The ACIT, 1(1), Bhopal V. M/s Globus Institute of Engineering and Technology, Bhopal

ITA 70/IND/2013

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1070 (ITAT-INDORE)
• Duration Of Justice: 5 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-11-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S MANTRI
• Assessee Lawyers: N D PATWA; AASHISH GOYAL
• Keywords: Depreciation; Charitable institution; Initiation of penalty proceedings
• Section: 32; 12; 271(1)(c); 11; 15; 143(3); 142(1); 153A; 234B; 40(a)(ia); 12A; 12AA

Judgement Text

[IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER IT(SS)A NOS.30&31/IND/2013 ASSESSMENT YEARS: 2004-05 & 2005-06 ACIT - 1(1) BHOPAL / VS. M/S. GLOBUS INSTITUTE OF ENGINEERING AND TECHNOLOGY BHOPAL ( APPELLANT ) ( REVENUE ) P.A. NO. AAAAG1256B ITA NOS.70 TO 73/IND/2013 ASSESSMENT YEARS: 2007-08 TO 2010-11 ACIT - 1(1) BHOPAL / VS. M/S. GLOBUS INSTITUTE OF ENGINEERING AND TECHNOLOGY BHOPAL (APPELLANT) (REVENUE ) P.A. NO. AAAAG1256B [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 2 IT(SS)A NO.54/IND/2013 ASSESSMENT YEAR: 2006-07 M/S. GLOBUS INSTITUTE OF ENGINEERING AND TECHNOLOGY BHOPAL / VS. ACIT - 1(1) BHOPAL (APPELLANT) (REVENUE ) APPELLA NT BY SHRI S.S. MANTRI, D.R. RESPONDENT BY SHRI N.D. PATWA & SHRI ASHISH GOYAL, A.RS DATE OF HEARING: 05.11.2018 DATE OF PRONOUNCEMENT: 30.11.2018 / O R D E R PER KUL BHARAT, J.M: THIS BUNCH OF 7 APPEALS, OUT OF WHICH, 6 BY THE REVENUE AND 1 BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-1, BHOPAL DATED 11.12.2012. AS THE COMMON GROUNDS WERE RAISED, ALL THE APPEALS WERE TAKEN UP TOGETHER AND ARE BEING DISPOSED OFF BY WAY THIS CONSOLIDATED ORDER. [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 3 2. FIRST WE TAKE UP REVENUES APPEAL PERTAINING TO THE ASSESSMENT YEAR 2004-05 IN IT(SS)A NO.30/IND/2013. T HE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN 1. DELETING THE ADDITION OF RS.4,24,600/- MADE ON ACCO UNT OF BUS HIRING CHARGES BY THE ASSESSING OFFICER. 2. ALLOWING THE APPLICABILITY OF SECTION 11 & 12 OF TH E I.T. ACT AS MADE BENEFIT HAD BEEN PASSED ON TO THE PERSONS COVE REDC U/S 13(3) OF THE I.T. ACT. 3. THE FACTS GIVING RISE TO THIS APPEAL ARE THAT THE ASSESSEE IS A SOCIETY REGISTERED WITH REGISTRAR OF FI RMS AND SOCIETIES, BHOPAL VIDE REGISTRATION NO.9563/2001 DATED 23.6.2001 AND A SEARCH & SEIZURE OPERATION WAS CARRIED OUT ON THE PREMISES OF ASSESSEE BY THE REVENUE ON 23.7.2009. SUBSEQUENTLY, THE A.O. ISSUED NOTICE U/S 153A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS TH E ACT) DATED 30.3.2011 REQUIRING THE ASSESSEE TO FURNISH RETU RN OF INCOME. IN RESPONSE THERETO, THE ASSESSEE FURNISHED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 U/S [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 4 153A OF THE ACT DECLARING THE SAME AT NIL AS WAS DECLARED IN THE ORIGINAL RETURN. THE A.O. AFTER ISSUING NOTIC ES U/S 143(2) AND 142(1) OF THE ACT, COMPLETED ASSESSMENT U/ S 153A OF THE ACT ON 23.12.2011 DETERMINING TOTAL TAXA BLE INCOME AT RS.1,73,11,267/-. THE ADDITIONS WERE MADE O N ACCOUNT OF EXCESS OF INCOME OVER EXPENDITURE OF RS.1,68,86,667/- AND DISALLOWANCE OF BUS HIRE CHARGES O F RS.4,24,600/-. IT IS PERTINENT TO NOTE THAT IN THIS CASE, THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETE D VIDE ORDER DATED 29.12.2016 IN THE ORIGINAL ASSESSMENT ORDER AS WELL. THE ASSESSING OFFICER HAS DISALLOWED C LAIM OF THE ASSESSEE U/S 11 & 12 OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 15 OF THE ACT. IN THAT, THE M ATTER TRAVELLED UP TO THE STAGE OF TRIBUNAL AND THE TRIBUNAL H AD RULED IN FAVOUR OF THE ASSESSEE. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 23.12.2011 , THE ASSESSEE SOCIETY PREFERRED AN APPEAL BEFORE LD. CI T(A), [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 5 WHO AFTER CONSIDERING THE SUBMISSIONS AND FOLLOWING T HE DECISION OF THE TRIBUNAL IN ORIGINAL PROCEEDINGS DELE TED THE ADDITIONS. AGAINST THIS, THE REVENUE IS IN APPEAL. 5. LD. D.R. SUPPORTED THE ORDER OF THE ASSESSING OFF ICER AND SUBMITTED THAT LD. CIT(A) WAS NOT JUSTIFIED IN DEL ETING THE ADDITIONS. HE FURTHER SUBMITTED THAT BENEFIT OF SECTIONS 11 & 12 OF THE ACT HAS RIGHTLY BEEN DENIED TO THE ASS ESSEE SOCIETY AS THE FUNDS OF THE SOCIETY HAVE BEEN UTILISE D FOR THE BENEFIT OF THE PERSONS RELATED TO OFFICE BEARER OF TH E SOCIETY. HE SUBMITTED THAT THE LD. CIT(A) OUGHT TO HAVE AFFIRM ED THE ORDER OF THE A.O. 6. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE OPPO SED THE SUBMISSIONS OF THE LD. D.R. AND SUPPORTED THE OR DER OF THE LD. CIT(A) AND SUBMITTED THAT THE ISSUES ARE COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIBU NAL IN ITA NO.26 & 448/IND/2007 FOR THE ASSESSMENT YEARS [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 6 2003-04 & 2004-05 VIDE ORDER DATED 20.1.2010 AND LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BASIS OF DENYING THE BENEFIT OF SECTIONS 11 & 12 OF THE ACT IS SAME AS WAS IN THE ORIGINAL ASSESSMENT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS CONTENDED THAT THE S IMILAR ADDITIONS WERE MADE DURING THE COURSE OF ORIGINAL ASSESSMENT ON THE SAME BASIS. IT IS CONTENDED THAT BOT H THE ISSUES WERE EXAMINED BY THE TRIBUNAL IN ITA NOS.2 6 & 448/IND/2007 (SUPRA) IN ASSESSEES CASE. LD. D.R. HA S FAIRLY CONCEDED THE FACT THAT THE BASIS OF DENYING THE BENEFIT OF SECTIONS 11 & 12 OF THE ACT ARE SAME AS WAS IN THE ORIGINAL PROCEEDINGS. WE FIND THAT THE TRIBUNAL I N ITA NOS.26 & 448/IND/2007 HAS DECIDED THE ISSUE IN PARA-1 3 AS UNDER: [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 7 13. IT IS NOTED THAT THE CHARGES RECEIVED BY THE A SSESSEE SOCIETY ON ACCOUNT OF BUS SERVICES HAVE BEEN EQUALLY SHARED BE TWEEN THE ASSESSEE SOCIETY AND M/S. SCPL AS BOTH THE PARTIES OPERATED TWO BUSE S EACH. THE DIFFERENCE BETWEEN THE EXPENSES INCURRED BY THE ASSESSEE SOCIE TY AND SUCH COMPANY IS NOT SIGNIFICANT. EVEN OTHERWISE, THE SAME CANNOT BE PR OPER BASIS TO FIND OUT THE ELEMENT OF UNDUE BENEFIT, BECAUSE BOTH ARE SEPARATE LEGAL ENTITIES HAVING THEIR OWN BUSINESS MODELS/STRUCTURES. FURTHER, IT IS NOT THE CASE OF THE A.O. THAT EXPENSES INCURRED BY M/S. SCPL HAVE BEEN DEBITED IN THE BOOKS OF THE ASSESSEE SOCIETY. THUS, IN OUR VIEW, THE ORDER OF THE LD. C IT(A) IS REASONABLE AND CORRECT IN LAW. HENCE, WE DISMISS THIS GROUND OF THE REVENUE. FURTHER, THE TRIBUNAL IN PARA-42 HAS DECIDED THE ISSU E AS UNDER: 42. IT IS NOTED THAT EVEN IF THE EXPENSES CLAIMED BY TH E ASSESSEE SOCIETY ARE DISTRIBUTED TOWARDS BUS OPERAT ED BY M/S. SCPL, THE AMOUNT PAID BY THE ASSESSEE SOCIETY TO SU CH CONCERN PER BUS PER MONTH COMES TO RS.27,500/- APPROXIMATELY, W HICH CANNOT BE CONSIDERED AS UNREASONABLE OR EXCESSIVE. WE FUR THER CLARIFY THAT IN ANY CASE, THIS AMOUNT WOULD HAVE BEEN ALLOWED TO THE ASSESSEE SOCIETY, WHETHER IT IS SHOWN AS ITS EXPENSES OR BY WAY OF HIRE CHARGES TO THE SAID CONCERN FOR OPERATING BUSES ON BEHALF OF THE ASSESSEE SOCIETY. ACCORDINGLY, WE FIND NO MERIT IN THIS GROUND OF THE REVENUE. THE SAME IS, THEREFORE, DISMISSED. 8. THE REVENUE HAS NOT BROUGHT TO OUR NOTICE ANY CHAN GE IN THE FACTS AND CIRCUMSTANCES OR ANY OTHER BINDING PRECEDENT. WE THEREFORE, FOLLOWING THE DECISION OF THE TRIBUNAL IN ITA NOS.26 & 448/IND/2007 (SUPRA) DO NOT SEE ANY MERIT IN THE GROUNDS RAISED BY THE REVENUE. BOTH THE GROUNDS OF THE REVENUES APPEAL ARE DISMISSED. [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 8 9. IN THE RESULT, APPEAL OF THE REVENUE IN IT(SS)A NO.30/IND/2013 IS DISMISSED. 10. NOW WE TAKE UP THE REVENUES APPEAL IN IT(SS)A NO.31/IND/2013 FOR THE ASSESSMENT YEAR 2005-06. GROU ND NOS.1 & 3 ARE IDENTICAL AS WERE IN IT(SS)A NO.30/IND/2 013. GROUND NO.2 IS WITH REGARD TO THE ADDITION DELETED IN RESPECT OF THE HOSTEL RENT. BOTH THE PARTIES HAVE ADO PTED THE SAME ARGUMENT AS WERE IN IT(SS)A NO.30/IND/2013 IN RESPECT OF THE GROUNDS. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FACTS ARE IDENTICAL AND ALL THESE GROUNDS ARE COVERED BY THE DECISION OF THE TRI BUNAL IN ITA NOS.26 & 448/IND/2007 (SUPRA). 11. LD. D.R. HAS NOT REBUTTED THE SUBMISSIONS. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. APROPOS TO GROUND NOS.1 & 3 OUR [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 9 FINDING IN IT(SS)A NO.30/IND/2013 AS GIVEN IN PARA 8 O F THIS ORDER WOULD APPLY MUTATIS MUTANDIS TO THIS APPEAL AS WELL AND ACCORDINGLY DISMISSED. 13. GROUND NO.2 IS IN RESPECT OF DELETING THE ADDIT ION OF RS.2,40,000/- MADE ON ACCOUNT OF HOSTEL RENT BY T HE A.O. IT IS CONTENDED BY THE LD. COUNSEL FOR THE ASS ESSEE THAT THIS GROUND IS COVERED BY THE DECISION OF THE T RIBUNAL IN ITA NOS.26 & 448/IND/2007 (SUPRA), WHEREIN THE HON'BLE TRIBUNAL EXAMINED THE ALLOWABILITY OF THE HOSTE L RENT AND IN PARA 18, LD. A.R. HAS FAIRLY CONCEDED THIS F ACT. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE TRIBUNAL I N ITA NOS.26 & 448/IND/2007 HAS DECIDED THE ISSUE IN PARA-1 8 BY OBSERVING AS UNDER: [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 10 18. IT IS NOTED THAT THERE IS NO DIFFERENCE BETWEEN CHA RGES PAID BY THE STUDENTS TO THE ASSESSEE SOCIETY FOR HO STEL FACILITIES AND TO SUCH PARTIES. HENCE, IT CANNOT BE SAID THAT ANY UNDUE BENEFIT HAS BEEN GIVEN TO SUCH PERSONS BY THE ASSESSEE SOCIETY. WE ALSO FIND THAT BASIS ADOPTED BY THE ASSESSING OFFICER FOR CAL CULATING SUCH BENEFIT IS NOT CORRECT. ACCORDINGLY, WE HOLD THAT THE ORDER OF THE LD. CIT(A) IS CORRECT IN LAW. HENCE, WE DISMISS THIS G ROUND OF THE REVENUE ALSO. 15. THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES. THE REVENUE HAS NOT BROUGHT ANY OTHER BINDING PRECEDENT ON THIS ISSUE. WE THEREFORE, FOL LOWING DECISION IN ITA NOS.26 & 448/IND/2007 (SUPRA), DISMI SS THE GROUND RAISED BY THE REVENUE. 16. IN THE RESULT, APPEAL OF THE REVENUE IN IT(SS)A NO.31/IND/2013 IS DISMISSED. 17. NOW WE TAKE UP APPEAL IN IT(SS)A NO.54/IND/2013, PERTAINING TO THE ASSESSMENT YEAR 2006 - 07. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ORDER OF THE ASSESSING OFFICER TREATING EXCESS OF INCOME OVER EXPENDITURE AS PER INCOME & EXPENDITURE OF RS.1,46,38,601/- AS TAXABLE BY INVOKING THE PROVISIONS OF SECTION 13 OF THE INCOME TAX ACT WITHOUT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE A ND WITHOUT [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 11 CONSIDERING THE FACT THAT THE INCOME OF THE SOCIETY IS EXEMPTED U/S 11 & 12 OF THE ACT AND THERE IS NO VIOLATION U/S 13 AS ALLEGED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ORDER OF THE ASSESSING OFFICER BY DISALLOWING RS.12,797/- OUT OF TELEPHONE EXPENSES BEING THE SAME WERE USED BY SHRI SUDEEP MA HESHWARI WITHOUT ACCEPTING THE EXPLANATION OFFERED BY THE AS SESSEE THAT ENTIRE EXPENDITURE IS INCURRED FOR THE PURPOSE OF T HE SOCIETY AND WITHOUT APPRECIATING THE FACT THAT THE TELEPHONE BI LLS ARE IN THE NAME OF THE SOCIETY AND HENCE PROVISIONS OF SECTION 13 A RE NOT APPLICABLE. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMED THE ORDER OF THE ASSESSING OFFICER BY DISALLOWING THE INTERES T OF RS.15,49,492/- U/S 40(A)(INTER ALIA,) FOR NON DEDUC TION OF TDS WITHOUT CONSIDERING THE EXPLANATION OFFERED BY THE ASSESSEE AND WITHOUT CONSIDERING THE FACT THAT THE INTEREST WAS NOT PAID TO INDIVIDUAL MEMBER BUT WAS PAID TO BANK THROUGH THE ACCOUNT OF MEMBERS OF THE SOCIETY AND HENCE, THERE IS NO LIABI LITY OF DEDUCTION OF TDS ON THE SAME. 4. THAT UNDER THE CIRCUMSTANCES, INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) IS NOT JUSTIFIED. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF PENAL TY PROCEEDINGS U/S 271(1)(C) IS NOT JUSTIFIED. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO URGE, TO ALTER OR TO AMEND ANY OF THE GROUND OF APPEAL ON OR BEFORE THE DATE O F HEARING. 18. FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT TH E ASSESSING OFFICER DECLINED BENEFIT OF SECTIONS 11 & 12 OF THE ACT AND COMPUTED THE INCOME OF THE ASSESSEE SOCIETY B Y MAKING ADDITIONS IN RESPECT OF EXCESS OF INCOME OVER EXPENDITURE OF RS.1,46,38,301/-, DISALLOWANCE OUT OF BUS HIRE CHARGES OF RS.48,000/-, DISALLOWANCE OUT OF TELEP HONE [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 12 EXPENSES OF RS.12,797/- AND DISALLOWANCE OF INTEREST B Y INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE A CT OF RS.15,49,492/-. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). ON APPEAL, THE LD. CIT(A) PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE, THEREBY THE ADDITION MADE ON ACCOUNT OF BUS HIRE CHARGES WAS DELETED. HOWEVER, OTHER ADDITIONS WERE CONFIRMED. NOW THE ASSESSEE IS IN FURTHER APPEAL. GROUND NO.1 OF THE ASSESSEES APPEAL IS AGAINST CONFIRMING THE ADDITION MADE ON ACCOUNT OF EXCESS OF INCOME OVER EXPENDITURE OF RS.1,46,38,601/-. LD. COUNSEL FOR THE ASSESSEE REIT ERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SYNOPSIS. HE SUBMITTED THAT THE BASIS FOR WHICH BENEFIT OF SECTION S 11 & 12 OF THE ACT IS DENIED IS AGAINST THE SETTLED POSITI ON OF LAW, EVEN AGAINST THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE. [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 13 19. ON THE CONTRARY, LD. D.R. SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW. 20. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LD. CIT(A) HAS DECIDE D THIS ISSUE IN PARA 6.4 AS UNDER: 6.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF T HE APPELLANT AND FACTS OF THE CASE. AS REGARDS THE PAYMENT FOR HIRING OF TWO BUSES FROM M/S. SUVEESHA CHEMICALS PVT. LTD., IT HAS BEEN HELD HEREINABOVE I N THIS ORDER THAT THE PAYMENTS MADE BY THE APPELLANT WERE FAIR AND REASONABLE AND WERE COMMENSURATE TO THE SERVICES PROVIDED BY THE COMPANY M/S. SUVEESHA CHEMICALS PVT . LTD. TO THE APPELLANT SOCIETY. THEREFORE, ON THIS ACCOUNT, THERE WAS NO VIOLATION OF SECTION 13 BY THE APPELLANT SOCIETY. HOWEVER, IN THE CASE OF PAYMENT OF BILLS OF THE MOB ILES ALLOTED TO SHRI SUDEEP MAHESHWARI, IT HAS BEEN HELD THAT THE APPELLANT HAD PROVIDED BENEFIT TO SHRI SUDEEP MAHESHWARI BY APPLYING THE INCOME OF THE SOCIETY FO R THE BENEFIT OF SHRI SUDEEP MAHESHWARI TO MEET HIS EXPENSES RELATING TO USE OF MOBILES FOR HIS PERSONAL AND OTHER BUSINESS PURPOSES. THUS, THERE WAS A VIOLATION OF SECTION 13 OF THE ACT. ACCORDINGLY, THE APPELLANT WAS NOT ENTITLED FOR BENEFITS U/S 11 & 12 OF THE ACT. IN THIS REGARD, REFERENCE CAN BE MADE TO THE DECIS ION OF HON'BLE KERALA HIGH COURT IN THE CASE OF AGAPPA CHILD CENTRE VS. CIT(1997) 22 6 ITR 211 (KER.). IN THIS CASE, THE ASSESSEE WAS A PUBLIC CHARITABLE TRUST. THE TRUST PURCHASED A REFRIGERATOR FOR ITS OWN USE, BEFORE THE COMPLETION OF THE TRUST BUILDINGS, AND KEPT THE SAID REFRIGERATOR AT THE RESIDENTIAL HOUSE OF THE MANAGING TRUSTEE OF THE TR UST. THE INCOME-TAX OFFICER REFUSED EXEMPTION TO THE TRUST UNDER SECTION 11 OF THE INCO ME-TAX ACT, 1961, ON THE GROUND THAT THE REFRIGERATOR WAS PURCHASED FOR THE USE OF THE M ANAGING TRUSTEE AND HE WAS USING IT AND THAT THE PROVISIONS OF SECTION 13(2)(B) OF THE ACT WERE ATTRACTED. THE TRIBUNAL CONFIRMED THIS, HOLDING THAT THE REFRIGERATOR WAS U SED FOR THE BENEFIT OF A PROHIBITED PERSON MENTIONED IN SECTION 13(3) OF THE ACT. ON A REFERENCE, THE HON'BLE HIGH COUIRT HELD THAT THE ASSESSEE WAS NOT ENTITLED FOR EXEMPTI ON U/S 11 OBSERVING AS UNDER (HEAD NOTES):- HELD, AFFIRMING THE VIEW OF THE TRIBUNAL, (I) THA T UNDER CLAUSE (B) OF SUB-SECTION (2) OF SECTION 13, THE LEGISLATIVE EMPHASIS IS ON AVAIL ABILITY OF THE PROPERTY FOR THE USE OF ANY [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 14 PERSON REFERRED TO IN SUB-SECTION (3) FOR ANY PERIO D DURING THE PREVIOUS YEAR IN QUESTION WITHOUT CHARGING ADEQUATE RENT OR COMPENSATION. TH E CHIEF TRUSTEE WAS ONE OF SUCH PROHIBITED PERSONS AND THE REFRIGERATOR REMAINED WI TH THE SAID PROHIBITED PERSON WITHOUT ANY INTENTION ON THE PART OF THE ASSESSEE, A PUBLIC CHARITABLE TRUST, TO CHARGE ADEQUATE RENT OR OTHER COMPENSATION WITH REGARD TO THE USE OF THE SAID REFRIGERATOR. IF ANY PROPERTY WAS MADE AVAILABLE FOR THE USE, IT WAS COVERED BY THE DEEMING PROVISION. (II) THAT IF ALL THE CLAUSES OF SUB-SECTION (2) OF SECTION 13 ARE ANALYSED, THE WORD PROPETY WOULD HAVE TO BE UDERSTOOD AS HAVING BEEN USED IN ITS OWN GENERIC SENSE TO INCLUDE MOVABLE AND IMMOVABLE PROIPERTY AND, THER EFORE, IN THE CONTEXT OF THE VARIOUS PROVISIONS OF SECTION 13(2) OF THE ACT, IT WAS NOT POSSIBLE TO UNDERSTAND THE TERM ANY LAND, BUILDING OR OTHER PROPERTY OF THE TRUST, ESP ECIALLY THE TERM OTHER PROPERTY IN THE SAME SENSE OF THE TERM LAND AND BUILDING, MEANING IMMOVABLE PROPERTY AND NOT INCLUDING MOVABLE PROPERTY. THEREFORE, SECTION 13( 2)(B) RELATES TO MOVABLE PROPERTY AS WELL AS IMMOVABLE PROPERTY. THUS, IN THE ABOVE MENTIONED CASE, THE REFRIGERATO R OF THE TRUST WAS PLACED IN THE RESIDENCE OF MANAGING TRUSTEE TILL TRUST BUILDING W AS READY AND IT WAS HELD THAT THE PROPERTY OF THE TRUST WAS MADE AVAILABLE FOR USE OF A PROHIBITED PERSON MENTIONED IN SECTION 13(3) OF THE ACT AND, THUS, IT WAS HELD THA T THE ASSESSEE WAS NOT ENTITLED TO EXEMPTION U/S 11 OF THE ACT. NOW, IN THE INSTANT C ASE OF THE APPELLANT SOCIETY, ADMITTEDLY TWO MOBILE PHONES OF THE SOCIETY WERE US ED FOR HIS PERSONAL AND OTHER BUSINESS PURPOSES BY SHRI SUDEEP MAHESHWARI WHO IS A PROHIBITED PERSON MENTIONED IN SECTION 13(3) OF THE ACT AND, THEREFORE, THE APPELL ANT WAS NOT ENTITLED TO EXEMPTION U/S 11 OF THE ACT. IT MAY BE NOTED THAT PROVISO TO CLA USE (G) OF SUB-SECTION (2) OF SECTION 13 READS AS UNDER: PROVIDED THAT THIS CLAUSE SHALL NOT APPLY WHERE T HE INCOME, OR THE VALUE OF THE PROPERTY OR, AS THE CASE MAY BE, THE AGGREGATE OF T HE INCOME AND THE VALUE OF THE PROPERTY, SO DIVERTED DOES NOT EXCEED ONE THOUSAND RUPEES. THUS, IF THE AMOUNT OF BENEFIT TO A PERSON REFERRE D TO IN SUB-SECTION (3) OF SECTION 13 IS OF ONE THOUSAND RUPEES OR MORE, THE PROVISION S OF SECTION 13 WILL BE ATTRACTED. HENCE, THE SUBMISSION OF THE APPELLANT THAT THE EXP ENDITURE INCURRED ON MOBILES USED BY SHRI SUDEEP MAHESHWARI WAS NOT VERY HIGH IS OF NO H ELP TO THE APPELLANT AS THE EXPENDITURE MET BY THE APPELLANT SOCIETY FOR HIS PE RSONAL AND OTHER BUSINESS PURPOSES WAS OF RS.12,797/- AS ESTIMATED BY THE A.O. WHICH W AS IN EXCESS OF ONE THOUSAND RUPEES. SINCE, THE APPELLANT VIOLATED THE PROVISIO NS OF SECTION 13, THE APPELLANT SOCIETY WAS NOT ENTITLED FOR EXEMPTION U/S 11 OF THE ACT. THE ASSESSING OFFICER WAS, THUS, JUSTIFIED IN NOT ALLOWING EXEMPTION U/S 11 TO THE A PPELLANT FOR A.Y. 2006-07. HENCE, THESE GROUNDS OF APPEAL ARE REJECTED. 21. WE FIND THAT THE ONLY BASIS OF NOT ALLOWING THE BE NEFIT OF SECTIONS 11 & 12 OF THE ACT IS THAT THE LD. CIT(A ) OBSERVED THAT THE PAYMENT OF MOBILE BILL OF SHRI SUD IP [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 15 MAHESWARI WAS NOT IN ACCORDANCE WITH LAW AND VIOLATED THE PROVISIONS OF SECTION 13 OF THE ACT. THERE IS NO D ISPUTE WITH REGARD TO THE FACT THAT SHRI SUDIP MAHESHWARI WAS LOOKING AFTER AFFAIRS OF THE SOCIETY. THE OBJECTION O F THE AUTHORITIES BELOW IS THAT THE MOBILE WAS NOT USED EXCLUSIVELY FOR DISCHARGING THE DUTIES OF SOCIETY. LOOKING TO THE FACTS OF THE PRESENT CASE, THE FINDING OF THE AUTH ORITIES BELOW IS CONTRARY TO THE SETTLED POSITION OF LAW. T HE LD. CIT(A) HAS APPLIED THE DECISION OF THE HON'BLE KERAL A HIGH COURT IN THE CASE OF AGAPPA CHILD CENTRE VS. CIT (1997 ) 226 ITR 211 (KER.). IN THAT CASE, THE PROPERTY BELON GING TO THE TRUST I.E. REFRIGERATOR WAS KEPT AT THE HOUSE OF O NE OF THE TRUSTEE. IN OUR VIEW, THE LD. CIT(A) HAS WRONGL Y APPLIED THE JUDGEMENT ON THE FACTS OF THE PRESENT CASE. AS IN THE PRESENT CASE, IT IS NOT DISPUTED THAT THE MOBILE WAS U TILISED FOR THE PURPOSE OF THE SOCIETY ALSO. IF THE REASONIN G GIVEN BY THE AUTHORITIES BELOW IS ACCEPTED, IT WOULD CAUSE [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 16 ABSURDITY AND ANY OTHER SMALL DEVIATION WOULD RESULT INT O REJECTION OF CLAIM U/S 11 & 12 OF THE ACT. IN OUR V IEW, THAT IS NOT THE INTENTION OF LAW. THEREFORE, WE DIRECT THE A.O. TO DELETE THIS ADDITION AND ALLOW CLAIM OF BENEFIT U/S 11 & 12 OF THE ACT. 22. GROUND NO.2 IS AGAINST CONFIRMING THE DISALLOWANCE OF RS.12,797/- IN RESPECT OF BILLS OF MOBILE WHICH WAS USED BY SHRI SUDIP MAHESHWARI. IT IS STATED THAT THE MOBILE W AS REGISTERED IN THE NAME OF THE SOCIETY. SHRI SUDIP MAHESHWARI IS THE OFFICE BEARER OF THE SOCIETY AND HAS B EEN CARRYING OUT THE AFFAIRS OF THE SOCIETY. THEREFORE, T HE EXPENDITURE IS RELATED TO THE SOCIETY. 23. LD. D.R. OPPOSED THE SUBMISSIONS. 24. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AFTER CONSIDERING THE FACT S THAT [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 17 SHRI SUDIP MAHESHWARI IS THE OFFICE BEARER OF THE SOC IETY WHO HAS BEEN LOOKING AFTER THE AFFAIRS OF THE SOCIETY, THE DISALLOWANCE IS BASED PURELY ON SUSPICION WITHOUT ANY CONCRETE MATERIAL ON RECORD, THEREFORE, WE DIRECT THE A.O. TO DELETE THIS DISALLOWANCE. 25. GROUND NO.3 IS AGAINST DISALLOWANCE OF INTEREST OF RS.15,49,492/- FOR INVOKING THE PROVISIONS OF SECTI ON 40(A)(IA) OF THE ACT. LD. COUNSEL FOR THE ASSESSEE RE ITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SYNOPSIS. LD . COUNSEL SUBMITTED THAT THE SOCIETY PAID INTEREST TO T RUSTEES OF RS.15,49,492/-. THIS AMOUNT WAS PAID TO THE SOCIE TY BY SHRI SUDEEP MAHESHWARI AND SMT. SHALINI MAHESHWARI BY OBTAINING OVER DRAFT FROM BANK IN THEIR PERSONAL CAPACIT Y AND GAVE THIS ENTIRE AMOUNT TO SOCIETY FOR CARRYING OUT ITS ACTIVITIES WITH THE AGREEMENT THAT WHATEVER INTEREST ON THIS OD ACCOUNT IS DISCHARGED SHALL BE PAID BY THE SOCIETY. THE SOCIETY HAS PAID INTEREST TO THE BANK WHICH WAS ROUTED [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 18 THROUGH THE ACCOUNTS OF SHRI SUDIP MAHESHWARI AND SMT. SHALINI MAHESHWARI. SINCE THE INTEREST WAS IN FACT PAID TO BANK, NO TDS HAS TO BE MADE ON SUCH PAYMENTS. 26. LD. D.R. OPPOSED THE SUBMISSIONS AND SUBMITTED T HAT THIS WAS THE INTERNAL ARRANGEMENT OF THE SOCIETY BUT TH E LAW REQUIRES DEDUCTION OF TAX, WHEREVER INTEREST IS PAID. 27. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDER S OF THE AUTHORITIES BELOW. LD. COUNSEL FOR THE ASSESS EE HAS RELIED UPON VARIOUS DECISIONS IN SUPPORT OF THE CONT ENTION THAT WHERE THE INCOME IS TO BE COMPUTED U/S 11 OF TH E ACT, PROVISION FOR DISALLOWANCE OF EXPENDITURE U/S 40(A)(IA) OF THE ACT IS NOT APPLICABLE. IN THIS REGARD, RELIANCE I S PLACED UPON THE COORDINATE BENCH DECISION IN THE CASE OF KOUNDINYA EDUCATIONAL SOCIETY VS. ACIT (2016) 71 TAXMANN.COM 6, (VISAKHAPATNAM TRIB.). THE COORDINATE BENCH IN PARA 20 OF THE DECISION HELD AS UNDER: [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 19 CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CAS E AND ALSO APPLYING THE RATIOS OF COORDINATE BENCH OF THIS TRI BUNAL, WE ARE OF THE OPINION THAT DISALLOWANCE U/S 40(A)(IA) OF THE ACT IS NOT APPLICABLE, WHEN INCOME IS COMPUTED UNDER THE PROVI SIONS OF SECTION 11 OF THE ACT. THEREFORE, WE DIRECT THE A.O. TO DE LETE THE ADDITIONS MADE U/S 40(A)(IA) OF THE ACT. 28. THE RELIANCE IS ALSO PLACED ON THE JUDGEMENT OF TH E HON'BLE MUMBAI HIGH COURT RENDERED IN THE CASE OF BOMBAY STOCK EXCHANGE LIMITED VS. DDIT (EXEMPTION) (2014) 52 TAXMANN.COM 29 (BOMBAY). THE HON'BLE HIGH COURT HELD IN FAVOUR OF THE ASSESSEE BY OBSERVING THAT IT IS CLEAR THAT SECTION 40 APPLIES TO DEDUCTIONS CLAIMED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFIT & GAINS OF BUSINESS OR PROFESSION. IN THE PRESENT CAS E, ADMISSIBLE INCOME EXEMPTED U/S 11 OF THE ACT. THE PETITIONER IS NOT CARRYING ON ANY BUSINESS AS HELD BY THE ITAT ON WHICH ORDER DATED 22.8.2006 IN RELATION TO TH E ASSESSMENT YEARS 1991-92 TO 1996-97. THIS ORDER HAS N OT BEEN CHALLENGED. IN THIS VIEW OF THE MATTER, WE HAVE NO HESITATION IN HOLDING THAT SECTION 40(A)(IA) OF THE ACT HAS NO [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 20 APPLICATION TO THE FACTS OF THE PRESENT CASE. THE IMPU GNED NOTICE ISSUED ON THE BASIS OF ABOVE WAS WHOLLY MISCONCEIVED. 29. IN VIEW OF THE ABOVE BINDING PRECEDENTS, WE HERE BY DIRECT THE ASSESSING OFFICER TO DELETE ADDITION MADE B Y INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 30. GROUND NO.4 IS AGAINST INITIATION OF PENALTY. THIS GROUND BEING PREMATURE IS DISMISSED. 31. GROUND NO.5 IS IN RESPECT OF CHARGING OF INTERES T U/S 234B AND 234D OF THE ACT. NO ARGUMENT IS MADE ON BEHAL F OF THE ASSESSEE. THEREFORE THIS GROUND OF THE ASSESS EES APPEAL IS DISMISSED. 32. GROUND NO.6 IS GENERAL IN NATURE AND NEEDS NO SEPARATE ADJUDICATION. THE SAME IS HEREBY DISMISSED. 33. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 21 34. NOW WE TAKE UP REVENUES APPEAL IN ITA NO.70/IND/2013. THE REVENUE HAS RAISED SOLITARY GROUN D, WHICH READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF DEPRECIATION OF RS.1,24,95,098/- DISALLOWED BY THE A.O. 35. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE TH AT THE A.O. WHILE MAKING ASSESSMENT ALLOWED THE CLAIM OF T HE ASSESSEE SOCIETY IN RESPECT OF THE DEPRECIATION. ON APPEAL, THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. AGAI NST THIS, REVENUE IS IN APPEAL. 36. LD. D.R. SUPPORTED THE ORDER OF THE A.O. AND SUBMITTED THAT LD. CIT(A) WAS NOT JUSTIFIED TO DELET E THE ADDITION. 37. ON THE CONTRARY, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ISSUE IS COVERED BY THE JUDGE MENTS OF HON'BLE SUPREME COURT AND JURISDICTIONAL HIGH COUR T IN FAVOUR OF THE ASSESSEE. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SYNOPSIS. THE SUBMISSIONS OF THE LD. COUNSEL FOR T HE ASSESSEE IN THE FORM OF SYNOPSIS ARE AS UNDER: [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 22 [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 23 [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 24 [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 25 [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 26 [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 27 38. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. LD. CIT(A) HAS DECIDED THE ISSUE OF DEPRECIATION IN PARA NO.3.5 OF HIS ORDER WHICH READS AS UNDER: [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 28 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE A PPELLANT AND FACTS OF THE CASE IT 'MAY BE NOTED THAT IT HAS BEEN HELD IN VARIOUS .JUDICIAL DECISIONS OF ITA T AND HIGH COURTS THAT DEPRECIATION MUST BE ALLOWED TO THE CHARITABLE INST ITUTIONS BECAUSE INCOME DERIVED FROM THE TRUST HAS TO BE DETERMINED IN COMMERCIAL SENSE. IT HAS AL SO BEEN OBSERVED BY THE HON'BLE COURTS THAT IF THE DEPRECIATION IS NOT ALLOWABLE AS A NECESSARY DE DUCTION FOR COMPUTING THE INCOME FROM THE CHARITABLE INSTITUTION, THEN THERE IS NO WAY TO PRE SERVE THE CORPUS OF THE TRUST FOR DERIVING THE INCOME. THE EXPENDITURE SHOULD BE UNDERSTOOD AS A N ECESSARY OUTGOING AND NOT MERELY ACTUAL EXPENDITURE ON PARTING WITH MONEY. EXPENDITURE INCU RRED, THEREFORE, INCLUDES THE CLAIM OF DEPRECIATION. THEREFORE, THE CHARITABLE TRUST IS EN TITLED TO DEPRECIATION IN RESPECT OF THE ASSETS OWNED BY IT. IT HAS ALSO BEEN HELD THAT THE RATIO O F THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE 0 F ESC0L1S LTD. V S. UNION 0 F INDIA (19 93 ) 199 ITR 4 3 (SC) IS NOT APPLICABLE IN THE CASE OF CHARI TABLE I NST IT UT ION/ TRUST. IT WI II BE RELEVANT TO REFER SOME DECISIONS OF THE HON'BLE HIGH COURT WHEREIN. IT HAS BEEN HELD THAT CHARITABL E INSTITUTION I TRUST IS ENTITLED TO DEPRECIATION IN RESPECT OF ASSETS OWNED BY IT AND THE DEPRECIATI ON IS A NECESSARY DEDUCTION IN COMPUTING THE INCOME OF THE CHARITABLE TRUST. (I) IN CIT V. SHETHMANILALRANCHHODDASVISHRAMBHAVANTRUST{ 199 2/ 198 ETR 0598- [GUJ.], THE HON'BLE GUJARAT HIGH COURT OBSERVED AS UNDER (HEAD OTES):- 'THE INCOME FROM THE PROPERTIES HELD UNDER TRUST HA VE TO BE ARRIVED AT IN THE NORMAL COMMERCIAL MANNER WITHOUT CLASSIFICATION UNDER THE VARIOUS HEADS SET OUT IN SECTION 14 OF THE INCOME-TO> ACT, 1961 THE EXPRESSION 'INCOME' HAS TO BE UNDERSTOOD IN THE POP ULAR OR GENERAL SENSE AND NOT IN THE SENSE IN WHICH THE INCOME IS ARRIVED AT FOR THE PURPOSE OF ASSESSMENT TO TAX BY APPLICATION OF SOME ARTIFICIAL PROVIIONS E I THER GIVING OR DENYING DEDUCTION. THE COMPUTATION UNDER THE DIFFERENT CATEGORIES OR H EADS ARISES ONLY FOR THE PURPOSES OF ASCERTAINING THE TOTAL INC OME FOR THE PURPOSES OF CHARGE. THOSE PROVISIONS CANNOT HE INTRODUCED TO FIND OUT WHAT THE INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST TO BE EXCLUDED FROM THE TOTAL INCOME IS , FOR THE PURPOSE OF THE EXEMPTIONS UNDER CHAPTER JJJ. THE AMOUNT 0/ DEPRECIATION DEBITED TO THE ACCOUNTS 0/ THE CHARITABLE INSTITUTION HAS TO BE DEDUCTED TO ARRIVE AT THE INCOME AVAILABL E/OR APPLICATION TO CHARITABLE AND RELIGIOUS PURPOSES. CIT V. SOCIETY OF THE SISTERS OF ST. ANNE [1984] 146 ITR 28 (KAR): CIT I'. RAIPUR PALLOTTINESOCIETY [1989] 180 ITR 579 (MP) AND CIT V. RAOBAHADURCALAVALACUNNANCHETTY CHARITIES [1982] 135 ITR 485 (MADLFOLLOWED ' QI) THE HON'BLE BOMBAY HIGH COURT HAD AN OCCASION T O CONSIDER THIS ISSUE IN THE CASE OF COMMISSIONER 0/ INCOME-TAX V. INSTITUTE 0/ BANKING /2003/ 264 ITR OLJO-/ BOM.J. THE FACTS IN BRIEF IN THIS CASE AND DECISION OF HON'BLE HIGH COURT ARE AS UNDER (RELEVA NT PORTION OF HEAD NOTES) :- 'NORMAL DEPRECIATION CAN BE CONSIDERED AS A LEGITIM ATE DEDUCTION IN COMPUTING THE REAL INCOME OF THE ASSESSEE ON GENERAL PRINCIPLES OR UNDER SECTION II (I )(A) OF THE INCOME-TAX ACT, 1961. INCOME OF A CHARITABLE TRUST DERIVED FROM BUILDING, PLANT AND M ACHINERY AND FURNITURE IS LIABLE TO BE COMPUTED IN A NORMAL COMMERCIAL MANNER ALTHOUGH THE TRUST MAY NOT BE CARRYING ON ANY BUSINESS AND THE ASSETS IN RESPECT WHEREOF DEPRECIATION IS CLAIMED MAY NOT BE BUSINESS ASSETS. IN ALL SUCH CASES, SECTION 32 OF T HE ACT PROVIDING FOR DEPRECIATION, FOR COMPUTATION OF INCO ME DERIVED FROM BUSINESS OR PROFESSION IS NOT APPLICABLE. HOWEVER, THE INCOME OF THE TRUST IS REQ UIRED TO BE COMPUTED UNDER SECTION LION COMMERCIAL PRINCIPLES AFTER PROVIDING 'FOR ALLOWANCE FOR NORMA L DEPRECIATION AND DEDUCTION THEREOF FROM THE GROSS INCOME OF THE TRUST. THE ASSESSEE WAS A TRUST REGISTERED UNDER THE BOMBA Y PUBLIC TRUST ACT AND SECTION 12A OF THE INCOME-TA X [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 29 ACT. THE OBJECT OF THE ASSESSEE WAS CHARITABLE IN N ATURE. THE INCOME OF THE ASSESSEE WAS EXEMPT UNDER SECTION I I OF THE INCOME-TAX ACT. THE ASSESSEE HAD CLAIMED DEPRECIATION WHICH WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT CAPITAL EXPEND ITURE INCURRED DURING THE ACCOUNTING YEAR WAS ALLOW ED AS A DEDUCTION FROM THE INCOME OF THE ASSESSEE. FUR THER, THE ASSESSEE HAD CLAIMED DEPRECIATION ON FURNITURE AND FIXTURES TO THE TUNE OF RS. 49,453 AT 10 PER CENT. OF THE WRITTEN DOWN VALUE WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND T HAT THE SAID ASSETS HAD BEEN RECEIVED BY THE ASSESS EE ON TRANSFER FROM NATIONAL INSTITUTE OF BANK MANAGEM ENT. THAT INSTITUTE WAS A CHARITABLE TRUST. ITS INC OME WAS ALSO EXEMPT UNDER SECTION II OF THE INCOME-TAX ACT. THE ASSESSING OFFICER DID NOT ALLOW DEPRECIATION ON FIXTURES AND FURNITURE'S ON THE GRO UND THAT FULL DEDUCTION HAD BEEN ALLOWED IN RESPECT OF CAPITAL COST OF FURNITURE AND FIXTURES AND IF THE D EPRECIATION WAS ALLOWED, AS CLAIMED BY THE ASSESSEE , IT WOULD RESULT IN DOUBLE DEDUCTION. IN THIS REFERENCE, THE HON'BLE HIGH COURT HELD AS U NDER ;_ HELD, (I) THAT THE TRIBUNAL WAS RIGHT IN LAW IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION ON THE ASSETS, THE COST OF WHICH HAD BEEN FULLY ALLOWE D AS APPLICATION OF INCOME UNDER SECTION I I IN THE PAST YEARS. CIT V. MUNISUVARAT JAIN [199-1} TAX LR 108-1 (BOM)/O/LO11'ED (II) THAT THE TRIBUNAL WAS JUSTIFIED IN LAW IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION OF RS. 49.453 ON ASSETS RECEIVED ON TRANSFER, WHEN (HE ASSESSEE HAD NOT INCURRED (HE COST O/ACQUIRING (HE ASSETS, DIRECTOR A/INCOME-TAX (EXEMPTION) V. FRAMJEECAWASJE E INSTITUTE [1993) 109 CTR 463 (BORN) FOLLOWED. 1. (III) THE HON'BLE PUNJAB & HARYANA HIGH COURT ALSO CONSIDERED THIS ISSUE IN DETAIL IN THE CASE OF COMMISSIONER OF INCOME-TAX V. MARKET COMMITTEE, PIP LI [201 II 330 ITR OOI6-[P &H. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WAS REGISTERED UNDER SECTION 12AA OF THE INCOME-TAX ACT, 196 I AS A CHARITABLE TRUST. THE ASSESSING OFFICER DISA LLOWED THE DEPRECIATION ON THE GROUND THAT SINCE TH E INCOME OF THE ASSESSEE WAS EXEMPT FROM TAX UNDER SE CTIONS II TO ~ 3, ALLOWING DEPRECIATION TO ASCERTAI N WHETHER 85 PER CENT. OF FUNDS WERE APPLIED FOR PURP OSES OF TRUST, WOULD AMOUNT TO CONFERRING DOUBLE BENEFIT. THIS VIEW WAS AFFIRMED BY THE COMMISSIONER (APPEALS). THE AP PEAL OF THE ASSESSEE TO THE TRIBUNAL WAS ALLOWED ON A THAT THE MATTER WAS COVER ED IN FAVOUR OF THE ASSESSEE BY ANOTHER ORDER OF TH E TRIBUNAL. ON APPEAL FILED BY THE DEP0/1MENT THE HON 'BLE HIGH COUN DISMISSING THE APPEAL. HELD AS UNDER: _ 'THAT THE INCOME 0/ THE ASSESSEE BEING EXEMPL, THE ASSESSEE WAS ONLY CLAIMING THAT DEPRECIATION SHOULD BE REDUCED FROM THE INCOME FOR DELERMININGTHE PERCEN/AGE AFFUNDS WHICH HAD 10 BE APPLIED FOR THE PURPOSES OF IHETRUST. THERE WAS NO DOUBLE DEDUCTION CLAIMED BY THE ASSESSEE. II COULD NOT BE HELD THAT DOUBLE BENEFIT WAS GIVEN IN ALLOWING THE CLAIM/OR DEPRECIATION/OR COMP ULING INCOME/OR PURPOSES 0/ SECTION II [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 30 CIT V. 1I0IPUR PALLOLLINE SOCIETY [1989) 180 ITII 579 (MP), CIT V. RAOBAHADURCALAVALACUNNANCHETTY CHARITIES [1982) /35 ITR 485 (MAD), CIT V. SETH MANILALRANCHHODDASVISHRAMBHAWANTRUST [1992) 19 8 ITR 598 (GU)). CIT V. SOCIETY OF IHESISLERS OF S!. A NNE [1984) 146 ITR 28 (KARN) AND CIT V. INST IT UTE OF BANKING [Z003) 264 ITR 110 (BAM) RELIED ON ESCORTS LTD V. UIJI [1993) 199 ITII 43 (SO DISTINGUISHED' 2. (IV) SIMILARLY, IN THE CASE OF COMMISSIONER 0/ INCOME-TAX V. TINY TOTS EDUCATION S OCIETY [2011/330 ITR 0021- [P & H/, THE HON'BLE PUNJAB & HARYANA HIGH COURT HAS EXPRESSED THE SAME VIEW. THE BRIEF FACTS OF THIS CASE ARE THAT THE ASSESSEE WAS A CHARITABLE INSTITU TION REGISTERED UNDER SECTION 12AA OF THE INCOME-TAX ACT , 1961. IN ITS ACCOUNTS, THE ASSESSEE CALCULATED DEPRECIATION FOR THE PURPOSE OF SHOWING THE AMOUNT UTILIZED. THE ASSESSING OFFICER DISALLOWED THE DEPRECIATION ON THE GROUND T HAT THE INCOME OF THE ASSESSEE BEING EXEMPT. CLAIM FOR DEPRECIATION WOULD AMOLLNT TO TAK ING OF DOUNLE BENEFIT. THE COMMISSIONER (APPEALS) HELD THAT DEDUCTION FOR COMPUTING INCOME TO PRESERVE THE CORPUS OF THE TRUST WAS PERMISSIBLE AND DID NOT AMOUNT TO DOUBLE BENEFIT. THIS VIEW WAS UPHELD BY THE TRIBUNAL OBSERVING THAT 'PPLICATION OF INCOME WAS NOT COMPUT ATION OF INCOME OF THE CHARITABLE INSTITUTION. THEREFORE. THE QUESTION WHETHER DEPREC IATION WAS TO BE ALLOWED OR NOT HAD NOTHING TO DO WITH THE APPLICATION OF INCOME. THE INCOME WA S ALWAYS TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND AS PER THE SYSTEM OF ACCOUNTING FOLL OWED BY THE ASSESSEE, SUBJECT ALWAYS TO THE STATUTORY PROVISIONS. ON APPEAL ;_ HELD, DISMISSING THE APPEAL, THAT THE ASSESSEE WAR NOT CL AIMING DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION. THE INCOME OF THE ASSESSEE BEING E XEMPT, THE ASSESSEE WAS ONLY CLAIMING THAT DEPRECIATION SHOULD HE REDUCED FROM THE INCOM E FOR DETERMINING THE PERCENTAGE OF FUNDS WHICH HAD TO BE APPLIED FOR THE PURPOSES OF THE TRU ST. IT COULD NOT BE HELD THAT DOUBLE BENEFIT WAS GIVEN IN ALLOWING THE CLAIM FOR DEPRECIATION FO R COMPUTING INCOME FOR PURPOSES OF SECT ION 11. (V) IN THE CASE OF CIT V. SOCIETY OF THE SISTERS OF ST. ANNE /1984/ 146 ITR 0028-/ K{1R!1./, THE HON'BLE KARNATAKA HIGH COURTS AS ALSO HELD AS UNDER :_ 'IF DEPRECIATION IS NOT ALLOWED AS A NECESSARY DEDU CTION FOR COMPUTING THE INCOME OF A CHARITABLE INSTITUTION, THEN THERE CAN BE NO WAY TO PRESERVE THE CORPUS OF THE TRUST FOR DERIVING THE INCOME. THEREFORE, THE AMOUNT OF DEPRECIATION D EBITED TO THE ACCOUNTS OF A CHARITABLE INSTITUTION IS TO BE DEDUCTED TO ARRIVE AT THE INCO ME AVAILABLE FOR APPLICATION TO CHARITABLE AND RELIGIOUS PURPOSES. ' (VI) IT MAY BE NOTED THAT THE HON'BLE JURISDICTIONA L HIGH COURT OF MADHYA PRADESH HAS ALSO EXPRESSED T HE SAME VIEW IN THE CASE OF CIT VS. RAIPUR PALLOTINE SOCIETY (1989) 180 ITR 579 (MP) AND IN THE CASE OF CI,T VS. SHRIGUJRATISARNAJ (REGD.) (201 J) 64 DTR (MP) 76. IN THE CASE OF CIT VS. SHRIGUJRATISAMAJ, THE HON'BLE HIGH COURT OBSERVED A S UNDER :_ 3. '6. WE FIND THAT THE QUESTION, WHETHER A CHARITABLE TRU ST IS ENTITLED TO DEPRECIATION UNDER S. 32 OF THE ACT IN RESPECT OF ASSETS OWNED BY IT, WAS DEALT WITH BY A DIVISION BENCH OF THIS COURT IN CIT VS. RAIPUR PALLO TINE SOCIETY (1989) 80 CTR 127: (1999) 180LTR 579 (MP) BY PLACING RELIANCE [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 31 ON A DIVISION BENCH JUDGMENT OF KARNATAKA HIGH COUR T IN CIT VS. SOCIETY OF THE SISTERS OF ST. ANNE (198439 CTR (KAR) 9: (1984) 146 ITR 28 (KAT) AND HAS HELD THAT DEPRECIATION IS NOTHING BUT DECREASE IN VALUE OF PROPERTY THROUGH V VEAR, DETERIORATION OR OBSOLESCENCE AND ALLOWANCE IS MADE FOR THIS PURPOSE IN BOOK KEEPING ACCOUNT ANCV ETC. IT IS THE EXHAUSTION OF THE EFFECTIVE LIFE OFA FIXED ASSET OWING /0 'LISE' OR OBSOLESCENCE. IT MAY BE COMPUTED AS THAT PART OF THE COS! 0/ THE ASSET WHICH WILL NOT BE RECOVERED WHEN THE ASSE T IS FINALLY PUR OUT 0/ USE. THE OBJECT OF PROVIDING FOR DEPRECIATION IS TO SPREAD T HE EXPENDITURE, INCURRED IN ACQUIRING THE ASSETS, OVER ITS EFFECTIVE LIFETIME; THE AMOUNT OF THE PROVISION, MADE IN RE ECT OF AN ACCOUNTING PERIOD, IS INTENDED TO REPRESENT THE PROPORTION OF SUCH EXPENDITURE, WHICH HAS EXPIRED DURING THAT PERIOD. IF DEPRECIATION IS NOT ALLOWED AS A NECESSARY DEDUCTION IN COMPUTIN G THE INCOME OF A CHARITABLE TRUST, THEN THERE WOULD BE NO WAY T O PRESERVE THE CORPUS OF THE TRUST. A CHARITABLE TRUST IS, THEREFORE, ENTITLED TO DEPRECI ATION IN RESPECT OF THE ASSETS OWNED BY IT. (ALSO SEE SPICER AND PEGIERS BOOK KEEPING AND ACCOUNTS, 17 TH EDN. PP.44, 45 AND 46). 7. HAVING REGARD TO THE AFORESAID SETTLED LEGAL POS ITION IN OUR CONSIDERED VIEW, THE TRIBUNAL HAS RIGHTLY DECIDED THE ISSUE ABOUT DISALLOWANCE OF CLAIM OF DEPRECIATION WHILE COMPUTING THE INCOME OF CHARITABLE TRUST AND HAS RIGHTLY HELD THA T THE ASSESSEE BEING A CHARITABLE TRUST IS ENTITLED FOR CLAIM OF DEPRECIATION ON THE ASSETS OW NED BY IT. WE, ACCORDINGLY, AFFIRM THE VIEW TAKEN BY THE TRIBUNAL IN THAT REGARD.. THEREFORE, CONSIDERING THE WELL SETTLED LEGAL POSI TION ON THE ISSUE AND RESPECTFULLY FOLLOWING THE DECISIONS OF HIGH COURT AND SPECIALLY THE JURISDICTIONAL HIGH COURT OF MADHYA PRADESH, WHICH IS BINDING, IT IS HELD THAT THE APPE LLANT IS ENTITLED FOR CLAIM OF DEPRECIATION ON THE ASSETS OWNED BY IT. ACCORDINGLY, THE A.O. IS DIREC TED TO ALLOW THE APPELLANTS CLAIM OF DEPRECIATION WHILE COMPUTING THE INCOME OF THE APPE LLANT SOCIETY UNDER SECTION 11 OF THE ACT FOR THESE ASSESSMENT YEARS I.E.A.Y.S 2007-08 TO 2010-11 . 39. FROM THE ABOVE DECISION OF THE LD. CIT(A), IT I S EVIDENT THAT HE HAS FOLLOWED THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT APART FROM THE OTHER CASE LAW S. THE REVENUE HAS NOT BROUGHT ANY OTHER BINDING PRECEDE NTS BEFORE US. THE LD. COUNSEL HAS DRAWN OUR ATTENTION TO THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT-3 PUNE VS. RAJASTHAN & GUJARAT CHARITABLE FOUNDATION, POONA (2018) 89 TAXMANN.COM 127 (SC). [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 32 HON'BLE APEX COURT AFFIRMED THIS JUDGEMENT OF THE HON 'BLE HIGH COURT HOLDING AS UNDER: 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. FRAMJEE CAWASJEE INSTITUT E (1993) 109 CTR 463. IN THAT CASE, THE FACTS WERE AS FOLLOWS: THE ASSESSEE WAS THE TRUST. IT DERIVED ITS INCOME FROM DEPRECIA BLE ASSETS. THE ASSESSEE TOOK INTO ACCOUNT DEPRECIATION ON THOSE AS SETS IN COMPUTING THE INCOME OF THE TRUST. THE ITO HELD TH AT DEPRECIATION COULD NOT BE TAKEN INTO ACCOUNT BECAUSE, FULL CAPIT AL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISITION OF THE ASSETS. THE ASSESSEE WENT IN APPEAL BEFORE THE ASSISTANT APPELL ATE COMMISSIONER. THE APPEAL WAS REJECTED. THE TRIBUN AL, HOWEVER, TOOK THE VIEW THAT WHEN THE ITO STATED THAT FULL EX PENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISITION OF THE ASSE TS, WHAT HE REALLY MEANT WAS THAT THE AMOUNT SPENT ON ACQUIRING THOSE ASSETS HAD BEEN TREATED AS APPLICATION OF INCOME OF THE TRUS T IN THE YEAR IN WHICH THE INCOME WAS SPENT IN ACQUIRING THOSE ASSET S. THIS DID NOT MEAN THAT IN COMPUTING INCOME FROM THOSE ASSETS IN SUBSEQUENT YEARS, DEPRECIATION IN RESPECT OF THOSE ASSETS CANN OT BE TAKEN INTO ACCOUNT. THIS VIEW OF THE TRIBUNAL HAS BEEN CONFIR MED BY THE BOMBAY HIGH COURT IN THE ABOVE JUDGEMENT. HENCE, Q UESTION NO.2 IS COVERED BY THE DECISION OF THE BOMBAY HIGH COURT IN THE ABOVE JUDGEMENT. CONSEQUENTLY, QUESTION NO.2 IS ANSWERED IN THE AFFIRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGA INST THE DEPARTMENT. 2. AFTER HEARING LEARNED COUNSEL FOR THE PARTIES, W E ARE 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 TO INTER FERE WITH THE SAME. 40. RESPECTFULLY FOLLOWING THE SAME, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS HEREBY UPHELD. GROUND RAISED IN THIS APPEAL IS DISMIS SED. [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 33 41. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. 42. NOW WE TAKE UP ITA NO.71/IND/2013 RAISED BY THE REVENUE FOR THE ASSESSMENT YEAR 2008-09. THE GRO UNDS RAISED BY THE REVENUE ARE REPRODUCED AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN 1. ALLOWING THE CLAIM OF DEPRECIATION OF RS.1,51,04,34 6/- DISALLOWED BY THE A.O. 2. ALLOWING THE SET OFF OF RS.49,31,205/- DISALLOWED B Y THE A.O. ON ACCOUNT OF EXCESS OF UTILISATION OF EARLIER YEAR SET OFF AGAIN ST THE PROVISION OF SECTION 11 OF THE I.T. ACT. 43. GROUND NO.1 OF THE APPEAL IS COVERED IN ITA NO.70/IND/2013 ABOVE AND THE SIMILAR FINDINGS ARE ADOPTED AND ACCORDINGLY, THE GROUND RAISED BY THE REVE NUE ARE DISMISSED. 44. GROUND NO.2 OF THE APPEAL IS ALSO COVERED AGAINST REVENUE IN ITA NO.70/IND/2013 FOR THE A.Y. 2007-08. THE LD. CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSE E IN PARA 4.4 OF HIS ORDER, WHICH IS REPRODUCED BELOW: [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 34 4.4. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. IT MAY BE NOTED THAT ON THIS ISSUE IT HAS BEEN CONSISTENTL Y DECIDED BY VARIOUS HIGH COURTS THAT EXCESS EXPENDITURE INCURRED BY A CHARITABLE TRUST IN EARLI ER YE ARS CAN BE ADJUSTED AGAINST THE INCOME EARNED IN SUBSEQUENT YEARS AND IT WOULD AMOUNT TO APPLICATION OF INCOME FOR CHARITABLE PURPOSES IN THE SUBSEQUEN T YEARS. THEREFORE, ADJUSTMENT OF EARLIER YEAR EXPENS ES AGAINST SUBSEQUENT YEAR INCOME SHOULD BE TREATED AS APPLICATION OF INCOME AND ALLOWABLE AS DEDUCTION TO COMPUTE INCOME U/S 11 (1 )(A) OF THE IT ACT. IT WOULD BE RELEVANT TO REFER SOME OF THE DECISIONS AS UNDER :- (I) THE HON'BLE RAJASTHAN HIGH COURT HAS CONSIDERED THI S ISSUE IN THE CASE OF CIT VS. MAHARANA OF MEWAR CHARITABLE FOUNDATIONJL RS T] 164 ITR 0439-/RAJ./. WHEREIN IT WAS HELD THAT THE ADJUSTMENT OF THE EXPENSES INCURRED BY THE TRUST FOR CHARITABLE A ND RELIGIOUS PURPOSES IN EARLIER YEARS AGAINST THE INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR WOULD AM OUNT TO APPLYING THE INCOME OF THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE SUBSEQUENT YEARS AND WOULD HAVE TO BE EXCLUDED HOM THE INCOME OF THE TRUST U/S 1 1(1)(A) OF THE IT ACT. THE HON'B LE HIGH COURT HELD AS UNDER (HEAD NOTES) :- 'A PERUSAL OF SECTION 11 OF THE INCOME-TAX ACT, 1961, SHOWS THAT THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES 10 THE EXTENT 10 WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA IS TO BE EXCLUDED/OR THE PURPOSES OF COMPUTING THE INCOME OF THE TRUST FOR THE PURPOSES OF ASSESSMENT. THERE ARE NO WORDS OF LIMITATION IN THIS SECTION EXPLAINING THAT THE INCO ME SHOULD HAVE BEEN APPLIEDFOR CHARITABLE OR RELIGIOUS PURPOSES ONLY IN THE YEAR IN WHICH THE INCOME ARISEN. THE WORDS USED IN SECTION J J (J )(A) MUST BE GIVEN THEIR NATURAL MEANING. APPLIED' AS DEFINED IN CHAMBERS' DICTIONARY MEANS 'TO PUT TO USE' OR '10 TURN TO USE'. ACCORDING TO THE OXFORD DICTIONARY, T HE WORD 'APPLIED' MEANS 'TO MAKE USE' OR 'TO PUT TO PRACTIC AL USE'. WHEN THE INCOME OF A TRUST IS USED OR PUT TO USE TO MEET THE EXPENSES INCURRED FO R RELIGIOUS OR CHARITABLE PURPOSES, IT IS APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES. THE S AID APPLICATION OF THE INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES TAKES PLACE IN THE YEAR IN WHICH THE INCOME IS ADJUSTED TO MEET THE EXPENSES INCURRED FOR CHARITABLE OR RELIGI OUS PURPOSES. IN OTHER WORDS, EVEN IF THE EXPENSES FOR CHARITABLE AND RELIGIOUS PURPOSES HAVE BEEN INCURRED IN THE EARLIER YEAR AND THE SAID EXPENSES ARE ADJUSTED AGAINST THE INCOME OF A SUBSEQUENT YEAR, THE INCOME OF THAT YEAR CAN BE SAID TO BE APPLIED FOR CHARITABLE AND RELIGI OUS PURPOSES IN THE YEAR IN WHICH THE EXPENSES INCURRED FOR CHARITABLE AND RELIGIOUS PURP OSES HAD BEEN ADJUSTED. ACCORDING /0 THE CIRCULAR ISSUED BY THE CENTRAL BOARD OF DIRECT TAXE S DATED JANUARY 24, J 973, IF A TRUST WANTS TO SPEND MORE MONEY ON CHARITABLE AND RELIGIOUS PUR POSES, IN A PARTICULAR YEAR, IT CAN TAKE A LOAN AND THE SAID LOAN CAN BE REPAID OUT OF THE INC OME OF THE SUBSEQUENT YEAR AND THE PAYMENT OF THE SAID LOAN OUT OF THE INCOME OF THE S UBSEQUENT YEAR WOULD AMOUNT TO APPLICATION OF INCOME FOR CHARITABLE AND RELIGIOUS PURPOSES UNDER SECTION II (/)(A) OF THE ACT. IF IT WERE HELD THAT ONLY THAT INCOME OF A CHARITAB LE TRUST WOULD BE EXCLUDED WHICH WAS APPLIED FOR CHARITABLE AND RELIGIOUS PURPOSES DURIN G THE RELEVANT ASSESSMENT YEAR IN WHICH THE INCOME WAS EARNED, IT WOULD LEAD /0 AN ANOMALOUS SITUATION. IF THE TRUST TAKES A LOAN F OR THE PURPOSE OF INCURRING EXPENSES FOR CHARITABLE AN D RELIGIOUS PURPOSES IN A PARTICULAR YEAR AND THE SAID LOAN IS REPAID OUT OF THE INCOME OF TH E SUBSEQUENT YEAR. THE SAID REPAYMENL WOULD HE ENTITLED TO EXEMPTION FROM TAX UNDER SECTI ON II (/)(A) OF THE ACT. BUT. IF THE TRUST. INSTEAD OF TAKING A LOAN. INCURS THE EXPENDITURE FO R CHARITABLE AND RELIGIOUS PURPOSES OUT OF THE CORPUS OF THE TRUST AND SEEKS TO REIMBURSEMENTS THE SAID AMOUNT OUT OF THE INCOME OF THE SUBSEQUENT YEAR. THE TRUST WOULD NOT BE ENTITLED TO CLAIM EXEMPTION IN RESPECT OF SUCH REIMBURSE UNDER SECTION II (I)(A) OF THE ACT. A CON STRUCTION WHICH LEADS TO SUCH AN ANOMALY SHOULD BE AVOIDED. THE ADJUSTMENT OF TILE EXPENSES INCURRED BY THE TRUST FOR CHARITABLE AND [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 35 RELIGIOUS PURPOSES ILL TILE EARLIER YEAR AGAINST TH E INCOME EARNED BY THE TRUST ILL THE SUBSEQUENT YEAR WOULD AMOUNT 10 APPLYING THE INCOME OJ THE TRUST JOR CHARITABLE AND RELIGIOUS PURPASES IN UBSEQUENT YEAR IN WHICH SUCH ADJUSTMENT HAD BEEN MA DE AND WOULD 'AVE TO BE EXCLUDED FROM THE INCOME OF THE TRUST UN DER SECTION J J(I)(A) OF THE ACT.' (II) THE HON'BLE GUJRAT HIGH COURT ALSO HAD AN OCCA SION TO CONSIDER THIS ISSUE IN THE CASE OF CIT V. SHRI PLOT SWETAMBERMURTI PUJAK JAIN MANDAL/1995J 211 ITR 0293-/GUJ.J, WHEREIN, IT WAS HELD THAT EXCESS OF EXPENDITURE IN EARLIER YEAR CAN BE ADJUSTED AGAINST INCOME OF SUBSEQUENT YEAR AND THE ADJUSTMENT IS TO BE TREATED AS APPLICATION OF INCOME IN SUCH SUBSEQUENT YEAR FOR CHARITABLE PURPOSES. THE HON'BLE HIGH COU RT HELD AS UNDER (HEAD OTE):- 'A BARE PERUSAL OF SECTION 11 OF THE INCOME-TAX ACT, 1961, SHOWS THAT THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA IS TO BE EXCLUDED FOR THE PURPOSES OF COMPUTING THE INCOME OF THE TR UST FOR THE PURPOSE OF ASSESSMENT. THERE ARE NO WORDS OF LIMITATION IN THIS SECTION PR OVIDING THAT THE INCOME SHOULD HAVE BEEN APPLIEDFOR CHARITABLE OR RELIGIOUS PURPOSES ONLY IN THE YEAR IN WHICH THE INCOME HAD ARISEN. THE WORD 'APPLY' MEANS 'TO PUT TO USE' OR 'TO TURN TO USE' O R 'TO MAKE USE' OR 'TO PUT TO PRACTICAL USE'. HAVIN G REGARD TO THE PROVISIONS OF SECTION 11 OF THE ACT, IT IS CLEAR THAT WHEN THE INCOME OF A T RUST IS USED OR PUT TO USE TO MEET (HE EXPENSES INCURREDFOR RELIGIOUS O R CHARITABLE PURPOSES, IT IS APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES. THE APPLICATION OF THE INCOME F OR CHARITABLE OR RELIGIOUS PURPOSES TAKES PLACE IN THE YEAR IN WHICH THE INCOME IS ADJUSTED TO MEET THE EX PENSES INCURRED FOR CHARITABLE OR RELIGIOUS PURPOSE S. IN OTHER WORDS, EVEN IF EXPENSES FOR CHARITABLE AND RELIGIOUS PURPOSES HAVE BEEN INCURREDFOR THE EARLIER YEAR AND THE SAID EXPENSES ARE ADJUSTED AGAINST THE INCOME OF A SUBSEQUENT YEAR, THE INCOME OF THAT YE AR CAN BE SAID TO HAVE BEEN APPLIED FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE YEAR IN WHICH THE EXPENS ES INCURREDFOR CHARITABLE AND RELIGIOUS PURPOSES HAD B EEN ADJUSTED. THERE IS NOTHING IN THE LANGUAGE OJ'SECTION 1I(I)(A) OF THE ACT TO INDICATE THAT THE EXPENDITURE INCURRED IN THE EARLIER YEAR CANNOT BE MET OUT 0/ THE INCOME OF THE SUBSEQUENT YEAR AND UTILIZATION O F SUCH INCOME FOR MEETING THE EXPENDITURE OF THE EARLIER YEAR, WOULD NOT AMOUNT TO SUCH INCOME BEING APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES. INCO ME DERIVED FROM TRUST PROPERTY HAS TO BE DETERMINED ON COMMERCIAL P RINCIPLES AND ({ COMMERCIAL PRINCIPLES FOR DETERMINING THE INCOME ARE APPLIED, IT IS BUT N ATURAL THAT THE ADJUSTMENT OF THE EXPENSES INCURRED BY THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE EARLIER YEAR AGAINST INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAVE TO BE REGARDED AS APP LICATION OF INCOME OF THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE SUBSEQUENT YEAR IN WHICH SUCH ADJUSTMENT HAS BEEN MADE HAVING REGARD 10 THE BENEVOLENL PROVISIONS CONTAINED IN SECTION 11 OF THE A CT AND WILL HAVE TO BE EXCLUDED FROM THE INCOME OF THE TRUST UNDER SECTION 11 (1)(A). ' (III) SIMILARLY, THE HON'BLE MADRAS HIGH COURT HAS ALSO EX PRESSED THE SAME OPINION IN THE CASE OF COMMISSIONER OF INCOME-TAX V. MATRISEVA TRUST/2000J 242 ITR 0020-FMAD.J, WHILE HOLDING THAT DEFICIENCY OF FUNDS OF FOLLOWING YEAR COULD BE SET OFF AGAINST EARLIER YEAR'S SURPLUS. IT WAS HELD AS UNDER (HEAD NOTE) :- HELD, (I) ........ . (II) THAT THE ASSESSEE-TRUST WAS ENTITLED TO SET OFF THE AMOUN T OF EXCESS APPLICATION OF THE LAST YEAR AGAINST THE DEFICIENCY OF THE PRES ENT YEAR. >(I ,,) THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING (2003) 26~ ITR 1 J 0 (BOM.) ALSO EXPRESSED THE SAME OPINION, WHEREIN IT WAS DECIDED AS UNDER (RELEVANT PORTION OF HEAD NOTES) : INCOME DERIVED FROM THE TRUST PROPERTY HAS ALSO GOT TO BE CO MPUTED ON COMMERCIAL PRINCIPLES AND IF COMMERCIAL PRINCIPLES ARE APPLIED THEN ADJUSTMENT OF EXPENSES I NCURRED BY THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE EARLIER YEARS AGAINST THE INCOME E ARNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAVE TO BE REGARDED AS APPLICATION OF INCOME OF THE TRU ST FOR CHARITABLE AND RELIGIOUS PURPOSES IN (HE SUBSEQUENT YEAR IN WHICH ADJUSTMENT HAD BEEN MADE HAVING REGARD TO THE BENEVOLENT PROVISIONS [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 36 CONTAINED IN SECTION II OF THE ACL AND SUCH ADJUSTMENT WILL HAVE 10 BE EXCLUDEDFROM THE INCOME OF THE TRUST UNDER SECTION I I (I)(A). DURING THE ASSESSMENT YEAR IN QUESTION THE ASSESSEE HAD CARR IED FORWARD THE DEFICIT OF THE EARLIER YEARS AND HAD ADJUSTED THE DEFICIT OF THE EARLIER YEARS AGAINS T THE SURPLUS OF THE SUBSEQUENT YEAR WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT SUCH CARRY FORWARD WAS APPLICABLE ONLY TO INCOME ASSESSABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUS INESS' AND SUCH CARRYFORWARD AND ADJUSTMENT WAS NOT PERMISSIBLE IN THE CASE OF INCOME ASSESSA BLE UNDER SEER ION I I TO 13 OF THE INCOME- TAX A CT. IN THE REFERENCE, THE HON'BLE HIGH COUL1 HELD AS UNDER :- (III) THAT THE TRIBUNAL WAS JUSTIFIED IN LAW IN AL LOWING CARRY FORWARD OF THE DEFICIT OF EARLIER YEAR S AND SET OFF AGAINST THE SURPLUS OF THE SUBSEQUENT Y EAR. CIT V. SHRI PLOT SWETAMBER MURTI PUJAK JAIN MANDAI RL995} 211 ITR 293 (GU)) FOLLOWED. .. (V) THE HON'BLE JURISDICTIONAL HIGH COURT OF MADHYA PRADESH ALSO HAD AN OCCASION TO CONSIDER THIS ISSU E IN THE CASE OF CIT VS. SLTRIGUJRATISAMAJ (REGD) (2011) 64 DTR (MP) 76, WHEREIN IT WAS OBSERVED BY THE HON'BLE HIGH COURT THAT ULS 11 (1 )(A), THE EXPENDITURE INCURRED IN THE EARLIER YEAR CAN BE MET OUT OF THE INCOME OF THE SUBSEQUENT YEAR AND UTILIZATION OF SU CH INCOME FOR MEETING THE EXPENDITURE OF EARLIER YE AR WOULD AMOUNT TO SUCH INCOME 'BEING APPLIED FOR CHAR ITABLE OR RELIGIOUS PURPOSES AND, ACCORDINGLY, IT W AS HELD THAT ASSESSEE'S CLAIM TO CARRY FORWARD DEFICIT IN THE APPLICATION OF FUNDS WAS JUSTIFIED. THE HON 'BLE HIGH COUL1 OBSERVED IN THIS CASE AS UNDER :- '8. COMING TO THE NEXT QUESTION AS TO WHETHER THE O RDER OF THE TRIBUNAL HOLDING THAT THE ASSESSEE IS ENTITLED FOR CARRY FORWARD AND SET OFF EXCESS OJ EX PENDITURE INCURRED DURING THE YEAR OVER ITS INCOME. WE FIND THAT IN VIEW OJ S. 11 (/)(A) OJ THE ACT, IT CANNOT BE SAID THAT THE EXPENDITURE INCURRED IN TH E EARLIER YEAR CANNOT BE MET OUT OJ THE INCOME OF THE SUBSEQUENT YEAR AND UTILIZATION OF SUCH INCOME FOR MEETING THE EXPENDITURE OF THE EARLIER YEAR WOULD N OT AMOUNT TO SUCH INCOME BEING APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES. HAVING REGARD TO S. 11 (/)(A) OF THE ACT IN OUR VIEW WHEN THE INCOME OF THE TRUST IS USED OR PUT TO USE TO MEET THE CHAR ITABLE OR RELIGIOUS PURPOSES IT IS APPLIED FOR CHARITABLE PURPOSE AND THE SAID APPLICATION OF THE INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES TAKES PLACE IN THE YEAR IN WHICH THE INCOME IS ADJUSTED T O MEET THE EXPENSES INCURRED FOR CHARITABLE OR RELIGIOUS PURPOSES. THUS, EVEN IF THE EXPENSES JOR CHARITABLE AND RELIGIOUS PURPOSES HAVE BEEN INCURRED IN THE EARLIER YEAR AND THE SAID EXPENSES ARE ADJUSTED AGAINST THE INCOME OF A SUBSEQUENT YEAR, THE INCOME OF THAT YEAR CAN BE SAID TO HAVE B EEN APPLIED FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE YEAR IN WHICH EXPENSES INCURRED FOR CHARITAB LE AND RELIGIOUS PURPOSES HAD BEEN ADJUSTED. THERE ARE NO WORDS OF LIMITATION IN S. 11 (1)(0) OF THE ACT EXPLAINING THAT THE INCOME SHOULD HAVE BEEN APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES ONLY IN THE YEAR I N WHICH THE INCOME HAD ARISEN. [SEE CIT VS. MAHARANA OF MEWAR CHARITABLE FOUNDATION (/987) 60 CTR (RAJ.) 40 : (/987) 164 ITR 439 (RAJ.)). IN OUR CONSIDERED VIEW THE TRIBUNAL HAS RIGHLY APPL IED THE RATIO OF THE JUDGEMENT AND ORDER PASSED BY THE DIVISION BENCH OF RAJASTHAN HIGH COUR T IN CIT VS. MAHARANA OF MEWAR CHARITABLE FOUNDATION (SUPRA) AND HAS COMMITTED NO ERROR IN HOLDING THIS ISSUE IN FAVOUR OF THE ASSESSEE. ' IN VIEW OF THE ABOVE WELL SETTLED LEGAL POSITION ON THE ISSUE AND RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE HIGH COURT, SPECIALLY JURISDICTIONAL HIGH C OURT OF MADHYA PRADESH WHICH IS BINDING, IT IS HELD THAT EXCESS EXPENDITURE INCU RRED IN EARLIER YEARS CAN BE ADJUSTED AGAINST INCOM E OF THE SUBSEQUENT YEAR. THE EXPENDITURE INCURRED IN EARLIE R YEARS CAN BE MET OUT OF THE INCOME OF SUBSEQUENT YEAR WHICH WOULD AMOUNT TO APPLICATION OF INCOME FOR CHA RITABLE OR) RELIGIOUS PURPOSES. ACCORDINGLY, THE AO IS DIR ECTED TO ALLOW CARRY FORWARD OF EXCESS OF EXPENDITU RE I.E. EXCESS UTILIZATION FOR BEING APPLIED IN SUB SEQUENT YEAR. [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 37 45. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE ISSUES ARE COVERED IN FAVOUR O F THE ASSESSEE. LD. D.R. HAS FAIRLY CONCEDED THE FACT THAT BO TH THE ISSUES ARE COVERED IN FAVOUR OF THE ASSESSEE BY VAR IOUS DECISIONS OF THE TRIBUNAL AND THE HON'BLE HIGH COURT. 46. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. SO FAR ISSUE OF DEPRECIATI ON IS CONCERNED, THE SAME HAS BEEN ELABOTRATELY DISCUSSED IN OUR DECISION IN ITA NO.70/IND/2013. FOLLOWING THE SAME, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 47. IN RESPECT OF ISSUE OF SET OFF AGAINST EXCESS UTILISATION OF EARLIER YEAR, IT IS CONTENDED THAT THE ISSUE IS COVERED BY THE JUDGEMENT OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. GUJARAT SAMAJ 64 DTR 76 (MP). [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 38 48. LD. D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 49. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GUJAR AT SAMAJ (SUPRA), THE HON'BLE HIGH COURT HELD AS UNDER: COMING TO THE NEXT QUESTION AS TO WHETHER THE ORDE R OF THE TRIBUNAL HOLDING THAT THE ASSESSEE IS ENTITLED FOR CARRY FORWARD AND SET OFF EXCESS OF EXPENDITURE INCURRED DURING THE Y EAR OVER ITS INCOME. WE FIND THAT IN VIEW OF SECTION 11(1)(A) O F THE ACT, IT CANNOT BE SAID THAT THE EXPENDITURE INCURRED IN THE EARLIE R YEAR CANNOT BE MET OUT OF THE INCOME OF THE SUBSEQUENT YEAR AND UT ILISATION OF SUCH INCOME FOR MEETING THE EXPENDITURE OF THE EARLIER Y EAR WOULD NOT AMOUNT TO SUCH INCOME BEING APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES. HAVING REGARD TO SECTION 11(1)(A) OF THE ACT, IN OUR VIEW, WHEN THE INCOME OF THE TRUST IS USED OR PUT TO USE TO MEET THE CHARITABLE OR RELIGIOUS PURPOSES, IT IS APPLIED FOR CHARITABLE PURPOSE AND THE SAID APPLICATION OF THE INCOME FOR CHARITAB LE OR RELIGIOUS PURPOSES TAKES PLACE IN THE YEAR IN WHICH THE INCOM E IS ADJUSTED TO MEET THE EXPENSES INCURRED FOR CHARITABLE OR RELIGI OUS PURPOSES. THUS, EVEN IF THE EXPENSES FOR CHAIRTABLE AND RELIG IOUS PURPOSES HAVE BEEN INCURRED IN THE EARLIER YEAR AND THE SAID EXPE NSES ARE ADJUSTED AGAINST THE INCOME OF A SUBSEQUENT YEAR, THE INCOME OF THAT YEAR CAN BE SAID TO HAVE BEEN APPLIED FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE YEAR IN WHICH EXPENSES INCURRED FOR CHARITABLE AND RELIGIOUS PURPOSES HAD BEEN ADJUSTED. THERE ARE NO WORDS OF LIMITATION IN SECTION 11(1)(A) OF THE ACT EXPLAININ G THAT THE INCOME SHOULD HAVE BEEN APPLIED FOR CHARITABLE OR RELIGIOU S PURPOSES ONLY IN THE YEAR IN WHICH THE INCOME HAD ARISEN (SEE CIT V. MAHARANA OF MEWAR CHARITABLE FOUNDATION (1987) 164 ITR 439/(198 6) 29 [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 39 TAXMAN 476 (RAJ.). IN OUR CONSIDERED VIEW, THE TRI BUNAL HAS RIGHTLY APPLIED THE RATIO OF THE JUDGEMENT AND ORDER PASSED BY THE DIVISION BENCH OF THE RAJASTHAN HIGH COURT IN MAHARAN OF MEW AR CHARITABLE FOUNDATION (SUPRA) AND COMMITTED NO ERROR IN HOLDIN G THIS ISSUE IN FAVOUR OF THE ASSESSEE. 50. RESPECTFULLY FOLLOWING THE SAME, WE FIND NO MER IT IN THE GROUND RAISED BY THE REVENUE AND THE SAME IS HE REBY DISMISSED. 51. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA NO.71/IND/2013 IS DISMISSED. 52. NOW WE TAKE UP ITA NO.72/IND/2013 FOR THE ASSESSMENT YEAR 2009-10 IN WHICH THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN 1. ALLOWING THE CLAIM OF DEPRECIATION OF RS.1,88,11,84 4/- DISALLOWED BY THE A.O. 2. CONSIDERING THE ALTERNATE CLAIM OF THE ASSESSEE THA T ITS INCOME WAS EXEMPT U/S 10(23C)(VI) OF THE I.T. ACT. 53. GROUND NO.1 IS COVERED IN ITA NO.70/IND/2013 FOR THE A.Y. 2007-08 ABOVE AND ACCORDINGLY ON THE SAM E REASONING, THE GROUND RAISED BY THE REVENUE IS DISMIS SED. [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 40 54. APROPOS TO GROUND NO.2, IT IS STATED THAT IF THE CLAIM OF THE DEPRECIATION IS ALLOWED NO INCOME WILL BE LEFT WHICH CAN BE CLAIMED U/S 10(23C) OF THE ACT. THIS FA CT IS NOT CONTROVERTED BY THE REVENUE, THEREFORE, THE SAME IS DISMISSED. 55. IN THE RESULT, APPEAL FILED BY THE REVENUE IN ITA NO.72/IND/2013 IS DISMISSED. 56. NOW WE TAKE UP ITA NO.73/IND/2013 FOR THE ASSESSMENT YEAR 2010-11 IN WHICH THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN 1. ALLOWING THE CLAIM OF DEPRECIATION OF RS.2,56,28,45 2/- DISALLOWED BY THE A.O. 2. CONSIDERING THE ALTERNATE CLAIM OF THE ASSESSEE THA T ITS INCOME WAS EXEMPT U/S 10(23C)(VI) OF THE I.T. ACT. 57. THE ABOVE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE SIMILAR TO THAT OF THE APPEAL RAISED BY THE REVENUE IN ITA NO.72/IND/2013, WHICH WAS ADJUDICATED [IT(SS)A 30, 31, 54/IND/2013 & ITA NOS. 70, 71, 72 & 73/IND/2013] [M/S. GLOBUS INSTITUTE OF ENGG. & TECHNOLOGY, BHOPA L] 41 AGAINST THE REVENUE AND DISMISSED THE APPEAL. HENCE, ON THE SAME REASONING, THE APPEAL FILED BY THE REVENUE IN ITA NO.73/IND/2013 IS DISMISSED. 58. IN THE RESULT, THE APPEALS FILED BY THE REVENUE IN IT(SS)A NOS.30 & 31/IND/2013, ITA NOS.70 TO 73/IND/2013 ARE DISMISSED AND APPEAL FILED BY THE ASSESSEE IN IT(SS)A NO.54/IND/2013 IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30 . 11.2018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 30/11/2018 VG/SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE