Deputy Director of Income Tax (Exemption), Ernakulam V. Adi Sankara Trust, Aluva

ITA 96/COCH/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4527 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 21-04-2011
• Assessment Year: misc
• Appeal Filed On: 20-02-2009
• Court: TRIBUNAL
• Department Lawyers: S C SONKAR
• Keywords: Capital asset; Depreciation; Charitable institution; Source of fund; Retrospective amendment; Question of law; Capital receipt; Revenue expenditure; Capital expenditure
• Section: 12A; 11

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NO. 96/COCH/2009 & C.O. 18/COCH/09 (IN I.T.A.NO. 96/COCH/2009) ASSESSMENT YEAR:2005-06 THE DY. DIRECTOR OF INCOME-TAX (EXEMPTION), RANGE-II, ERNAKULAM. VS. ADI SANKARA TRUST, SANKARA NAGAR, MATTOOR P.O., KALADY. [PAN:AABTA 0123D] (REVENUE -APPELLANT) (ASSESSEE - RESPONDENT) (AND VICE-VERSA) REVENUE BY SHRI S.C.SONKAR, CIT-DR ASSESSEE BY SHRI V.RAMACHANDRAN, SR. COUNSEL FOR DR. ANITHA SUM ANTH, ADV. I.T.A. NOS. 259 COCH/2009 ASSESSMENT YEAR:2006-07 V.N.GANGADHARA PANICKER MEMORIAL CHARITABLE TRUST, RANI BHAVAN, KESTON ROAD, KOWDIAR, THIRUVANANTHAPURAM-03. [PAN: AAATV 3928N] VS. THE ASST. DIRECTOR OF INCOME-TAX (EXEMPTION), TRIVANDRUM. (ASSESSEE -APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY DR. ANITHA SUMANTH, ADV. REVENUE BY SHRI S.C.SONKAR, CIT-DR. O R D E R PER SANJAY ARORA, AM: THESE ARE A SET OF TWO APPEALS QUA TWO ASSESSEES, ARISING OUT OF SEPARATE ORDERS BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-II & I V, KOCHI (CIT(A) FOR SHORT) DATED 12.12.2008 AND 18.2.2009 RESPECTIVELY. THE ISSUES A RISING IN THE APPEALS BEING COMMON, THE SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OF VIDE A COMMON, CONSOLIDATED ORDER. ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 2 THE ISSUE 2. THE ASSESSEE IN BOTH THE CASES IS A CHARITABLE T RUST REGISTERED U/S. 12A OF THE INCOME-TAX ACT, 1961 ('THE ACT' HEREINAFTER). IN BO TH THE CASES, IT RETURNED NIL INCOME, CLAIMING DEPRECIATION AT ` 96.83 LAKHS AND ` 146.75 LAKHS RESPECTIVELY. THE CORRESPONDING COST (OF THE CAPITAL ASSETS) ON WHICH DEPRECIATION STOOD CLAIMED, WAS, AS IN THE PAST, CLAIMED AS APPLICATION OF INCOME TOWARD ITS OBJECTS AT ` 372.99 LAKHS AND ` 126.15 LAKHS RESPECTIVELY. THAT IS, THE COST OF THE RELEVANT ASS ETS STOOD CLAIMED AS AN APPLICATION OF INCOME FOR A PRECEDING AND/OR THE CURRENT YEAR. THE ISSUE CALLING FOR CONSIDERATION IN THE PRESENT SET OF APPEALS, THEREFORE, IS THE MAINTAINA BILITY IN LAW OF THE DEDUCTION QUA DEPRECIATION ALLOWANCE, CLAIMED BY THE ASSESSEE-TRU ST U/S.32(1), IN RESPECT OF ASSETS, THE ENTIRE COST OF WHICH STANDS ALLOWED BY WAY OF APPLI CATION OF INCOME U/S. 11(1) OF THE ACT . THE COST OF ASSET/S HAVING BEEN ALLOWED, ITS WDV WA S NIL, SO THAT THERE WAS NO AMOUNT AVAILABLE ON WHICH DEPRECIATION COULD BE CLAIMED IN ITS RESPECT. THE SAME WOULD EVEN OTHERWISE AMOUNT TO A DOUBLE DEDUCTION, PROHIBITED BY LAW, AS EXPLAINED BY THE APEX COURT IN THE CASE OF ESCORTS LTD. & OTHRS. VS. UNION OF INDIA (1993) 199 ITR 43 (SC). THE ASSESSING OFFICER (AO), ACCORDINGLY, DISALLOWED THE DEPRECIATION CLAIMED, WHILE ALLOWING THE APPLICATION OF INCOME, INCLUDING QUA THE COST OF THE CAPITAL ASSETS, AT THE CLAIMED AMOUNT. THE SAME STOOD DELETED, OR CONFIRM ED, IN APPEAL BY THE LD. CIT(A), FINDING THE DECISION IN THE CASE OF CIT VS. INSTITUTE OF BANKING, 264 ITR 110 (BOM.), CITED BEFORE HIM, AS GOVERNING, OR NOT SO, AS THE C ASE MAY BE, THE ASSESSEES CASE BEFORE HIM; DISTINGUISHING THE SAID RELIANCE WITH REFERENC E TO THE DECISION IN THE CASE OF CIT VS. BHORUKA PUBLIC WELFARE TRUST , 241 ITR 513 (CAL). ACCORDINGLY, BOTH THE PARTIES, THE ASSESSEE AND THE REVENUE, ARE IN APPEAL IN THE RESP ECTIVE CASES, WITH THE ASSESSEE FILING A CROSS OBJECTION WHERE THE REVENUE IS IN APPEAL. ARGUMENTS 3.1 BEFORE US, THE MATTER WAS ARGUED AT LENGTH BY T HE LD. AR; THE TRIBUNAL (COCHIN BENCH) HAVING PASSED AN ORDER TAKING A VIEW UPHOLDI NG THAT BY THE REVENUE [ DIRECTOR OF INCOME-TAX (EXEMPTION) VS. LISSIE MEDICAL INSTITUTI ONS , IN I.T.A. NOS. 1010/COCH/2008 AND CO NO. 6/COCH/2009 DATED 26.10.2010 / REFER PB PGS. 1 TO 17] , RELYING ON THE DECISION IN THE CASE OF ESCORTS LTD . & OTHRS. V. UNION OF INDIA (SUPRA). THE TRIBUNAL HAD, ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 3 IT WAS AVERRED, DISTINGUISHED THE SEVERAL DECISIONS BY THE HIGHER COURTS OF LAW CITED BEFORE IT, ON TWO GROUNDS. FIRSTLY, THAT THERE HAS BEEN N O CONSIDERATION OF THE DECISION BY THE APEX COURT IN THE CASE OF ESCORTS LTD. & OTHRS. (SUPRA), I.E., IN RENDERING THE DECISIONS BEING RELIED UPON, HAVING NOT BEEN CITED BEFORE THE HONBLE COURTS, WHILE THE SAME FORMED THE BASIS OF THE REVENUES CASE. SECONDLY, THAT TH E LAW STANDS AMENDED W.E.F. 1.4.1989 BY CO-OPTION OF CLAUSE (D) TO S. 11(1) OF THE ACT, SO THAT THERE IS NO REQUIREMENT IN LAW FOR APPLYING THE SAID INCOME, I.E., AS COVERED BY S. 11 (1)(D), FOR CLAIMING EXEMPTION IN ITS RESPECT. AS REGARDS THE FIRST POINT OF DISTINCTION, THE DECISIONS IN THE CASE CIT VS. MARKETING COMMITTEE, PIPLI , 330 ITR 16 (P&H) AND CIT V. TINY TOTS EDUCATION SOCIETY , 330 ITR 21 (P&H) STAND RENDERED BY THE HONBLE HIGH COURT AFTER CONSIDERING THE SAME, EXPLICITLY STATING THAT THERE IS NO DOUBLE DEDUCTIO N, SO THAT THE SAID DECISION BY THE APEX COURT IS NOT APPLICABLE IN THE FACTS AND CIRCUMSTAN CES OF THE CASE. WITH REGARD TO THE SECOND DIFFERENCE, THE SAID DECISIONS BY THE HONBL E P&H HIGH COURT, BEING FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 RESPECTIVELY, ARE FOR SUBSEQUENT YEARS, WHEREAT THE AMENDED SEC. 11 IS IN FORCE, SO THAT THE SAID D ISTINCTION WOULD ALSO NOT OBTAIN. HOW WOULD IT MATTER, HE POSED, WHETHER THE VOLUNTARY CO NTRIBUTION OR DONATION RECEIVED BY THE CHARITABLE TRUST IS WITH OR WITHOUT A DIRECTION THA T THE SAME SHALL FORM PART OF THE CORPUS OF THE TRUST, WHERE THE SAME IS IN FACT APPLIED FOR THE ACQUISITION OF A CAPITAL ASSET ? SO HOWEVER, GOING BY THE TRIBUNALS VIEW (IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA) - REFER PARA 4.6 OF THE ORDER), WHILE IN THE CASE OF FORMER (I.E., WITH SUCH A DIRECTION), THE ASSESSEE WOULD STAND TO BE ALLOWED DEPRECIATION ON THE CAPITAL ASSET/S ACQUIRED OUT OF THE SAID FUNDS, IT WOULD NOT IN THE CASE OF THE LATTER, EVEN AS THE CONTRIBUTION IN BOTH THE CASES STANDS APPLIED SIMILARLY. IN EITHER CASE, THE SAME HAVING BEEN APPLIED OR UTILIZED THUS, THE NON-ALLOWANCE OF DEPRECIATION IN THE LATTER CASE WO ULD LEAD TO A DIFFERENCE IN THE INCOME SUBJECT TO TAX TO THE EXTENT OF DEPRECIATION DISALL OWED. THAT IS, A MERE DIRECTION BY THE DONOR WOULD ALTER THE DONEES ASSESSABLE INCOME, EV EN AS THE SAME STANDS UTILIZED BY THE DONOR IN THE SAME MANNER, AND WHICH IS NOT COMPREHE NSIBLE AND, IN ANY CASE, COULD NOT BE THE INTENT OF LAW. THE PROVISION OF S. 11(1)(D) WAS NECESSITATED BY THE OMISSION OF THE WORDS NOT BEING CONTRIBUTIONS MADE WITH A SPECIFIC DIRECT ION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION IN S. 2(24)(IIA) BY DIRECT TAX LAWS (AMENDMENT) ACT, 1987 W.E.F. 1.4.1989, SO THAT THE SAID CONCEPT WAS IN FORCE SINCE THE INSERTION OF ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 4 CLAUSE (IIA) IN S. 2(24) BY FINANCE ACT, 1972 W.E.F . 1973, WHICH OPERATED TO REMOVE FROM THE SWEEP OF `INCOME VOLUNTARY CONTRIBUTIONS WHERE THESE FORMED A PART OF THE CORPUS OF THE DONEEINSTITUTION. ON A QUERY BY THE BENCH THA T IF IT IS SO, I.E., GRANTING SO FOR THE MOMENT, WHY COULD NOT, THEN, THE ASSESSEE TAKE PAIN S TO SECURE A SPECIFIC DIRECTION FROM THE DONOR(S) - WHICH SHOULD RATHER BE ONLY A SIMPLE MATTER AND PARTICULARLY WHERE IT PROPOSED TO ACQUIRE CAPITAL ASSET(S) THERE-FROM. I T WAS SUBMITTED BY HIM THAT THE SAME MAY NOT ALWAYS BE PRACTICAL AND, SECONDLY, THE CORP US IS NOT FOR ACQUIRING CAPITAL ASSETS ALONE, AND MAY WELL BE MAINTAINED IN THE FORM OF LI QUID ASSETS. IT NEEDS TO BE APPRECIATED, HE CONTINUED, THAT THE TWO CLAIMS ARE DISTINCT AND SEPARATE, EVEN AS SOUGHT TO BE EXPLAINED BY THE HONBLE P&H HIGH COURT IN THE CITED CASES; W HILE THAT FOR DEPRECIATION IS A CHARGE AGAINST THE PROFITS AN ABOVE-THE-LINE ITEM THE ACQUISITION OF CAPITAL ASSET(S) IS AN APPLICATION OF INCOME, DETERMINED THUS, A BELOW-THE -LINE ITEM. PROVISIONS, AS FOR TAX, DIVIDEND, ETC., ARE CLASSICALLY CONSIDERED AS BELOW -THE-LINE ITEMS, DENOTING THE APPLICATION OF PROFITS, ALSO CALLED THE `PROFIT AND LOSS APPROP RIATION ACCOUNT. 3.2 THE LD. DR, ON THE OTHER HAND, RELIED ON THE TR IBUNALS DECISION IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA). THE SAME IS AN EXTENSIVE REVIEW OF THE L AW IN THE MATTER, DEALING WITH THE ISSUE IN ALL ITS RELEVANT ASPECTS, INCLUDING BY DISCUSSING THE VARIOUS JUDGMENTS RENDERED IN THE MATTER AND CITED BEFORE IT, AND WHICH ARE THE SAME AS BEING NOW RELIED UPON. THE ASSESSEE HAS NOT BEEN AB LE TO POINT OUT ANY INFIRMITY IN THE SAID ORDER, SO THAT THERE IS NO GROUND OR OCCASION FOR THE TRIBUNAL TO REVIEW OR RE-VISIT ITS ELABORATE AND WELL-CONSIDERED ORDER, WHICH IN ANY C ASE COULD BE CHALLENGED BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. FINDINGS 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, INCLUDING THE CASE LAW RELIED UPON. 4.1 THE TRIBUNAL IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA) [2010-TIOL-644- ITAT-COCHIN] HAS ATTEMPTED TO PROVIDE AN ANSWER TO THE VARIOUS ISSUES ARISING FOR CONSIDERATION IN THE MATTER. WE HAVE GIVEN OUR CAR EFUL CONSIDERATION TO THE MATTER, AND ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 5 FIND NO REASON TO DEPART FROM OUR EARLIER VIEW. THA T BEING THE CASE, WE SHALL PROCEED ON THE BASIS THAT THE SAID ORDER BY THE TRIBUNAL (SUPR A) HAS BEEN READ AND, FURTHER, IN THE BACKGROUND AND THE BACKDROP OF THE TRIBUNALS FINDI NGS IN THAT CASE, TAKING LIBERTY TO FREELY REFER/ADVERT TO THE SAME. FURTHER ON, WE SHALL, AS IS INCUMBENT ON US, MEET T HE TWO ARGUMENTS RAISED BEFORE US BY THE LD. AR, WHICH CON STITUTE THE ASSESSEES CASE BEFORE US. 4.2 THE FIRST ARGUMENT IS THAT THE ALLOWANCE OF DEPRECIATION AND DEDUCTION QUA THE APPLICATION OF INCOME (ON THE ASSETS ON WHICH THE S AME IS CLAIMED), DOES NOT AMOUNT TO OR RESULT IN A DOUBLE DEDUCTION, SO AS TO BE HIT BY TH E DECISION BY THE APEX COURT IN THE CASE OF ESCORTS LTD . & OTHRS . (SUPRA). THE SAID ISSUE STANDS DISCUSSED AT PARA 4.5 OF THE ORDER BY THE TRIBUNAL IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA). IT, WITH REFERENCE TO THE DECISION IN THE CASE OF ESCORTS LTD . & OTHRS . (SUPRA), EXPLAINED THAT THE IMPORT AND PURPORT OF THE TWO CLAIMS, I.E., DEPRECIATION ON CA PITAL ASSET/S AS WELL AS THE DEDUCTION QUA THE COST OF THE SAID CAPITAL ASSETS, IS THE SAME, A ND TO THE SAME EFFECT, I.E., THE WRITE OFF OF THE UNDERLYING CAPITAL EXPENDITURE. THE DISTINCTIO N SOUGHT TO BE DRAWN BY THE LD. AR, IS, TO OUR MIND, NON-EXISTENT. IF THE CAPITAL ASSET/S IS A PART OF THE ASSET BASE OF THE CHARITABLE TRUST, USED FOR ITS PURPOSES, IT ONLY FORMS A PART OF THE CAPITAL STRUCTURE OR THE APPARATUS OF THE ENTITY, AND ONLY ON THE STRENGTH OF WHICH THE C LAIM QUA DEPRECIATION IS MAINTAINABLE, I.E., AS A CHARGE AGAINST PROFITS/INCOME THEREOF. T HOUGH THE SAME IS TRITE LAW, REFERENCE IN THIS CONTEXT, FOR THE SAKE OF COMPLETENESS OF THE D ISCUSSION, IS DRAWN TO THE DECISIONS, INTER ALIA , IN THE CASE OF CIT V. P.K. BADIANI , 76 ITR 369 (BOM.) & CIT V. SOCIETY OF SISTERS OF ST. ANNE , 146 ITR 28 (KAR), AS WELL AS TO PARA 4.4 OF THE O RDER BY THE TRIBUNAL IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA). HOW COULD THEN, THE VERY SAME ASSET(S), FORMING PART OF ITS CAPITAL STRUCTURE, BE CONSIDERE D AS A APPLICATION OF INCOME ? THE GRAPHICAL REPRESENTATION OF THE ABOVE AND BELOW THE LINE, I.E., SPEAKING IN AN ACCOUNTANTS TERMINOLOGY, WITH REFERENCE TO WHICH T HE LD. COUNSEL SOUGHT TO BRING HOME HIS CASE, RATHER, BRINGS TO FOCUS THE INCONSISTENCY AND THE FALLACY IN THE ARGUMENT. COULD THE SAME EXPENDITURE BE CONSIDERED AS BEING TOWARD `INCOME AND, AT THE SAME TIME, AN APPLICATION OF IT, OR, TO PUT IT IN THE SAME GRAPHI CAL MANNER, COULD AN EXPENDITURE BE CONSIDERED AS BOTH ABOVE AND BELOW THE LINE, AND SI MULTANEOUSLY AT THAT. THE TWO ARE MUTUALLY EXCLUSIVE, AND THE ARGUMENT ADVANCED IS IN TERNALLY INCONSISTENT . WHILE AN ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 6 EXPENDITURE IS NECESSARILY INCURRED FOR THE PURPOSE S OF INCOME, I.E., AS A PART OF THE INCOME GENERATING PROCESS, DIRECTLY OR INDIRECTLY, THE OTHER IS AN APPLICATION OF THE INCOME SO GENERATED, AND HAS NOTHING TO DO WITH EITHER INC OME GENERATION OR THE MAINTENANCE OF THE CAPITAL STRUCTURE OR THE INCOME GENERATING APPA RATUS. EVEN WHERE THE INCOME ARISES ONLY OUT O F VOLUNTARY CONTRIBUTIONS, RECOGNISING THE NEED TO MAINTAIN CORPUS, AS IN THE CASE OF ANY BUSI NESS ACTIVITY, THE LAW PROVIDES THEREFOR, SO THAT THE TRUST/INSTITUTION IS NOT REQUIRED TO AP PLY THE SAME TO CLAIM ITS EXEMPTION FROM TAX U/SS. 11 & 12. THAT IS, THE VERY FACT THAT THE SAID CONTRIBUTION IS TOWARD CAPITAL OR CORPUS, IS BY ITSELF SUFFICIENT TO ACCORD IT EXCLUS ION, AND IS, THUS, NOT LIABLE FOR, OR IS FREE FROM THE REQUIREMENT OF, ITS APPLICATION TOWARD TH E OBJECT/S OF THE TRUST. INCOME OF A CHARITABLE TRUST, IT MAY BE NOTED, IS NOT PER SE EXEMPT FROM TAX, BUT ONLY ON ITS APPLICATION TOWARD ITS OBJECTS . THE SAME, THUS, IS ONLY IN THE NATURE OF A DEDUCT ION, I.E., REQUIRED TO A ALLOWED FOR COMPUTING INCOME SUBJECT TO TAX UNDER T HE ACT, WHICH ALSO FINDS SUPPORT FROM THE INSERTION OF S. 11(1)(D). IT IS, AS SUCH, NOT A QUESTION OF A MERE DIRECTION, AS THE LD. AR WOULD PUT IT, BUT OF CLASSIFYING THE RECEIPT OF THE TRUST INTO TWO DISTINCT CATEGORIES, I.E., `REGULAR AND `TOWARD CAPITAL. HOW ELSE, ONE MAY ASK, COULD THE LAW SEEK TO DISTINGUISH THE TWO, EXCEPT ON THE BASIS OF THE APP LICATION INCIDENTAL AND SUBJECT TO WHICH THE SAME STANDS RECEIVED ? FURTHER, IF THE SAID DISTINCTION IS WITH REFEREN CE TO AN EARLIER DATE, I.E., PRIOR TO 1.4.1989, AS SOUGHT TO BE CLAR IFIED BEFORE US, IT DOES NOT DETRACT FROM, RATHER, ONLY REINFORCES THE SAME; THE LAW BECOMING MORE EXPLICIT FROM THAT DATE, REMOVING ANY AMBIGUITY THAT MAY HAVE PERSISTED IN T HE MATTER. CONTINUING FURTHER, THE RESULTANT DIFFERENCE, I.E., DEPRECIATION BEING ALLO WABLE IN ONE CASE AND NOT IN THE OTHER, AMOUNT AS IT DOES TO A DOUBLE DEDUCTION, ARISES OUT OF THE VERY NATURE OF THE SOURCE OF FUNDING, AND THE DIFFERENCE IN THE LAW IN RELATION THERE-TO. THE SAME RATHER THAN BEING PREJUDICIAL TO A CHARITABLE TRUST, IS BENEFICIAL TH ERETO, INASMUCH AS THE LAW `RECOGNISES CAPITAL RECEIPT AS THE PRINCIPAL SOURCE OF FUNDING OF A CHARITABLE TRUST/INSTITUTION NOT ENGAGED IN ANY BUSINESS, I.E., VOLUNTARY CONTRIBUTI ONS, OR ITS NEED TO MAINTAIN CAPITAL. WE MAY ONLY LOOK AT THE CORRESPONDING CASE OF ANY N ORMAL, BUSINESS ENTERPRISE, TO CLARIFY THIS. WHILE A CAPITAL ASSET ACQUIRED FOR AND PUT TO USE FOR BUSINESS PURPOSES WOULD ENTITLE IT TO A CLAIM FOR DEPRECIATION, I.E., WHATEVER BE T HE SOURCE OF FUNDING, AND WHETHER THE ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 7 SAME IS ACQUIRED FROM `INCOME OR FROM `CAPITAL, I T IS ONLY THE `INCOME WHICH IS, WHERE OTHERWISE NOT EXEMPT, LIABLE TO TAX. WOULD THAT IN ANY MANNER BE CONSIDERED AS PREJUDICIAL OR LEADING TO A DICHOTOMY WITH REFERENC E TO THE SOURCE OF FUNDING, AS SOUGHT TO BE MADE OUT IN RESPECT OF A CHARITABLE TRUST ? IN FACT, THE REVENUES ARGUMENT IN THE C ASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA), THAT A CLAIM FOR DEPRECIATION IS NOT ALLOWABLE ALSO FOR THE REASON OF IT BEING VIOLATIVE OF S. 14A, WHICH THOUGH DID NOT FIND FAVOUR WITH THE TRIB UNAL (REFER PARA 4.7), WAS ONLY ON THIS BASIS: `THE INCOME OF A CHARITABLE TRUST BEING EXEM PT, THE CORRESPONDING CLAIM FOR DEPRECIATION IS NOT ALLOWABLE U/S. 14A. THE INCOM E THAT IS EXEMPT IS ONLY THAT COMPUTED APPLYING THE NORMAL PRINCIPLES OF COMMERCIAL ACCOUN TING, I.E., NET OF EXPENSES, WHICH WOULD THUS STAND TO BE DEDUCTED, EVEN WHERE THE INC OME OF THE TRUST IS NOT FROM BUSINESS, DETERMINED BY APPLYING THE PROVISIONS OF CHAPTER IV -D (REFER S. 11 (4A)), AND WHICH EXPENSES WOULD INCLUDE A CHARGE TOWARD DEPRECIATION ON CAPITAL ASSETS DEPLOYED OR MAINTAINED BY THE TRUST AS WELL. SECONDLY, AS NOTED EARLIER, THE INCOME OF THE CHARITABLE INSTITUTION IS NOT EXEMPT PER SE , BUT ONLY ON ITS APPLICATION. COMING BACK TO THE POINT IN ISSUE, THE DIFFERENTIAL TREATMENT QUA DEPRECIATION IS ONLY DUE TO THE DIFFERENCE IN LAW ATTENDING THE TWO SCENARIOS, WHICH RATHER SEEKS TO BRING THE SAME (LAW) AT PAR WITH THAT QUA ANY OTHER ENTITY ACQUIRING AND USING A CAPITAL ASS ET FOR ITS PURPOSES. NO INFIRMITY, THUS, INFLICTS THE TRI BUNALS ORDER QUA THE DIFFERENTIAL TREATMENT OF THE CLAIM FOR DEPRECIATION, I.E., W.R.T. THE APP LICATION OR OTHERWISE OF THE PROVISION OF S. 11(1)(D) IN THE FACTS OF A CASE, AND THERE IS NOTHI NG INCOMPREHENSIBLE ABOUT IT. RATHER, THE ASSESSEES ARGUMENT OR CONTENTION FOR A UNIFORM TRE ATMENT ( QUA DEPRECIATION), THEREBY, SEEKS TO ELIMINATE THE DIFFERENCE THAT THE LAW ITSE LF SPECIFICALLY PROVIDES FOR, I.E., IS CONTRARY TO THE EXPRESS PROVISIONS OF LAW. FURTHER, THE FINDING OF THE TWO CLAIMS AS REPRESENTING A DEDUCTION QUA THE SAME EXPENDITURE, WHICH STANDS EXTENSIVELY DIS CUSSED AT PARA 4.5 OF THE TRIBUNALS SAID ORDER, MEETING EACH OF THE ARGUMENTS RAISED, IS ESSENTIALLY A MATTER OF FACT. IT POINTS OUT THAT THE USER OF AN ASSET FOR THE INTENDED PURPOSE/S, A PRE- REQUISITE FOR A CLAIM OF DEPRECIATION IN ITS RESPEC T, IS ALSO NECESSARY TO VALIDATE THE CLAIM (IN RESPECT OF THE CAPITAL EXPENDITURE) QUA THE APPLICATION OF INCOME, AS NO CHARITABLE ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 8 PURPOSE WOULD STAND TO BE SERVED WHERE THE CAPITAL ASSET ACQUIRED THUS, AND RETAINED, IS NOT USED FOR THE OBJECTS OF THE TRUST; CONCLUDING A S UNDER:- `4.5.5 IN OUR VIEW, THERE IS, AS SUCH, A CLEAR CASE OF DOU BLE DEDUCTION, AND NOT CONSIDERING IT AS SO WOULD BE A TRAVESTY OF THE CON CEPT OF INCOME. THE PROPOSITION FOR NON-DOUBLE DEDUCTION (OF THE SAME EXPENDITURE), AS ALSO EXPLAINED BY THE APEX COURT, IS BASIC AND FUNDAMENTAL TO THE ACT. IT WOULD BE AKIN TO TAXING THE SAME INCOME TWICE . IN OTHER WORDS, A COMPLETE CONGRUENCE OF IDENTITY AND RATIONALE MARKS OR ATTENDS THE TWO CLAIMS, BEING ONLY THE TWO FACETS OF A COIN . THE TRIBUNAL FURTHER ALSO DWELLS INTO WHAT IN ITS VIEW IS RESPONSIBLE FOR THE CONFUSION, I.E., THE DIFFERENT METHODS OR YARDSTICKS EMPLOYED FOR RECKONING THE TWO (CLAIMS) (REFER PARA 4.5.2 OF ITS ORDER). WHILE THE CLAIM FOR DEPRECIATION ARISES FOLLOWING THE ACCRUAL BASIS OF ACCOUNTING FOR DETERMINING `INCOME, THE CASH METHOD IS APPLIED FOR RECKONING ITS APPLICATION. ACCORDINGLY, WHETHER IN THE GIVEN FACTS, THE TWO CLAIMS AMOUNT TO A DOUB LE DEDUCTION IS PURELY FACTUAL. IN A GIVEN CASE, THE CAPITAL ASSET MAY BE DONATED BY THE ASSESSEE-TRUST TO A NEEDY PERSON, SAY, A MOBILE AMBULANCE UNIT TO A GOVERNMENT HOSPITAL; T HE CAPITAL ASSET, NOT BEING RETAINED BY DONOR-TRUST, IT WOULD NOT BE ENTITLED TO ANY DEP RECIATION THEREON, AND THE ONLY CLAIM THAT WOULD OBTAIN IN THE CASE IS TOWARD APPLICATION OF INCOME. WE HAVE ALSO FOUND ENDORSEMENT OF THE SAID FINDING, I.E., APART FROM T HE LEGAL ASPECT EXPLAINED BY THE APEX COURT, IN THE EXPRESS TERMS OF LAW, CARVING OUT AN EXCEPTION FOR NON OBLIGATION TOWARD APPLICATION OF INCOME IN THE CASE OF CORPUS DONATIO NS. THE ASSESSEE/S HAS NOT BEEN ABLE TO SHOW, AS ALSO CONTENDED BY THE LD. DR, ANY INFIRMIT Y IN THE SAID FINDINGS BY THE TRIBUNAL, WHICH WE AFFIRM. A DIFFERENT FINDING IN THE MATTER BY THE HONBLE P& H HIGH COURT, GIVEN THE LAW QUA DOUBLE DEDUCTION, AS PRONOUNCED BY THE APEX COURT IN THE CASE OF ESCORTS LTD. & OTHRS. (SUPRA), ALSO DISCUSSING THE NATURE OF THE T WO CLAIMS BEING MADE, BEING AGAIN IN RESPECT OF `DEPRECIATION AND THE `CAPITAL EXPENDIT URE ON THE ASSETS PUT TO SCIENTIFIC RESEARCH , WOULD, MOST RESPECTFULLY, NOT OPERATE TO BIND THI S TRIBUNAL TO ARRIVE AT A DIFFERENT FINDING OF FACT. WE MAY ALSO ADD THAT TH ERE IS NO REFERENCE IN THE CITED DECISIONS BY THE HONBLE COURT AS TO THE REASONS THAT INFORM ITS DECISION. FURTHER, REFERENCE IN THIS ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 9 CONTEXT MAY ALSO BE MADE TO THE DECISION IN THE CAS E OF CIT VS. THANE ELECTRICITY SUPPLY LTD ., 206 ITR 727 (BOM.), WHEREIN THE HONBLE COURT HA S ABUNDANTLY CLARIFIED, ON THE ISSUE BEING RAISED BEFORE IT, INTER ALIA , THAT THE DECISION BY THE NON-JURISDICTIONAL HIGH COURT, THOUGH OF PERSUASIVE VALUE, IS NOT BINDING O N THE TRIBUNAL, EXPLAINING THAT THE SAID STATUS COULD BE ACCORDED ONLY TO THE DECISION BY TH E APEX COURT UNDER ART. 141 OF THE CONSTITUTION OF INDIA. 4.3 FURTHER, WE OBSERVE THAT IN THE PRESEN T CASE, BOTH THE ASSESSES ARE NOT ENGAGED IN ANY BUSINESS ACTIVITY, SO THAT THE DEPRECIATION CLA IMED CANNOT BE WITH REFERENCE TO S. 32, BUT ONLY AS APPLICABLE UNDER GENERAL PRINCIPLES. H OWEVER, THAT WOULD NOT DETRACT FROM OR IMPACT THE SAID FINDING IN ANY MANNER, AS THE NATUR E OF THE DEPRECIATION, EITHER WAY, REMAINS THE SAME; THE ONLY DIFFERENCE BEING IN THE RATE/S OF DEPRECIATION, EVEN AS DISCUSSED BY THE TRIBUNAL AT PARA 4.4 OF ITS ORDER IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA). 4.4 WE NEXT STATE OUR REASONS AS TO WHY THE DECISIO NS ADDITIONALLY BROUGHT TO OUR NOTICE IN THE PRESENT APPEALS, I.E., IN ADDITION TO THOSE CITED AND CONSIDERED BY US IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA), WHICH WE HAVE GONE THROUGH, HAVE NOT BEEN ABLE TO PERSUADE US TO CHANGE OUR VIEW IN THE MATTE R. A). THE FIRST DECISION IS IN THE CASE OF CIT VS. RAO BAHADUR CALAVALA CUNNAN CHETTY CHARITIES , 135 ITR 485 (MAD.) (PB PGS. 18 TO 29) . THE SAID DECISION, AS APPARENT FROM THE QUESTIONS REFERRED BY THE TRIBUNAL TO THE HONB LE COURT, AS WELL AS WHAT STANDS HELD BY IT, IS THE MANNER IN WHICH THE ACCUMULATION OF INCO ME U/S. 11(1)(A) OF THE ACT IS TO BE COMPUTED. THE HONBLE COURT HELD THAT THE SAME HAS TO BE ARRIVED IN THE NORMAL COMMERCIAL MANNER, WITHOUT CLASSIFYING THE INCOME U NDER THE VARIOUS HEADS THEREOF SET OUT U/S. 14 OF THE ACT AND, FURTHER, THAT INCOME OF THE TWO SCHOOLS RUN BY THE ASSESSEE- TRUST, BEING EXEMPT U/S. 10(22), WOULD NOT BE SUBJE CT TO AGGREGATION AND, THUS, IS NOT TO BE TAKEN INTO ACCOUNT. THE LANGUAGE OF S. 11, IT WAS EXPLAINED, MADE NO REFERENCE TO THE INCOME BEING COMPUTED IN ACCORDANCE WITH THE PROVIS IONS OF THE ACT, AND WHICH, THEREFORE, IS TO BE ARRIVED AT ON THE BASIS OF THE NORMAL COMMERCIAL ACCOUNTING, KEEPING IN ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 10 VIEW THE PURPOSE FOR WHICH THE CONDITIONS OF S. 11( 1)(A) ARE IMPOSED. THE CHARITABLE TRUST COULD ONLY APPLY WHAT WAS AVAILABLE WITH IT, SUBJEC T OF COURSE TO ANY ADJUSTMENT IN RESPECT OF EXTRANEOUS EXPENSES. WE ARE UNABLE TO SEE AS TO HOW THE SAID DECISION S UPPORTS THE ASSESSEES CASE IN ANY MANNER. WHATEVER BE THE POSITION OF LAW AT THE RELEVANT TIME, THE SAME CAN BE TAKEN AS SINCE SETTLED, AND EXCEPT WHERE THE PROPERTY HEL D UNDER TRUST IS ITSELF A `BUSINESS, THE INCOME WHEREOF HAS TO BE COMPUTED UNDER CHAPTER IV- D, IN TERMS OF S. 11 (4A), THE SAME IS TO BE COMPUTED FOLLOWING THE PRINCIPLES OF NORMA L COMMERCIAL ACCOUNTING, AND WHICH WOULD INCLUDE A CHARGE TOWARD DEPRECIATION AS WELL. IN FACT, THE NUMBER OF OTHER DECISIONS CITED AND CONSIDERED BY THE HONBLE COURT , ARE ALSO TO THE SAME EFFECT. THE SAME HAS NO BEARING ON THE ISSUE OF DOUBLE DEDUCTION, WH ICH ONLY IS RELEVANT, AND TO BE SEEN, FOR OUR PURPOSES. THE QUESTION, IT MAY BE EMPHASIZED, IS NOT WHETHER THE DEPRECIATION IS ALLOWABLE OR NOT? BUT WHETHER, ALLOWING IT, WOULD S TILL ENTITLE A CHARITABLE TRUST TO CONSIDER THE SAID CAPITAL ASSETS, I.E., ON WHICH TH E DEPRECIATION STANDS CLAIMED AND ALLOWED, AS TOWARD APPLICATION OF INCOME, AMOUNT AS IT WOULD TO A TOTAL DEDUCTION. REFERENCE TO THE CONCLUDING PART (PARA 4.8 OF THE O RDER) IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA) WOULD BE RELEVANT IN THIS REGARD. WE HAVE SOUGHT TO ILLUSTRATE BY WAY OF AN EXAMPLE (REFER PARA 4.2 ABOVE) THAT IN A PART ICULAR CASE THE CLAIM FOR DEPRECIATION MAY NOT OBTAIN, I.E., AS WHERE THE RELEVANT CAPITAL ASSET IS NOT RETAINED AND USED BY THE TRUST FOR ITS PURPOSES. HOWEVER, WHERE IT IS RETA INED AND SO USED, THE NEXT QUESTION WOULD BE IF IT IS SOURCED FROM CORPUS FUNDS, IN WHICH CAS E A CLAIM FOR DEPRECIATION WOULD DEFINITELY OBTAIN; THE DONEE-ENTITY BEING NOT OBLIG ED TO APPLY THE SAME TO CLAIM EXEMPTION IN ITS RESPECT, BEING EXEMPT PER SE . WHERE, HOWEVER, THE SAME IS FROM REGULAR (AS DISTINCT FROM CORPUS) FUNDS, THE ENTITY IS NOT OBLIGED TO MAINTAIN THE SAME AS A PART OF ITS CAPITAL STRUCTURE, SO THAT ITS UTILISATION FOR ITS PURPOSES WHETHER BY WAY OF CAPITAL OR REVENUE EXPENDITURE WOULD MERIT EXEMPTION U/S. 11 TO THE EXTENT SO APPLIED. NO TAX LIABILITY, THUS, IS ATTRACTED QUA THE SAID INCOME. IT IS IN FACT IMMATERIAL WHETHER THE APPLICATION IS TOWARD REVENUE OR CAPITAL EXPENDITUR E, AND THE TWO ARE EQUIVALENT; THE ONLY RELEVANT CONSIDERATION BEING THAT THE EXPENDITURE I S TOWARD THE OBJECTS OF THE TRUST. IN FACT, REALISTICALLY SPEAKING, A CONTINUED USER OF T HE ASSET FOR THE INTENDED PURPOSE/S, I.E., WHERE THE CAPITAL EXPENDITURE RESULTS IN ONE, IS TH E UNDERLYING PRESUMPTION ESSENTIAL TO ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 11 SATISFY THE CONDITION OF THE APPLICATION OF THE INC OME FOR THE STATED OBJECT(S). THAT, HOWEVER, WOULD BE THE END OF THE MATTER, AS IN THE CASE OF REVENUE EXPENDITURE, AND NO FURTHER CLAIM QUA DEPRECIATION WOULD ARISE. ON THE OTHER HAND, WHER E THE CHARITABLE INSTITUTION AT ITS OPTION WISHES THAT THE SAID CAPITAL ASSET(S) IS REFLECTED IN ITS ACCOUNTS (CAPITAL STRUCTURE), FORMING A PART THEREOF, IT MAY WELL CHOOSE TO CLAIM DEPRECIATION THEREON. THE ENTITY HAS, THUS, EFFECTIVELY CAPITALIZED THE I NCOME . THE SAME WOULD, OVER TIME, SECURE IT DEDUCTION - BY WAY OF DEPRECIATION - FOR THE ENTIRE CAPITAL COST INCURRED, SO THAT THE SAME IS NOT CONSIDERED AS A PART OF INCOME AND, CONSEQUENTLY, NOT SUBJECT TO TAX TO THAT EXTENT. HOW, THEN, CAN ANOTHER CLAIM FOR APPLICATION OF THE SAID CAPITALIZED INCOME, AND WITH REFERENCE TO THE SAME CAPITAL ASSE T(S), ARISE ? THE QUESTION, IT MAY BE APPRECIATED, AND AS WOULD BE APPARENT FROM THE FORE GOING, OR THE POINT IN ISSUE, IS NOT WHETHER THE INCOME IS TO BE DETERMINED FOLLOWING TH E PRINCIPLES OF COMMERCIAL ACCOUNTING, SO THAT THE SAME WOULD INCLUDE AN ALLOW ANCE TOWARD DEPRECIATION ON CAPITAL ASSETS AS WELL, BUT WHETHER, GIVEN THE IMPORT AND P URPORT OF THE SAID DEDUCTIONS, AND THE CLAIMS IN THEIR RESPECT, THE SAME AMOUNTS TO A DOUB LE DEDUCTION IN THE FACTS AND CIRCUMSTANCE OF THE CASE. THE APEX COURT HAS IN TH E CASE OF ESCORTS LTD. & OTHRS. V. UNION OF INDIA (SUPRA) CONFIRMED THAT THE CLAIM FOR DEPRECIATION QUA A CAPITAL EXPENDITURE AND ITS CLAIM AS SUCH UNDER THE PROVISIONS OF THE A CT, ARE PARI MATERIA , THE PURPOSE OF THE TWO BEING THE SAME. IN FACT, AS ALSO EXPLAINED IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA) (REFER PARA 4.5.3 THEREOF) , WHILE A CLAIM COULD POSSIBLY BE MADE, AS INDEED WAS DONE BEFORE THE APEX COURT IN THE SAID CASE, THAT T HE TWO CLAIMS REPRESENT DIFFERENT DEDUCTIONS, UNDER SEPARATE SECTIONS, SERVING DIFFER ENT OBJECTS, SO THAT ONE WOULD NOT LIMIT OR INFLUENCE THE OTHER; THE CONCEPT OF TAXABLE INCO ME BEING A LEGAL ONE, WHICH MAY NOT CORRESPOND TO THE ACCOUNTING INCOME, WHICH THOUGH S TOOD REJECTED BY IT, FINDING THE TWO DEDUCTIONS AS REPRESENTING THE SAME CLAIM, I.E., TH E WRITE OFF OF THE CAPITAL EXPENDITURE, AND TOWARD THE SAME PURPOSE, NO SUCH CLAIM CAN POSS IBLY BE RAISED IN THE INSTANT CASE. THAT IS, THE TWO SIMULTANEOUS CLAIMS, AND THE CASE SUPPORTING THEM, IS ON A STILL WEAKER FOOTING, WITH THERE BEING A DISTINCT DICHOTOMY BETW EEN THE TWO A CAPITAL EXPENDITURE AS BEING TOWARD INCOME (SO THAT IT HAS TO BE ALLOWED P ROPORTIONATELY OVER THE PERIOD OF UTILITY OF THE EXPENDITURE), AND AT THE SAME TIME OUT OF IT. THE `INCOME TO BE APPLIED IS ONLY ONE DETERMINED FOLLOWING THE PRINCIPLES OF COM MERCIAL ACCOUNTING, I.E., TO ARRIVE AT ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 12 WHAT CAN BE SAID TO BE AVAILABLE `FOR APPLICATION WITH IT, SO THAT THERE IS NO OVERLAP BETWEEN THE TWO. THAT THE USER (OF THE ASSET) FOR T HE STATED PURPOSE IS AN IMPLICIT REQUIREMENT TO SATISFY THE ESSENTIAL CONDITION FOR A CLAIM TOWARD THE APPLICATION OF INCOME FOR THE STATED OBJECT, COMPLETES THE CASE OF A COMP LETE IDENTITY BETWEEN THE TWO CLAIMS, DEDUCTION FOR WHICH IT IS BEING SIMULTANEOUSLY SOUG HT, EVEN AS FOUND IN THE CASE OF ESCORTS LTD. & OTHRS. V. UOI (SUPRA). IN FACT, THE CITED DECISION SUPPORTS THE REVENUES CASE. FIRSTLY IT EXPLAINS, EVEN AS STATED BY US AT PARA 4.2 ABOVE, THAT DETERMINATI ON OF INCOME AND ITS APPLICATION ARE DIFFERENT CONCEPTS, AND ARE NOT TO BE MIXED UP. FU RTHER, THE APPLICATION OF INCOME, IF ANY, WOULD HAVE TO BE EXCLUDED IN ARRIVING AT THE INCOME WHICH IS SUBJECT TO APPLICATION IN ANY YEAR. SECONDLY, IT CLARIFIES EVEN AS THE TRIBUNAL D OES, AT PARA 4.5.3 OF ITS ORDER IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA), THAT THE TRUST CAN APPLY ONLY WHAT IS AVA ILABLE WITH IT, I.E., NO MORE OR NO LESS, SUBJECT TO ANY EXTRAN EOUS EXPENDITURE, I.E., WHICH IS NOT FOR THE PURPOSE OF THE TRUST. B). IN THE CASE OF S.RM. M.CT.M. TIRUPPANI TRUST VS. CIT (1998) 230 ITR 636 (SC) (PB PG. 43 50 ), THE CONTROVERSY CONCERNED AS TO WHETHER THE APPE LLANT-TRUST HAD APPLIED THE INCOME IN TERMS OF SEC.11, SO AS TO BE ENTITLED FOR EXEMPTION THERE-UNDER. IT WAS EXPLAINED BY THE APEX COURT THAT THE NEED FOR ACCUM ULATION OF INCOME, AND ITS CONCOMITANT INVESTMENT IN GOVERNMENT SECURITIES, WO ULD APPLY ONLY IF THE CLAIM FOR EXEMPTION EXTENDS BEYOND 25% OF ITS TOTAL INCOME. THE ASSESSEE HAD ALREADY APPLIED ` 8 LAKHS FOR CHARITABLE PURPOSES IN INDIA BY PURCHASIN G A BUILDING AND UTILISING IT AS A HOSPITAL. THE BALANCE INCOME AMOUNTED TO ` 1.64 LAKHS, WHICH CONSTITUTED LESS THAN 25% OF ITS INCOME FOR THE RELEVANT ASSESSMENT YEAR (A.Y . 1970-71). AS SUCH, THE SAME DID NOT REQUIRE INVESTMENT IN GOVERNMENT SECURITIES, AND TH E ASSESSEE WAS ENTITLED TO EXEMPTION OF ITS ENTIRE INCOME FROM TAX U/S. 11(1)(A) OF THE ACT. THE SAME, AS WOULD BE APPARENT, HAS NO BEARING IN THE FACTS AND CIRCUMSTANCES ON TH E ISSUE ARISING FOR ADJUDICATION IN THE PRESENT CASE. THE NEXT DECISION CITED IS AN ORDER DISMISSING A SLP MOVED BY THE REVENUE IN THE CASE OF CIT VS. BONANZA PVT. LTD . (IN SLP (CIVIL) NO. 21890 OF 2010/PB PG. 57 ). PER THE SAME, LEAVE THERE-TO IS DECLINED BY THE APEX COURT TO APPEAL AGAINST A ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 13 DECISION BY THE HONBLE DELHI HIGH COURT HOLDING O F THE BROKERAGE PAYABLE BY THE ASSESSEE-BROKERS CLIENTS THERETO AS A DEBT, TAKEN INTO ACCOUNT IN COMPUTING INCOME, WHICH SATISFIED THE CONDITION OF SS. 36(1)(VII) AND 36(2). WE ARE UNABLE TO SEE AS TO HOW THE SAME IS RELEVANT FOR OUR PURPOSE. C). THE DECISION IN THE CASE OF CIT VS. MANAV MANGAL SOCIETY, 328 ITR 421 (P&H) (PB PG. 58-62 ), AS A REFERENCE TO THE QUESTION OF LAW POSED TO T HE HONBLE COURT WOULD SHOW, IS NOT CONCERNED WITH THE ISSUE BEFORE US. T HE REVENUES CASE IN THAT CASE WAS THAT THE ASSESSEE HAD NOT APPLIED 25% OF THE PROFITS AS REQUIRED BY S.11 (4A) R/W S. 11(2). WE HAVE ALSO GONE THROUGH THE TRIBUNALS FINDINGS IN T HE MATTER, WHICH STAND APPROVED BY THE HONBE COURT, TO FIND NO QUESTION OR ISSUE OF DOUBL E DEDUCTION, OR WITH REGARD TO THE SIMULTANEOUS DEDUCTION IN RESPECT OF DEPRECIATION A S WELL AS OF THE CAPITAL EXPENDITURE ON WHICH THE SAME IS CLAIMED. D). THE DECISIONS IN THE CASE OF MARKETING COMMITTEE, PIPLI (SUPRA) AND TINY TOTS EDUCATIONAL SOCIETY (SUPRA) (PB PGS. 63 TO 71) STAND ALREADY DISCUSSED WHILE CONSIDERING THE ASSESSEES CASE AS MADE BEFORE US WITH REFERENC E THERE-TO (REFER PARA 3.1, 4.2). THE DECISION IN THE CASE OF CIT VS. BHORUKA PUBLIC WELFARE TRUST , 157 CTR (CAL.) 40 (PB PG. 72 TO 78 ), UPHOLDS THE ASSESSEES CLAIM ON THE BASIS OF PRI NCIPLES OF COMMERCIAL ACCOUNTING, EVEN AS NO BUSINESS WAS BEING CARRIED O N BY IT, AND WHICH STOOD ALLOWED BY THE HONBLE COURT WITH REFERENCE TO THE DECISION, A MONG OTHERS, IN THE CASE OF CIT VS. SOCIETY OF THE SISTERS OF ST. ANNE , 146 ITR 28 (KAR.). THE DECISION IN THE CASE OF CIT VS. MUNISUVRAT JAIN (1994), TAX. L.R. 1084 (BOM.) (PB PGS. 79-84) IS ALSO TO THE SAME EFFECT. THE PROPOSITION IS NOT DISPUTED, AND NOWHE RE IMPINGES ON THE ISSUE AT LARGE, AS SOUGHT TO BE EXPLAINED VIDE PARAS 2, 4.2, AS WELL A S THE FOREGOING PART (A) OF THIS PARA (4.4). IN ADDITION, BOTH THESE DECISIONS, I.E., BY THE HONBLE HIGH COURTS OF CALCUTTA AND BOMBAY, AS ALSO IN THE CASE OF RAO BAHADUR CALAVALA CUNNAN CHETTY CHARITIES (SUPRA), ARE FOR YEARS PRIOR TO A.Y. 1989-90, WHERE-FROM THE NEED FOR MAINTENANCE OF CORPUS BY THE CHARITABLE INSTITUTIONS HAS SINCE BEEN SPECIFIC ALLY RECOGNISED BY LAW, DE-LINKING IT FROM THE REQUIREMENT OF APPLICATION, ONLY SUBJECT T O WHICH THE INCOME OF A CHARITABLE TRUST/INSTITUTION IS LIABLE FOR EXEMPTION. ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 14 THE CITED CASE LAW WOULD, THUS, BE OF NO ASSISTANC E TO THE ASSESSEE/SS CASE. 4.5 BEFORE PARTING WITH THE ORDER, WE MAY, WITHOUT PREJUDICE TO THE FOREGOING, ADVERT TO ANOTHER ASPECT OF THE MATTER. EVEN AS NOTED EARL IER (REFER PARA 4.3 ABOVE), BOTH THE ASSESSEE-TRUSTS ARE NOT UNDERTAKING ANY BUSINESS AC TIVITY. AS SUCH, THE CLAIM OF DEPRECIATION WOULD BE, IF AT ALL, EXIGIBLE ONLY WIT H REFERENCE TO THE NORMATIVE RATE(S) OF DEPRECIATION, I.E., AS DETERMINED WITH REFERENCE TO THE USEFUL LIVES OF THE RELEVANT ASSET(S) UNDER ITS GIVEN STATE OF USER. IN FACT, EVEN IF BU SINESS ACTIVITY WAS BEING UNDERTAKEN, THE CLAIM FOR DEPRECIATION U/S. 32(1) WOULD OBTAIN ONLY IN RESPECT OF BUSINESS ASSET(S). THE ASSESSEE HAS, HOWEVER, CLAIMED DEPRECIATION IN TERM S OF THE RATE(S) PRESCRIBED UNDER THE ACT AND, AS SUCH, IS NOT MAINTAINABLE AT THE CLAIME D AMOUNT/S. ONE OF THE ASSESSES, I.E., ADI SANKARA TRUST , HAS ALSO FILED A CROSS OBJECTION, THOUGH WITH A M ARGINAL DELAY OF FOUR DAYS. THE DELAY HAS BEEN SUITABLY EXPLAINED BY WAY OF CONDONATION PETITION, SUPPORTED BY AN AFFIDAVIT DATED 22.5.2009, AND WHICH IS, THUS , CONDONED. THE SAME WE FIND IS SUPPORTIVE OF THE ASSESSEES CASE; ITS APPEAL HAVIN G BEEN ALLOWED BY THE FIRST APPELLATE AUTHORITY. IT NEVERTHELESS RAISES A LEGAL CONTENTI ON WHICH WE MAY ADDRESS. THE ASSESSEE STATES THAT IN THE CASE OF ESCORTS LTD . & OTHRS . (SUPRA), S. 35(2)(IV) ITSELF CONTAINS AN EMBARGO FOR NON ALLOWANCE OF DEDUCTION U/S. 32(1)(I I), I.E., WHERE THE CLAIM FOR DEDUCTION U/S. 35 IS BEING CLAIMED AND ALLOWED, SO THAT A DOU BLE DEDUCTION STOOD EXCLUDED BY THE RELEVANT PROVISIONS OF THE ACT ITSELF, WHILE NO SUC H PROHIBITION ATTENDS THE PRESENT CASE. AS ALSO EXPLAINED IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA) (REFER PARA 4.2), ON A SIMILAR ARGUMENT BEING ADVANCED, THAT THE SAID EMBA RGO U/S. 35(2)(IV) STOOD PROVIDED FOR BY FINANCE (NO. 2) ACT, 1980 W.R.E.F. 1.4.1962. IT WAS THE RETROSPECTIVE APPLICATION THEREOF; THE SAME BEING CONTENDED TO BE TAKING AWAY A VESTED RIGHT; IT BEING TRITE THAT NO NEW LEVY COULD BE IMPOSED RETROSPECTIVELY, THAT LED TO A BUNCH OF 33 WRIT PETITIONS BEFORE THE APEX COURT, WHICH STOOD DISPOSED OF BY IT IN TH E CASE OF ESCORTS LTD. & OTHRS . V. UNION OF INDIA (SUPRA). PER ITS ELABORATE DECISION, THE APEX COU RT UPHELD THE RETROSPECTIVITY, AS THE SAME DID NOT, IN ITS VIEW, AMOUNT TO OR RESULT IN EITHER A NEW LEVY OR TAKING AWAY OR DIVESTMENT OF ANY EXISTING RIGHT. TH ERE IS A FUNDAMENTAL, THOUGH UNWRITTEN, AXIOM, IT STOOD EXPLAINED BY IT, THAT NO LEGISLATION WOULD HAVE INTENDED A ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 15 DOUBLE DEDUCTION IN RESPECT OF THE SAME BUSINESS OU TGOING, AND IT WAS IMPOSSIBLE TO CONCEIVE OTHERWISE, I.E., UNLESS CLEARLY SO EXPRESS ED. IN OTHER WORDS, THE INTENTION OF NON DOUBLE DEDUCTION IS THE GIVEN STATUS, AND IS TO BE PRESUMED, UNLESS THERE IS AN EXPRESS PROVISION TO THE CONTRARY IN A PARTICULAR CASE, AND WHICH WAS NOT SO IN THE CASE(S) BEFORE IT. THE RETROSPECTIVE AMENDMENT WAS, THEREFORE, HE LD TO BE ONLY CLARIFICATORY, AND VALID. THE ASSESSEES CONTENTION IS, THUS, NOT VALID. IN FACT, THE LD. CIT(A) HAS ALLOWED ITS CLAIM, RELYING ON THE DECISION IN THE CASE OF CIT VS. INSTITUTE OF BANKING (SUPRA), AND WHEREIN NO CLAIM (OF DOUBLE DEDUCTION) WAS RAISED AND THERE IS NO REFERENCE TO THE DECISION IN THE CASE OF ESCORTS LTD. & OTHRS. (SUPRA), THEREIN. THE LD. FIRST APPELLATE AUTHORI TY HAS, IN FACT, THEREFORE, NOT MET THE REVENUES CASE IN THE SAID CASE IN ANY MANNER. CONCLUSION 5. IN VIEW OF THE AFORE-SAID FINDINGS IN TH E MATTER, WHICH, IN EFFECT, ENDORSE OUR FINDINGS IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA), WE DO NOT FIND ANY MERIT IN THE ASSESSEES CASE AND, CONSEQUENTLY, UPHOLD THAT OF T HE REVENUE. WE DECIDE ACCORDINGLY. RESULT 6. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED, AND THE APPEAL AS WELL AS THE CROSS OBJECTION BY THE ASSESSEE, ARE DISMISSED. SD/- SD/- (N.VIJAYAKUMARAN) (SA NJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 16TH JUNE, 2011 GJ COPY TO: 1. ADI SANKARA TRUST, SANKARA NAGAR, MATTOOR P.O., KALADY. 2. V.N.GANGADHARA PANICKER MEMORIAL CHARITABLE TRUS T, RANI BHAVAN, KESTON ROAD, KOWDIAR, THIRUVANANTHAPURAM - 03. 3. THE DY. DIRECTOR OF INCOME-TAX (EXEMPTION), RAN GE-2, ERNAKULAM. ITA NOS. 96, 259 /COCH/2009 & C.O. NO. 1 8/COCH/2009 16 4. THE ASST. DIRECTOR OF INCOME-TAX (EXEMPTION), T RIVANDRUM. 5 THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, K OCHI. 6. THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, K OCHI, 7. THE COMMISSIONER OF INCOME-TAX, KOCHI, 8. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 9. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 10. GUARD FILE. FIT FOR PUBLICATION IN ITD JUDICIAL MEMBER ACCOUNTANT MEMBER