDGMENT OF THE BOMBAY HIGH COURT IN 'COMMISSIONER OF INCOME TAX V. INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS)' [(2003) 131 TAXMAN 386 (BOMBAY)]. IN THE SAID JUDGMENT, THE CONTENTION OF THE DEPARTMENT PREDICAT ED ON DOUBLE BENEFIT WAS TURNED DOWN IN THE FOLLOWING MANNER: 3. AS STATED ABOVE, THE FIRST QUESTION WHICH REQUIR ES CONSIDERATION BY THIS COURT IS: WHETHER DEPRECIATIO N WAS ALLOWABLE ON THE ASSETS, THE COST OF WHICH HAS BEEN FULLY 6 ITA NO.645/DEL./2017 ALLOWED AS APPLICATION OF INCOME UNDER SECTION 11 I N THE PAST YEARS? IN THE CASE OF CIT V. MUNISUVRAT JAIN 1994 T AX LAW REPORTER, 1084 THE FACTS WERE AS FOLLOWS. THE ASSES SEE WAS A CHARITABLE TRUST. IT WAS REGISTERED AS A PUBLIC CHA RITABLE TRUST. IT WAS ALSO REGISTERED WITH THE COMMISSIONER OF INCOME TAX, PUNE. THE ASSESSEE DERIVED INCOME FROM THE TEM PLE PROPERTY WHICH WAS A TRUST PROPERTY. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEARS 1977-78 , 1978-79 AND 1979-80, THE ASSESSEE CLAIMED DEPRECIAT ION ON THE VALUE OF THE BUILDING @2% AND THEY ALSO CLAIME D DEPRECIATION ON FURNITURE @ 5%. THE QUESTION WHICH AROSE BEFORE THE COURT FOR DETERMINATION WAS : WHETHER DE PRECIATION COULD BE DENIED TO THE ASSESSEE, AS EXPENDITURE ON ACQUISITION OF THE ASSETS HAD BEEN TREATED AS APPLICATION OF IN COME IN THE YEAR OF ACQUISITION? IT WAS HELD BY THE BOMBAY HIGH COURT THAT SECTION 11 OF THE INCOME TAX ACT MAKES PROVISI ON IN RESPECT OF COMPUTATION OF INCOME OF THE TRUST FROM THE PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES AND IT AL SO PROVIDES FOR APPLICATION AND ACCUMULATION OF INCOME. ON THE OTHER HAND, SECTION 28 OF THE INCOME TAX ACT DEALS WITH CHARGEABILITY OF INCOME FROM PROFITS AND GAINS OF B USINESS AND SECTION 29 PROVIDES THAT INCOME FROM PROFITS AND GA INS OF BUSINESS SHALL BE COMPUTED IN ACCORDANCE WITH SECTI ON 30 TO SECTION 43C. THAT, SECTION 32(1) OF THE ACT PROVIDE S FOR DEPRECIATION IN RESPECT OF BUILDING, PLANT AND MACH INERY OWNED BY THE ASSESSEE AND USED FOR BUSINESS PURPOSE S. IT FURTHER PROVIDES FOR DEDUCTION SUBJECT TO SECTION 3 4. IN THAT MATTER ALSO, A SIMILAR ARGUMENT, AS IN THE PRESENT CASE, WAS ADVANCED ON BEHALF OF THE REVENUE, NAMELY, THAT DEP RECIATION CAN BE ALLOWED AS DEDUCTION ONLY UNDER SECTION 32 O F THE INCOME TAX ACT AND NOT UNDER GENERAL PRINCIPLES. TH E COURT REJECTED THIS ARGUMENT. IT WAS HELD THAT NORMAL DEP RECIATION CAN BE CONSIDERED AS A LEGITIMATE DEDUCTION IN COMP UTING THE REAL INCOME OF THE ASSESSEE ON GENERAL PRINCIPLES O R UNDER SECTION 11(1)(A) OF THE INCOME TAX ACT THE COURT RE JECTED THE ARGUMENT ON BEHALF OF THE REVENUE THAT SECTION 32OF THE INCOME TAX ACT WAS THE ONLY SECTION GRANTING BENEFI T OF DEDUCTION ON ACCOUNT OF DEPRECIATION. IT WAS HELD T HAT INCOME OF A CHARITABLE TRUST DERIVED FORM BUILDING, PLANT AND MACHINERY AND FURNITURE WAS LIABLE TO BE COMPUTED I N NORMAL COMMERCIAL MANNER ALTHOUGH THE TRUST MAY NOT BE CAR RYING ON ANY BUSINESS AND THE ASSETS IN RESPECT WHEREOF DEPR ECIATION IS CLAIMED MAY NOT BE BUSINESS ASSETS. IN ALL SUCH CASES, SECTION 32 OF THE INCOME TAX ACT PROVIDING FOR DEPR ECIATION FOR COMPUTATION OF INCOME DERIVED FROM BUSINESS OR PROF ESSION IS NOT APPLICABLE. HOWEVER, THE INCOME OF THE TRUST IS REQUIRED TO BE COMPUTED UNDER SECTION 11 ON COMMERCIAL PRINCIPL ES AFTER PROVIDING FOR ALLOWANCE FOR NORMAL DEPRECIATION AND DEDUCTION 7 ITA NO.645/DEL./2017 THEREOF FROM GROSS INCOME OF THE TRUST. IN VIEW OF THE AFORESATATED JUDGMENT OF THE BOMBAY HIGH CURT, WE A NSWER QUESTION NO. 1 IN THE AFFIRMATIVE I.E., IN FAVOUR O F THE ASSESSEE AND AGAINST THE DEPARTMENT. 4. QUESTION NO. 2 HEREIN IS IDENTICAL TO THE QUESTI ON WHICH WAS RAISED BEFORE THE BOMBAY HIGH COURT IN THE CASE OF DIRECTOR OF INCOME-TAX (EXEMPTION) V. FRAMJEECAWASJEE INSTITUTE [1993] 109 CTR 463. IN THAT CASE, THE FACTS WERE AS FOLLOW S: THE ASSESSEE WAS THE TRUST. IT DERIVED ITS INCOME FROM DEPRECIABLE ASSETS. THE ASSESSEE TOOK INTO ACCOUNT DEPRECIATION ON THOSE ASSETS IN COMPUTING THE INCOME OF THE TRUST. THE IT O HELD THAT DEPRECIATION COULD NOT BE TAKEN INTO ACCOUNT BECAUS E, FULL CAPITAL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISITION OF THE ASSETS. THE ASSESSEE WENT IN APP EAL BEFORE THE ASSISTANT APPELLATE COMMISSIONER. THE APPEAL WA S REJECTED. THE TRIBUNAL, HOWEVER, TOOK THE VIEW THAT WHEN THE ITO STATED THAT FULL EXPENDITURE HAD BEEN ALLOWED I N THE YEAR OF ACQUISITION OF THE ASSETS, WHAT HE REALLY MEANT WAS THAT THE AMOUNT SPENT ON ACQUIRING THOSE ASSETS HAD BEEN TRE ATED AS 'APPLICATION OF INCOME' OF THE TRUST IN THE YEAR IN WHICH THE INCOME WAS SPENT IN ACQUIRING THOSE ASSETS. THIS DI D NOT MEAN THAT IN COMPUTING INCOME FROM THOSE ASSETS IN SUBSEQUENT YEARS, DEPRECIATION IN RESPECT OF THOSE ASSETS CANNOT BE TAKEN INTO ACCOUNT. THIS VIEW OF THE TRIB UNAL HAS BEEN CONFIRMED BY THE BOMBAY HIGH COURT IN THE ABOV E JUDGMENT. HENCE, QUESTION NO. 2 IS COVERED BY THE D ECISION OF THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. CONSEQ UENTLY, QUESTION NO. 2 IS ANSWERED IN THE AFFIRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. AFTER HEARING LEARNED COUNSEL FOR THE PARTIES, WE A RE OF THE OPINION THAT THE AFORESAID VIEW TAKEN BY THE BOMBAY HIGH CO URT CORRECTLY STATES THE PRINCIPLES OF LAW AND THERE IS NO NEED T O INTERFERE WITH THE SAME. IT MAY BE MENTIONED THAT MOST OF THE HIGH COURTS HA VE TAKEN THE AFORESAID VIEW WITH ONLY EXCEPTION THERETO BY THE H IGH COURT OF KERALA WHICH HAS TAKEN A CONTRARY VIEW IN 'LISSIE M EDICAL INSTITUTIONS V. COMMISSIONER OF INCOME TAX'. IT MAY ALSO BE MENTIONED AT THIS STAGE THAT THE LEG ISLATURE, REALISING THAT THERE WAS NO SPECIFIC PROVISION IN THIS BEHALF IN THE INCOME TAX ACT, HAS MADE AMENDMENT IN SECTION 11(6) OF THE ACT VIDE FINANCE ACT NO. 2/2014 WHICH BECAME EFFECTIVE FROM THE ASSE SSMENT YEAR 2015-2016. THE DELHI HIGH COURT HAS TAKEN THE VIEW AND RIGHTLY SO, THAT THE SAID AMENDMENT IS PROSPECTIVE IN NATURE. 8 ITA NO.645/DEL./2017 IT ALSO FOLLOWS THAT ONCE ASSESSEE IS ALLOWED DEPRE CIATION, HE SHALL BE ENTITLED TO CARRY FORWARD THE DEPRECIATION AS WE LL. 4.2 IN VIEW OF THE ABOVE, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE IN FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, AND ACCORDIN GLY, WE UPHOLD THE SAME. THE GROUND OF THE APPEAL OF THE RE VENUE IS ACCORDINGLY DISMISSED. 5. REGARDING SECOND GROUND, THE FINDING OF THE LD. CI T(A) ON THE ISSUE IN DISPUTE IS REPRODUCED AS UNDER: 4.2.1 I HAVE CONSIDERED THE ORDER OF THE ASSESSI NG OFFICER AND SUBMISSIONS OF THE APPELLANT. ASSESSING OFFICER HAS DENIED CARRY FORWARD OF DEFICIT BUT HAS NOT CITED ANY REASONS FO R THIS DECISION. CHARITABLE TRUSTS OR INSTITUTIONS ARE GOVERNED BY T HE PROVISIONS OF SECTIONS 11, 12, 12A, 12AA AND 13 UNDER CHAPTER III OF THE INCOME- TAX ACT. THESE SECTIONS CONSTITUTE A COMPLETE CODE GOVERNING THE GRANT, CANCELLATION OR WITHDRAWAL OF REGISTRATION, PROVIDING EXEMPTION OF INCOME AND ALSO CONDITIONS SUBJECT TO WHICH A CHARITABLE TRUST OR INSTITUTION IS REQUIRED TO FUNC TION IN ORDER TO BE ELIGIBLE FOR EXEMPTION. IN THESE SECTIONS, THERE IS NO PROVISION FOR ADJUSTMENT OF BROUGHT FORWARD LOSS OR CARRY FORWARD OF LOSS OF CURRENT YEAR TO BE ADJUSTED AGAINST THE INCOME OF S UBSEQUENT YEAR. HOWEVER, VARIOUS HON'BLE HIGH COURT HAVE TAKEN A VI EW THAT INCOME IS TO BE COMPUTED IN ACCORDANCE WITH COMMERCIAL PRI NCIPLES AND AS SUCH ADJUSTMENT OF BROUGHT FORWARD LOSS/DEFICIT AND CARRY FORWARD LOSS/DEFICIT IS TO BE ALLOWED. SUCH DECISIONS, SOME OF WHICH HAVE ALSO BEEN RELIED UPON BY THE APPELLANT, ARE AS UNDE R: I. CIT VS. MAHARANA OFMEWAR CHARITABLE FOUNDATION, 164 ITR 439 (RAJ) 1987. II. CIT VS. SHRI PLOT SWETAMABER MURTI PUJAK JAIN M ANDAL, 211 ITR 293 (GUJ) 1995. ILL. CIT VS. MATRISEWA TRUST, 242 ITR 20 (MAD) 2000 W. GOVINDU NAICKER ESTATE VS. ADIT, 248 ITR 110 (BO M) 2003. V. CIT VS. INSTITUTE OF BANKING, 264 ITR 110 (BOM) 2003. VI. DIT VS. RAGHUVANSLII CHARITABLE TRUST, 197 TAXM ANN.COM 170 (DELHI) 2011 VII CIT VS. GUJARAT SAMAJ, 349 ITR 559 (MP) 2012 9 ITA NO.645/DEL./2017 5.1 WE FIND THAT LD. CIT(A) WHILE ARRIVING AT HIS FIND ING, HAS FOLLOWED DECISION OF THE HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF DIT VS RAGHUVANSHI CHARITABLE TRUST (SUPRA), WHICH IS A BINDING PRECEDENT. IN OUR OPINION, THERE IS NO ERRO R IN THE ORDER OF LD. CIT(A) ON THE ISSUE IN DISPUTE, AND ACCORDINGLY , WE UPHOLD THE SAME. THE GROUND OF THE APPEAL OF THE REVENUE IS AC CORDINGLY DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MAY, 2021 SD/- SD/- (KULDIP SINGH) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 TH MAY, 2021. RK/- (DTDS) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI