Shriram Scientific And Industrial Research Foundation, New Delhi V. JDIT (Exemptions), New Delhi

ITA 920/DEL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6964 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 11-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 24-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RISPAL BEDI
• Assessee Lawyers: R K KAPOOR
• Keywords: Depreciation; Charitable institution; Opportunity of being heard; Additional evidence
• Section: 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G NEW DELHI BEFORE SH. I.C. SUDHIR , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 920 /DEL/ 2012 ASSESSMENT YEAR: 2008 - 09 M/S. SHRIRAM SCIENTIFIC AND INDUSTRIAL RESEARCH FOUNDATION, DIAMOND PRESS BUILDING, 8E , RANI JHANSI ROAD, JHANDEWALAN EXTENSION, NEW DELHI VS. JDIT (EXEMPTIONS), RANGE - II, NEW DELHI PAN : AAATS0867K (APPELLANT) (RESPONDENT) APPELLANT BY SH. R.K. KAPOOR, CA RESPONDENT BY SMT. RISPAL BEDI, SR.DR DATE OF HEARING 29.07.2016 DATE OF PRONOUNCEMENT 30.09.2016 ORDER PER O.P. KANT , A. M. : THIS APPEAL ARISES FROM THE DIRECTION GIVEN BY THE HON BLE HIGH COURT OF DELHI IN ITA NO. 9/2013. FOR THE SAKE OF READY REFERENCE, THE FINDINGS /DIRECTION S OF THE HON BLE HIGH COURT IN PARA - 4 ARE REPRODUCED AS UNDER: 2 ITA NO. 920/DEL/2012 AY: 2008 - 09 4. WE HAVE CONSIDERED THE MATERIALS ON RECORD AND SUBMISSIONS OF THE PARTIES. AS TO WHETHER ASSESSEE HAD CLAIMED DEPRECIATION IN ANY OF THE PREVIOUS YEARS OR WHETHER THE APPLICATION OF MONEY WAS SHOWN TO HAVE BEEN FOR THE ACQUISITION OF ASSET WITH THE LOANS OBTAINED IS A MATTER OF FACT. THERE IS NO SPECIFIC FINDING. IN THESE CIRCUMSTANCES, THE MATTER IS REMITTED FOR RECONSIDERATION BY THE TRIBUNAL WHICH SHALL ALSO TAKE N INTO ACCOUNT THE MATERIAL BROUGHT ON RECORD BY THE ASSESSEE THAT ARE NOT ALREADY ON RECORD UNDER RULE 29 TO FACILITATE A FULLER APPRECIATION AND RECORDING OF FACTS IN THIS REGARD. THE APPELLANT IS ALSO AT LIBERTY TO PLACE RELIANCE ON SUCH ADDITIONAL MATE RIAL HAVING REGARD TO THE CIRCUMSTANCES. THE APPEAL IS PARTLY ALLOWED IN THE ABOVE TERMS. THERE SHALL BE NO ORDER AS TO COSTS. 2. ACCORDINGLY, THE ISSUES WHICH ARE REQUIRED TO BE EXA MINED ARE WHETHER THE ASSESSEE HAS CLAIMED DEPRECIATION IN ANY OF THE PREVIOUS YEARS AND WHETHER THE LOAN MONEY WAS SHOWN TO HAVE BEEN UTILIZED FOR ACQUISITION OF THE ASSETS. 3. THE FACTS IN BRIEF OF THE CASE AS CULLED OUT FROM THE ORDER OF THE LOWER AUTHORITIES AND STATEMENT OF FACTS SUBMITTED BY THE ASSESSEE ARE THAT THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE SOCIETIES R EGISTRATION ACT VIDE REGISTRATION DATED 05/10/ 1940. THE ASSESSEE WAS ENGAGED IN CARRYING OUT THE SCIENTIFIC AND INDUSTRIAL RESEARCH IN APPLIED SCIENCES. THE RETURN OF INCOME WAS FILED DEC LARING NIL INCO ME ON 30/09/2008. T HE ASSESSING OFFICER NOTED THAT ASSESSEE HAS SHOWN INCOME DERIVED O F RS.34,29,70, 551/ - AND APPLICATION OF INCOME THEREOF AND THUS CLAIM E D THE TAXABLE INCOME AS NIL. 3 ITA NO. 920/DEL/2012 AY: 2008 - 09 4. THE STATEMENT OF COMPUTATION OF TOTAL INCOME FILED BY THE ASSESSEE ALONGWITH THE RETURN OF INCOME IS REPRODUCED AS UNDER: STATEMENT OF TOTAL INCOME OF A SCIENTIFIC RESEARCH ASSOCIATION CLAIMED EXEMPT U/S 11/10(21) OF THE ACT - Y.E. MARCH 31. 2008 INCOME DERIVED GROSS - INTEREST INCOME 3,19,12,073 - DIVIDEND INCOME 69 ,44,640 - RENTAL INCOME 3,94,388 - RECEIPTS FROM SPONSORED AND ANALYTICAL RESEARCH WORK 28,99,35,779 - CAPITAL SUBSIDY RECEIVED DURING THE YEAR 6,45,450 - PROFIT ON SALE OF SECURITIES/BONDS 7,56,280 - ADJUSTMENT ON ACCOUNT OF EMPLOYEE BENEFITS IN GENER AL FUND 65,27,451 - OTHER INCOMES 58,54,490 ------------------ TOTAL INCOME 34,29,70,551 LESS : - INCOME ACCUMULATED U/S 11(1) OF THE ACT UPTO 15% OF INCOME DERIVED 5,14,45,583 ---------------- BALANCE INCOME TO BE APPLIED 29,15,24,968 LESS : - INCOME APPLIED - RESEARCH & OTHER EXPENSES 17,59,09,531 - INTEREST PAID 3,07,523 - REPAYMENT OF LOAN TO WORLD BANK 1,70,00,000 - LOSS ON REDEMPTION OF SECURITIES 53,650 - PROVISION FOR PAY ARREARS 3,24,80,000 - ADDITION TO FIXED ASSETS [NET OF AMOUNT REALISED ON DISPOSAL OF ASSET] 2,53,26,518 ---------------- 25,10,77,222 LESS: - OPTION EXERCISED UNDER EXPLANATION 2 TO SECTION 11 FOR A. Y. 2007 - 2008 8,18,31,406 16,92,45,816 -------------- --------------- EXCESS INCOME OVER EXPENDITURE 12,22,79,152 LESS: - INCOME TO BE APPLIED IN THE NEXT YEAR AS PER OPTION EXERCISED UNDER EXPLANATION 2 TO SECTION 11 12,22,79,152 ---------------- TAXABLE INCOME NIL ---------------- 4 ITA NO. 920/DEL/2012 AY: 2008 - 09 5. A CCORDING TO THE ASSESSING OFFICER , ONE OF THE ITEM S OF THE EXPENDITURE CLAIMED BY THE ASSESSEE WAS AN APPLICATION OF INCOME TOWARDS LOAN REPAYMENT TO THE BANK AMOUNTING TO RS.1, 70,00,000 / - AND THIS CLAIM WAS NOT MADE IN THE AUDITED INCOME/EXPENDITURE ACCOUNT APPENDED WITH THE RETURN OF INCOME BUT THE CLAIM HAS BEEN MADE SEPARATELY BY WAY OF THE STATEMENT FURNISHED ALONGWITH THE RETURN OF INCOME. ON BEING ASKED BY THE ASSESSING OFFICER TO CLARIFY THE NATURE OF SAID LOAN, THE ASSESSEE SUBMITTED THAT THE FINANCIAL ASSISTANCE FOR AN AMOUNT OF RS. 62.2 MILLION (US DOLLAR 3.57 MILLION) WAS ORIGINALLY SANCTIONED BY THE WORLD BANK IN 1990 BY THE AGREEMENT DATED 07/12/1994 STRENGTHENING THE ACTIVITI ES IN THE FIELD OF MATERIAL S CIENCE, ANALYTICAL CHEMISTRY, ENVIRONMENTAL PROTECTION AND TOXICOLOGY AND NEW ACTIVITIES LIKE STANDARD REFERENCE MATERIALS IN MODERN INSTRUMENTAL ANALYSIS AND ELECTRONIC GRADE CHEMICAL FACILITIES FOR CARRYING OUT PURIFICATION A ND CHARACTERIZATION OF VARIOUS SOLVENTS AND CLEANING AGENTS TO BE USED BY THE ELECTRONIC INDUSTRY UNDER TECHNOLOGY S ERVICES R EVOLVING FUND (TSRF) CON STITUTE D BY THE INTERNATIONAL B ANK FOR RECONSTRU CTION AND D EVELOPMENT (WORLD BANK), INTERNATIONAL DEVELOPME NT ASSOCIATION (IDA) AND THE GOVERNMENT OF INDIA AND FINAL DISBURSEMENT RECEIVED BY THE ASSESSEE IN MARCH 1996. THE FINAL AMOUNT DISBURSED WAS RS.1 25 MILLIONS DUE TO INCREASE IN EXCHANGE RATE OF DOLLAR. THE REPAYM ENT MADE DURING THE YEAR UNDER CONSIDERATIO N OF RS.1 70 LAKHS WAS TOWARD THIS LOAN. THE 5 ITA NO. 920/DEL/2012 AY: 2008 - 09 SAID LOAN WAS INTEREST - FREE IN NATURE AND AMOUNT WAS PAID TOWARDS THE PRINCIPAL AMOUNT. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT : (I) THE ASSETS PURCHASED OUT OF THE LOAN AMOUNT WERE ALREADY TREATED AS APPLICATION OF INCOME (II) THAT THE REPAYMENT OF LOAN, WHICH IS INTEREST FREE IS AGAIN BEING CLAIMED BY THE ASSESSEE SHOWING THE SAME AS APPLICATION OF INCOME (III) THAT THE SAID LOAN HAS NOT BEEN CONSIDERED AS INCOME AND ACCORDINGLY NOT INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR IN WHICH THE LOAN WAS RECEIVED. 6. THE ASSESSEE RELIED ON THE CIRCULAR NO. 100 (F .NO. 195/1/72 - IT (A - I) DATED 24 .01.1973 OF THE CENTRAL BOARD OF DIRECT TAXES (CBDT) . HOWEVER , THE ASSESSING O FFICER WAS OF THE OPINION THAT C IRCULAR WAS NO T OF HELP TO THE ASSESSEE AS THE BENEFIT OF THE CIRCULAR COULD BE AVAILED BY T HE ASSESSEE WHO HAD SHOWN D EBT IN THE NATURE OF INCOME AT THE TIME OF RECEIVING SUCH DEBT. THE ASSESSING OFFICER RELIED ON THE DECISION OF THE HON BLE APEX C OURT IN THE CASE OF E SCORTS LTD . VS. UOI , 199 ITR 43 AND HON BLE APEX COURT DECISION IN THE CASE OF LAKSHMIPAT SINGHANIA VS. CIT 71 ITR 291. CONSIDERING THE ABOVE SAID DECISIONS AND PRINCIPAL OF ACCOUNTING, THE ASSESSING OFFICER OBSERVED THAT THE PRACTICE OF CLAIMING REPAYMENT OF LOAN AS APPLICATION, IN ADDITION TO THE CLAIM OF INVESTMENT IN FIXED ASSETS MADE OUT OF THE SAID LOAN, AMOUNTED TO DOUBLE DEDUCTION WHICH WAS NEITHER INTENDED NOR EXPRESSED BY THE 6 ITA NO. 920/DEL/2012 AY: 2008 - 09 LEGISLATURE. HENCE , HE CONCLUDED THAT AMOUNT OF RS.1, 7 0,00, 000/ - CLAIMED AS APPLICATION OF INCOME CANNOT BE ALLOWED TO THE ASSESSEE. 7. THE LEAR NED COMMISSIONER OF INCOME - TAX( APPEALS) UPHELD THE ACTION OF THE ASSESSING OFFICER WITH FOLLOWING OBSERVATION: 3.2 I HAVE GONE THROUGH THE FINDING OF THE AO IN THE ASSESSMENT ORDER A ND WRITTEN SUBMISSION OF THE ID. AR. FURTHER, ID. AO ALSO RELIED ON VARIOUS CASE LAWS WHICH WERE PERUSED BY ME AND ID. AR HAS ALSO PRODUCED THE COPY OF FORM NO.3CD FOR ASSESSMENT YEARS 2006 - 07 AND 2.007 - 08, WHEREIN, REPAYMENT OF THE LOAN HAS BEEN SHOWN AS UNDER: - RS. 1,80,00,000/ - FOR THE ASSESSMENT YEAR 2006 - 07 RS.1,70,00,000/ - FOR THE ASSESSMENT YEAR 2007 - 08 IN THIS REGARD IT WAS SUBMITTED THAT THIS IS AN INTER EST FREE LOAN AND AMOUNT OF RS. 1,70,00,000 / - ADDED BY AO IS ACTUALLY REPAYMENT OF LOAN. THE ID. AR OF THE APPELLANT ALSO RELIED ON THE CIRCULAR NO. 100 OF CBDT DATED 24.1.1973. IN FACT ABOVE MENTIONED CIRCULAR HAS BEEN DISTINGUISHED BY THE AO IN THE BODY OF ASSESSMENT ORDER ITSELF. FURTHERMORE, IN PARA 6.1 , THE AO HAS ALSO DEMONSTRATED THE FINDINGS OF DOUBLE DEDUCTION AS UNDER: - 6.1. THIS IS RENDERED MORE CLEAR BY WAY OF AN ILLUSTRATION, SAY FOR INSTANCE, AN ASSESSEE RECEIVES A LOAN OF RS. 100 / - .THE SAME IS NOT REFLECTED AS AN INCOME. HOWEVER, AS AGAINST THIS, THE ASSESSEE CLAIMS RS.100 TOWARDS APPLICATION [PURCHASE OF ASSETS] AND AGAIN RS 100[REPAYMENT OF LOAN]. IN OTHER WORDS, AGAINST A RECEIPT OF THE OUT - GO IS TO THE TUNE OF RS.200/ - . 3.3 IN THE RELEVANT PARAGRAPH NO. 6 .3 AND 6.4 , AO HAS RELIED ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. VS. UNION OF INDIA, 199 ITR 43 AND IN THE CASE O F LAXMILPAT SINGHANIA VS. CIT [1969] 71 ITR 291, WHEREIN, DOUBLE DEDUCTION HAS NOT BEEN ALLOWED IN THE 7 ITA NO. 920/DEL/2012 AY: 2008 - 09 CONSIDERATION OF JUSTICE AND EQUITY. SO, AO HAS RELIED ON THE RATIO OF THE ABOVE MENTIONED TWO JUDGMENTS OF THE HON'BLE SUPREME COURT SO AS TO MAKE AN ADDITION OF RS. 1,70,00,000/ - . IN THIS REGARD BEFORE ME ID. AR OF THE APPELLANT R ELIED ON THE JUDGMENT OF THE HON BLE DELHI HIGH COURT IN THE CASE OF D1T (EXEMPTION) VS. SPAN FOUNDATION REPOR TED AT 178 TAXMAN 436 (MAD.). I HAVE GONE THROUGH THE FACTS OF THE CASE AND IN MY CONSIDERED OPINION RELIANCE ON THE CASE OF SPAN FOUNDATION IS DI STINGUISHABLE ON FACTS DUE TO FOLLOWING REASONS: - 1) I N CASE OF THE APPELLANT, LOAN HAS BEEN FOUND TO BE INTEREST FREE WHEREAS THERE IS NO MENTION ABOUT THE INTEREST IN THE CASE OF SPAN FOUNDATION. 2) THE CASE OF APPELLANT IS THAT APPELLANT HAS TAKEN LOA N FROM WORLD BANK FOR STRENGTHENING ACTIVITIES OF MATERIAL SCIENCE AND ANALYTICAL CHEMISTRY, ENVIRONMENTAL PROTECTION ETC., WHEREAS, CASE OF SPAN FOUNDATION PERTAINS TO REPAYMENT OF BORROWED FUND FOR CONSTRUCTION OF BUILDING. 3) IN THE CASE OF SPAN FOUNDA TION, THERE IS MENTION OF STANDARD RENT COMPUTED IN ACCORDANCE WITH THE DELHI RENT CONTROL ACT, WHICH IS NOT PRESENT IN THE APPELLANT S CASE. 3.4 SO, IN MY CONSIDERED OPINION RELIANCE ON THE JUDGMENT OF SPAN FOUNDATION IS TOTALLY DISTINGUISHABLE. FURTHE RMORE, AO WAS ABLE TO DEMONSTRATE THAT THERE IS NO VIOLATION OF CIRCULAR NO. 100. THIS FACT HAS BEEN DISCUSSED BY AO IN PARA 5.3 OF THE ASSESSMENT ORDER, WHEREIN, AO HAS RELIED ON THE JUDGMENT IN THE CASE OF C1T VS. RAMCHANDRA PODDAR CHARITABLE TRUST [1987 ] 164 ITR 666 (CAL.). SO, IN MY CONSIDERED OPINION, I AM IN AGREEMENT WITH THE FINDING OF THE AO IN THIS REGARD THAT CIRCULAR NO. 100 DOES NOT FAVOUR THE CASE OF THE APPELLANT. FURTHERMORE, RELIANCE ON VARIOUS CASE LAWS BY THE ID. AR OF THE APPELLANT IS FO UND TO BE DISTINGUISHED ON THE FACTS AND IN MY 8 ITA NO. 920/DEL/2012 AY: 2008 - 09 CONSIDERED OPINION ACTION OF THE AO MAKING ADDITION OF RS. 1,70,00,000/ - DESERVES TO BE CONFIRMED. GROUNDS NO. 1 TO 4 ARE DISMISSED. 8. AGGRIEVED , THE ASSESSEE FILED FURTHER APPEAL TO THE INCOME TAX APPELLATE TRIBUNAL (IN SHORT THE TRIBUNAL ). THE TRIBUNAL RELYING ON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF DIT(E) VS. SPAN F OUNDATION, 178 TAXMANN 436 (DEL) AND THE CBDT C IRCULAR ( SUPRA) SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND ALLOWED THE REPAYMENT OF LOAN AS APPLICA TION OF INCOME. AGGRIEVED, THE R EVENUE FILED APPEAL BEFORE THE HON BLE HIGH COURT OF DELHI. THE HON BLE HIGH COURT AFTER TAKING INTO CONSIDERATION THE SUBMISSI ON OF THE PARTIES , REMITTED THE MATTER FOR RECONSIDERATION BY THE TRIBUNAL WITH THE FOLLOWING OBSERVATIONS: 3. THE TRIBUNAL NOTED THAT THE CASE OF THE ASSESSEE WAS THAT IT WANTED TO LET OUT THE BUILDING AND DERIVE RENT THEREFROM AND USE THE RENTS FOR THE CHARITABLE PURPOSES SET OUT IN THE TRUST DEED. AS NOTED ABOVE, THE ASSESSEE HAD BORROWED FUNDS FOR THE PURPOSES OF CONSTRUCTING THE BUILDING. THE RENT THAT WAS DERIVED FROM THE SAID BUILDING WAS UTILIZED BY THE ASSESSEE TRUST TO RE - PAY THE BORROWED FUNDS. IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE RE - PAYMENT OF THE LOAN, IN THESE CIRCUMSTANCES, HAS TO BE REGARDED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES. THE TRIBUNAL ACCEPTED THIS PLEA OF THE ASSESSEE. THE TRIBUNAL NOTED THAT IF THE ARGUME NT OF THE REVENUE WAS TO BE ACCEPTED, THEN IT WOULD AMOUNT TO CONCLUDING THAT THE ASSESSEE COULD NOT UTILIZE THE RENTAL INCOMES RECEIVED BY IT FROM THE LEASE OF THE PROPERTY FOR CHARITABLE PURPOSES. THE TRIBUNAL NOTED THAT AS AND WHEN THE LOANS ARE DISCHAR GED AND THE ASSESSEE BECOMES FREE TO UTILIZE THE RENTAL INCOME, IT WOULD APPLY THE SAME FOR CHARITABLE PURPOSES SET OUT IN 9 ITA NO. 920/DEL/2012 AY: 2008 - 09 THE TRUST DEED AND THAT IT IS AT THAT JUNCTURE THAT THE ASSESSING OFFICER COULD INSIST THAT THE APPLICATION OF THE INCOME BE FOR THE PURPOSES MENTIONED IN THE TRUST DEED. THE TRIBUNAL CONCLUDED THAT THE REPAYMENT OF THE FUNDS BORROWED FOR CONSTRUCTION OF THE BUILDING WAS TO BE TREATED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES AND HELD ITA NOS.767/08 & 789/08 PAGE NO.4 OF 5 THAT T HE ASSESSEE WAS ENTITLED TO THE BENEFITS UNDER SECTION 11 AND 12 OF THE SAID ACT. 4. AS REGARDS THE BENEFIT BEING DERIVED BY INTERESTED PERSONS, THE ONLY QUESTION THAT WAS OF RELEVANCE WAS WHETHER THE RENTS PAID BY THE SO - CALLED INTERESTED PERSONS WERE AD EQUATE OR NOT? IN THIS REGARD, THE TRIBUNAL REMANDED THE MATTER TO THE ASSESSING OFFICER TO DECIDE THE QUESTION OF ADEQUACY IN ACCORDANCE WITH LAW, AFTER AFFORDING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. HOWEVER, WHILE DOING SO, THE TRIBUNAL NOTED ITS EARLIER DECISION IN THE CASE OF RABHUBIR SARAN CHARITABLE TRUST V. INCOME TAX OFFICER WHERE THE VIEW WAS TAKEN THAT IF THE RENT CHARGED BY AN ASSESSEE WAS HIGHER THAN THE STANDARD RENT, AS COMPUTED UNDER THE RENT CONTROL LEGISLATION, THEN THE RENT CHARGED BY THE ASSESSEE SHOULD BE CONSIDERED AS ADEQUATE. WE NOTE THAT THE TRIBUNAL S DECISION IN RABHUBIR SARAN CHARITABLE TRUST WAS THE SUBJECT MATTER OF A REFERENCE BEING IT CASE NO. 81/1989 WHICH WAS DISPOSED OF BY AN ORDER DATED 15.01.1990 WHICH HAS BEEN REPO RTED AS 183 ITR 297 (DEL). IN THAT DECISION THIS COURT APPLIED THE PRINCIPLES SET OUT IN DEWAN DAULAT RAI KAPOOR V. NDMC: 122 ITR 700 AND CONCLUDED THAT THE MARKET RENT COULD NOT BE MORE THAN THE STANDARD RENT. 9. BEFORE US, THE ASSESSEE FILED AN APPLIC ATION UNDER RULE 29 OF THE INCOME - TAX (APPELLATE TRIBUNAL) R ULES , 1963 IN COMPLIANCE TO THE DIRECTION OF THE HON BLE HIGH COURT FOR ADMITTING DETAILED CHART OF TOTAL RECEIPTS AS PER AUDITED ACCOUNTS AND EXPENDITURE CLAIMED APPENDED WITH THE INCOME 10 ITA NO. 920/DEL/2012 AY: 2008 - 09 TAX RETU RN FOR THE PERIOD FROM ASSESSMENT YEAR 1992 - 93 TO ASSESSMENT YEAR 2000 - 01. THE DETAILS OF ADDITION TO ASSETS W A S ALSO FILED ALONGWITH THE STATEMENT OF TOTAL I NCOME FOR EACH OF THE AFORESAID ASSESSMENT YEARS. 10. FURTHER , THE LEARNED AUTHORIZED R EPRESENTATIVE OF THE ASSESSEE CLAIMED THAT DEPRECIATION WAS NEVER BEEN CLAIMED AS AN EXPENDITURE OR AN APPLICATION OF INCOME IN ANY OF THE ASSESSMENT YEARS CONCERNED AND , THEREFORE , THE SUBMISSION OF THE LEARNED D EPARTMENTAL R EPRESENTATIVE BEFORE THE HON BLE HIGH COURT AS CONTAINED IN PARA - 3 WERE FACTUALLY INCORRECT BECAUSE THE ASSESSEE NEVER CLAIMED DEPRECIATION AS T H E APPLICATION OF INCOME IN ALL THE YEARS CONCERNED DURING WHICH THE LOANS WERE UTILIZED FOR ACQUISITION OF ASSETS. FURTHER, HE REITERATED EARLIER SUBMISSION MADE BY THE ASSESSEE BEFORE THE TRIBUNAL. 11. IN THE COURSE OF HEARING B E F O R E U S , THE DETAILS OF RECEIPTS AND EXPENDITURE AS WELL AS STATEMENT OF INCOME FOR THE ASSESSMENT YEAR FROM 2001 - 02 TO 2008 - 09 WERE MADE AVAILABLE BY THE ASSESSEE FOR ADMISSION AS ADDITIONAL EVIDENCE UNDER RULE 29 OF THE ITAT RULES. 12. THE LEARNED COMMISSIONER OF INCOME TAX (DEPARTMENTAL R EPRESENTATIVE), RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES AND R E I T E R A T E D THE SUBMISSION MADE BEFORE THE HON BLE HIGH COURT BY THE DEPARTMENT. 13. WE HAVE HEAR D THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ADDITIONAL EVIDENCES HAVE BEEN FILED BY 11 ITA NO. 920/DEL/2012 AY: 2008 - 09 THE ASSESSEE IN COMPLIANCE T O THE DIRECTION OF THE HON BLE C OURT, WHICH IS NECESSARY FOR DISPOSAL OF THIS APPEAL AND , THEREFORE , WE ADMIT TH ESE ADDITION AL EVIDENCES UNDER R ULE 29 OF THE INCOME - TAX (APPELLATE TRIBUNAL) R ULES , 1963 . WE ALSO FIND THAT THE LEARNED DEPARTMENTAL R EPRESENTATIVE WAS ALLOWED SUFFICIENT TIME TO GO THROUGH THOSE EVIDENCES, HOWEVER , SHE DID NOT RAISE ANY OBJECTIONS IN RESPECT OF RELIABILITY OF THOSE EVIDENCES. 14. FROM THE FACTS OF THE CASE , WE FIND THAT LOAN UNDER REFERENCE WAS SANCTIONED IN THE YEAR 1990 AND FINAL AMOUNT OF DISBURSEMENT OF THE LOAN WAS RECEIVED BY THE ASSESSEE COMPANY IN MARCH, 1996 . ON PERUSAL OF THE STATEMENT OF INCOME FILED FOR THE ASSESSMENT YEAR S 19 92 - 93 TO 19 99 - 2000 DURING WHICH THE LOAN WAS RECEIVED BY THE ASSESSEE, WE FIND THAT APPARENTLY THE LOAN UNDER REFERENCE RECEIVED FROM WORLD BANK HA S NOT BEEN SHOWN AS INCOME IN ANY OF THE YEAR CONCERNED. FURTHER , WE FIND FROM THE STATEMENT OF TOTAL I NCOME THAT THE C OST OF FIXED ASSETS ACQUIRED DURING THE RELEVANT YEARS HAS BEEN CLAIMED AS APPLICATION OF INCOME. IN THE NOTE APPENDED TO DEPRECIATION CH ART FOR THE ASSESSMENT YEAR 1992 - 93 ENCLOSED ALONG WITH THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT, IT IS MENTIONED THAT ADDITIONS INCLUDE ASSETS AMOUNTING TO RS.91,31, 124/ - (PREVIOUS YEAR RS.75,50, 597/ - ) PURCHASE D UNDER THE INDUSTRIAL CREDIT AND INVEST MENT CORPORATION OF INDIA LTD . (TECH NOLOGY SERVICE REVOLVING FUND) S CHEME. SIMILAR NOT ES HAVE BEEN PROVIDED IN CASE OF OTHER 12 ITA NO. 920/DEL/2012 AY: 2008 - 09 ASSESSMENT YEARS INVOLVED . THE ASSESSMENT YEAR WISE DEDUCTION CLAIMED FOR COST OF FIXED ASSET IS AS UNDER SL. NO. ASSESSMENT YEAR COST OF FIXED ASSET CLAIMED AS DEDUCTION ( I N R S . ) 1. 1992 - 93 1,73,58,448/ - 2. 1993 - 94 1,08,17,964/ - 3. 1994 - 95 1,10,97,687/ - 4. 1995 - 96 1,86,70,264/ - 5. 1996 - 97 3,30,21,268/ - 6. 1997 - 98 2,01,21,185/ - 7. 1998 - 99 2,72,73,985/ - . 15. FURTHER , ON PERUSAL OF THE STATEMENT OF COMP UTATION OF INCOME, WE FIND THAT IN THE ASSESSMENT YEARS FROM 1992 - 93 TO ASSESSMENT YEAR 1998 - 99, THE DEPRECIATION PROVIDED IN THE BOOKS OF ACCOUNTS HAS BEEN REDUCED FROM THE EXPENDITURE CLAIMED TOWARDS APPLICATION OF INCOME, WHICH MEA NS THE DEPRECIATION HAS NOT BEEN CLAIMED AS APPLICATION OF INCOME. FROM THE ASSESSMENT YEAR 1999 - 2000 ONWARDS TILL THE ASSESSMENT YEAR UNDER CONSIDERATION ALSO THE DEPRECIATION HAS NOT BEEN CLAIMED TOWARDS APPLICATION OF THE INCOME. 16. IN VIEW OF ABOVE O BSERVATIONS, IT IS CLEAR THAT THE ASSESSEE HAS NOT SHOWN THE LOANS RECEIVED AS ITS INCOME OR RECEIPT, IN THE YEAR IN WHICH SUCH LOAN WAS RECEIVED BY THE ASSESSEE AND , THEREFORE , THE REPAYMENT ALSO CANNOT BE ALLOWED AS AN EXPENDITURE OR APPLICATION OF INCOM E. FURTHER , WE FIND THAT LOAN MONEY OBTAINED HAS BEEN SHOWN AS APPLICATION ON ACQUISITION OF FIXED ASSETS AND, THEREFORE , THE ASSESSEE HAS ALREADY CLAIMED LOAN AS DEDUCTION OR APPLICATI ON OF INCOME AND THEREFORE, IN OUR 13 ITA NO. 920/DEL/2012 AY: 2008 - 09 OPINION , ALLOWING APPLICATION OF REPAYMENT OF LOAN WILL AMOUNT TO DOUBLE DEDUCTION. 17. AS REGARD THE CBDT C IRCULAR, THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. RAJENDRA PODDAR CHARITABLE T RUST (1987) 164 ITR 666 HAS HELD THAT CIRCULAR IN QUESTION CANNOT OVERRIDE THE LAW. THE RELEVA NT FINDING S OF THE APEX C OURT ARE AS UNDER: 18. WE ARE ENTIRELY UNABLE TO UPHOLD THIS CONTENTION. WHEN THE INCOME OF A CHARITABLE TRUST IS SET APART OR ACCUMULATED, IT CAN ONLY BE WITH THE OBJECT OF APPLICATION OF THE AMOUNT FOR CHARITABLE PURPOSES. THE R ELIEF GRANTED BY S. 11(1)(A) IS LIMITED ONLY TO CASES WHERE ACCUMULATION HAS BEEN MADE OF ONLY 25 PER CENT OF THE INCOME OF A PARTICULAR YEAR. THE MERE FACT THAT THE ASSESSEE HAD APPLIED ITS ACCUMULATED INCOME OF THE EARLIER YEARS FOR THE PURPOSE OF CHARIT Y WILL NOT ABSOLVE THE ASSESSEE OF ITS DUTY TO APPLY ITS INCOME FOR THE PURPOSE OF CHARITY IN THE CURRENT YEAR NOR WILL IT ENLARGE THE LIMIT OF THE AMOUNT WHICH IS PERMITTED TO BE ACCUMULATED BY S. 11(1)(A). AN ASSESSEE MAY BORROW MONEY AND SPEND IT FOR CH ARITABLE OBJECT. THE CIRCULAR MERELY RECOGNISES THAT IN SUCH A CASE, APPLICATION OF INCOME FOR REPAYMENT OF A LOAN TAKEN FOR CHARITABLE PURPOSE WILL AMOUNT TO APPLICATION OF INCOME FOR CHARITABLE PURPOSE. THE CIRCULAR, HOWEVER, DOES NOT PERMIT AN ASSESSEE TO ACCUMULATE MORE THAN 25 PER CENT OF ITS INCOME OR RS. 10,000, WHICHEVER IS HIGHER (FOR THE PURPOSE OF CHARITY). THE WORDING OF S. 11 IS CLEAR AND UNAMBIGUOUS. THE RELIEF IS LIMITED TO THE AMOUNT OF INCOME OF A CHARITABLE TRUST ACTUALLY APPLIED FOR CHARI TABLE PURPOSE. ACCUMULATION OF INCOME IS PERMITTED ONLY TO THE EXTENT AND SUBJECT TO THE CONDITIONS LAID DOWN IN THAT SECTION. AN ASSESSEE CAN ACCUMULATE OR SET APART ONLY 25 PER CENT OF THE INCOME OF THE TRUST OR RS. 10,000, WHICHEVER IS HIGHER, IN A GIVE N YEAR. THE CIRCULAR DOES NOT SEEK TO AND CANNOT ENLARGE THE SCOPE OF THE SECTION. 14 ITA NO. 920/DEL/2012 AY: 2008 - 09 (EMPHASIS SUPPLIED BY US) 18. I N VIEW OF DISCUSSION ABOVE, IN COMPLIANCE TO THE DIREC TIONS OF THE HON BLE HIGH COURT , WE HOLD THAT THE ASSESSEE HAS ALREADY BEEN ALLOWED COST OF ADDITION TO ASSET ACQUIRED OUT OF THE LOANS AS APPLICATION OF INCOME IN RELEVANT YEARS AND THEREFORE ASSESSEE CANNOT BE ALLOWED THE REPAYMENT OF LOAN AS APPLICATION OF THE INCOME, ACCORDINGLY WE UPHOLD THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) ON THE ISSUE IN DISPUTE. 19. IN RESULT , THE APPEAL OF THE ASSESSEE IS DISMISSED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 3 0 T H SEPT., 2016 . S D / - S D / - ( I.C. SUDHIR ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 T H SEPTEMBER , 2016 . LAPTOP / - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI