Commissioner Of Income Tax, Udaipur v. Geetanjali Educational Society, 19-C Old Fatehpura, Udaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR D.B. Income Tax Appeal No. 71 / 2011 Commissioner of Income Tax, Udaipur ----Appellant Versus Geetanjali Educational Society, 19-C Old Fatehpura, Udaipur. ----Respondent Connected With D.B. Income Tax Appeal No. 46 / 2009 Commissioner of Income Tax, Udaipur ----Appellant Versus Geetanjali Educational Society, 19-C Old Fatehpura, Udaipur. ----Respondent D.B. Income Tax Appeal No. 177 / 2011 Commissioner of Income Tax, Udaipur ----Appellant Versus Geetanjali Educational Society, 19-C Old Fatehpura, Udaipur ----Respondent D.B. Income Tax Appeal No. 106 / 2013 Commissioner of Income Tax, Udaipur ----Appellant Versus Geetanjali Educational Society, 19-C Old Fatehpura, Udaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr.KK Bissa.For Respondent(s) : Mr.Sanjay Jhanwar. _____________________________________________________ HON'BLE MR. JUSTICE K. S. JHAVERIHON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATIJudgment / Order 24/01/2018 1.By way of these appeals, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeals of the department and affirmed the order ofCIT (Appeal). 2.While admitting the appeals, this Court framed followingsubstantial questions of law :- D.B. Income Tax Appeal No. 71 / 2011 “(i)Whether in the facts and in the present circumstancesof the case as well as in the law, the Tribunal is justifiedconfirming the order of the learned CIT (A) in directing theAO not to charge the entire amount at maximum marginalrate? (ii)Whether in the facts and in the present circumstancesof the case as well as in the law, the Tribunal is justifiedconfirming the order of the learned CIT (A) in directing theAO to exclude corpus donation of Rs. 2,62,70,001/- from thecomputation of the income of the assessee society? (iii)Whether in the facts and in the presentcircumstancesof thecase as well as in the law, the Tribunal isjustified in upholding the order of CIT (A) in directing the AOto consider the additions to fixed assets as application ofincome of the socity u/s 11 of the I.T. Act?” D.B. Income Tax Appeal No. 46 / 2009 1.“Whether in the facts and in the present circumstancesof the case as well as in the law, the Tribunal was justifiedconfirming the order of the CIT(A) in allowing the exemptionclaimed under Section 11 of I.T. Act and in deleting theadditions made by the Ao? 2.Whether in the facts and in the present circumstancesof the case as well as in the law, the Tribunal was justifiedconfirming the order of the CIT(A) in directing the AO not tocharge the entire amount at maximum marginal rate? 3.Whether in the facts and in the present circumstancesof the case as well as in the law, the Tribunal was justifiedconfirming the order of the CIT(A) in directing the AO toexclude corpus donation of Rs. 2,81,40,000/- from thecomputation of the income of the assessee society? 4.Whether in the facts and in the present circumstancesof the case as well as in the law, the Tribunal was justifiedconfirming the order of the CIT(A) in directing the AO toconsider the donation of Rs. 73,50,000/- given to M/s.Mangalam Educational Society as application of incomeunder Section 11 of the Act? 5.Whether in the facts and in the present circumstancesof the caseaswell as in the law, the Tribunal was justifiedconfirming the order of the CIT(A) in directing the AO tocompute and allow exact depreciation on the assets ownedand utilized for the objectives of the assessee society? D.B. Income Tax Appeal No. 177 / 2011 4.Whether in the facts and in the present circumstancesof the case as well as in the law, the Tribunal was justifiedconfirming the order of the CIT(A) in directing the AO toconsider the donation of Rs. 73,50,000/- given to M/s.Mangalam Educational Society as application of incomeunder Section 11 of the Act? 5.Whether in the facts and in the present circumstancesof the caseaswell as in the law, the Tribunal was justifiedconfirming the order of the CIT(A) in directing the AO tocompute and allow exact depreciation on the assets ownedand utilized for the objectives of the assessee society? D.B. Income Tax Appeal No. 177 / 2011 “1.Whether in the facts and in the present circumstancesof the case as well as in the law, the Tribunal was justifiedconfirming the order of the CIT(A) in allowing the exemptionclaimed under Section 11 of I.T. Act and in deleting theadditions made by the Ao? 2.Whether in the facts and in the present circumstancesof the case as well as in the law, the Tribunal was justifiedconfirming the order of the CIT(A) in directing the AO not tocharge the entire amount at maximum marginal rate? 3.Whether in the facts and in the present circumstancesof the case as well as in the law, the Tribunal was justifiedconfirming the order of the CIT(A) in directing the AO toexclude corpus donation of Rs. 84,12,400/- from thecomputation of the income of the assessee society? 4.Whether in the facts and in the present circumstancesof the case as well as in the law, the Tribunal was justifiedconfirming the order of the CIT(A) in directing the AO toconsider the donation of Rs. 42,00,000/- given to M/s. VijayShanti Trust as application of income under Section 11 of theAct?” D.B. Income Tax Appeal No. 106 / 2013 1.“Whether on the facts and in the present circumstancesof the case as well as in the law, the ID. Tribunal is justifiedin confirming the order of the CIT(A) directing the AssessingOfficer to allow exemption u/s 11 of the I.T. Act. to theassessee society ignoring the fact that the assessee society has violated the provisions of section 13 of the I.T. Act?” 2.“whether on the facts and in the present circumstancesof the case as well as in the law, the Id. Tribunal is justifiedin confirming the order of the Id. CIT (A) directing the AOnot to charge the maximum marginal rates on the entireincome ignoring the findings of the AO that the assesseetrust is hot entiled for exemption u/s 11 on account ofviolation of provision of section 13 of the I.T. Act?” 3.“Whether on the facts and in the present circumstancesof the case as well as in the law, the Id. Tribunal is justifiedin confirming the order of the Id. CIT (A) directing the AO toexclude corpus donation of Rs. 3,00,10,000/- from thecomputation of the income without appreciating that in thiscase the applicability of section 11 & 12 ceases therefore,corpus donation were trated by the AO as just anothervoluntary contributions as income u/s 2(24) (x)(ii)(a) of theI.T. Act?” 4.“Whether on the facts and in the present circumstancesof the case as well as in the law, the Id. Tribunal is justifiedin confirming the order of the Id. CIT(A) allowing the claimof depreciation on capitalized expenditure against the rulingof the Hon’ble Supreme Court in the case of Escorts Vs.Union of India (1993) 199 ITR 43.” 3.Now the issue is squarely covered by the decision of thisCourt in Commissioner of Income Tax (Exemptions) vs. MahimaShiksha Samiti (D.B. Income Tax Appeal No.262/2017) decided on 3.10.2017 wherein, it has been held as under :- "13. On first issue, the case is covered by the reasoning ofthis court in the case of same assessee in ITA No.708/2008wherein it has been held as under:- 5. Counsel for the appellant contended that the issue isrequired to be viewed seriously inasmuch as the toursand other expenditure which are made are not inconsonance with the object of the Trust. 3.Now the issue is squarely covered by the decision of thisCourt in Commissioner of Income Tax (Exemptions) vs. MahimaShiksha Samiti (D.B. Income Tax Appeal No.262/2017) decided on 3.10.2017 wherein, it has been held as under :- "13. On first issue, the case is covered by the reasoning ofthis court in the case of same assessee in ITA No.708/2008wherein it has been held as under:- 5. Counsel for the appellant contended that the issue isrequired to be viewed seriously inasmuch as the toursand other expenditure which are made are not inconsonance with the object of the Trust. 6. Counsel for the respondent has relied upon theobservations made by the Tribunal in para 10, 17, and19 which reads as under: 10. The ld A/R submitted that the legislature is notaverse to earning of income by charitable institutionsbu desires that if the income is earned throughpursuing charitable objects, such income should be re- applied into the charitable objects and for charitablepurpose so that the society and the nation can enjoythe larger benefits from such charitable institutions.The logic behind devising such scheme is that evenafter collection of taxes the Government applies thesame towards public charitable purposes therefore whyto at all collect tax from such institutions which arethemselves utilizing their incomes for charitablepurposes. Therefore to all those charitable institutions,which plough back their earnings for charitablepurposes, the fiscal incentive of exemption undersection 11 is allowed and no tax is being charged. 17. The ld. A/R pointed out that the appellant societywas granted registration under section 12A, as acharitable institution, by ld. Commissioner of IncomeTax after considering and examining the objects andactivities of the society. This registration under section12A/12AA is in force even as on date. Therefore, ld. AOis not entitled to raise questions in relation to“charitable purpose” which the appellant is persuadingconsistently for past several years. There is no denial tothe fact that the AO is entitled to examine theapplication of income for “charitable purpose” and canalso examine the breach of any condition/falling intoany disqualification criteria under section 13 but hecannot be allowed to go into the existence of the trustfor “charitable purpose”. This is for the reason that elseit would imply that the subordinate authority has “setat naught” the judgment of a superior authority. This isagainst the principles of Administrative law as well asjurisprudence. The “charitable Purpose” can bequestioned only by the Commissioner and he has beengranted the statutory powers even to cancel theregistration if a doubt arises about the “charitablepurpose” subsequent to granting of registration. 19. Without prejudice to above, reliance is placed onthe decision of Hon’ble Rajasthan High Court in case ofDeputy Commissioner Income-Tax v. CosmopolitanEducation Society 244 ITR 494 where the appeal of thedepartment was rejected by affirming the finding of ld.Income Tax Appellate Tribunal and ld. Commissioner ofIncome-Tax Appeals that in case there was anymisutilisation of the funds of the society ormismanagement of the activities of the society, theaction could be taken against the members of thesociety as per the provisions of various statuesgoverning the society. However, even suchmisutilisation or mismanagement by the memberscould not be the basis of rejection of the claim ofexemption ot the assessee educational society. TheSpecial Leave Petition against this judgment also stood dismissed vide 241 ITR (St) 132. Therefore, thesegrounds of disallowance of exemption are notsustainable in law.” 6.1 He also relied upon the following decisions:- 3.3(i) In Queen’s Education Society vs. CIT reported in(2015) 372 ITR 699 (SC), the Supreme Court held asunder:- dismissed vide 241 ITR (St) 132. Therefore, thesegrounds of disallowance of exemption are notsustainable in law.” 6.1 He also relied upon the following decisions:- 3.3(i) In Queen’s Education Society vs. CIT reported in(2015) 372 ITR 699 (SC), the Supreme Court held asunder:- 19. It is clear, therefore, that the Uttarakhand HighCourt has erred by quoting a non existent passagefrom an applicable judgment, namely, Aditanar andquoting a portion of a property tax judgment whichexpressly stated that rulings arising out of the IncomeTax Act would not be applicable. Quite apart from this,it also went on to further quote from a portion of thesaid property tax judgment which was rendered in thecontext of whether an educational society is supportedwholly or in part by voluntary contributions, somethingwhich is completely foreign to Section 10(23C) (iiiad).The final conclusion that if a surplus is made by aneducational society and ploughed back to construct itsown premises would fall foul of Section 10(23C) is toignore the language of the Section and to ignore thetests laid down in the Surat Art Silk Cloth case,Aditanar case and the American Hotel and Lodgingcase. It is clear that when a surplus is ploughed backfor educational purposes, the educational institutionexists solely for educational purposes and not forpurposes of profit. In fact, in S.RM.M.CT.M. TiruppaniTrustv.CommissionerofIncomeTaxMANU/SC/0107/1998 : (1998) 2 SCC 584, this Court inthe context of benefit claimed Under Section 11 of theAct held: 9. In the present case, the Assessee is not claiming anybenefit Under Section 11(2) as it cannot; because inrespect of this assessment year, the Assessee has notcomplied with the conditions laid down in Section11(2). The Assessee, however, is entitled to claim thebenefit of Section 11(1)(a). In the present case, theAssessee has applied Rs. 8 lakhs for charitablepurposes in India by purchasing a building which is tobe utilised as a hospital. This income, therefore, isentitled to an exemption Under Section 11(1). Inaddition, Under Section 11(1)(a), the Assessee canaccumulate 25% of its total income pertaining to therelevant assessment year and claim exemption inrespect thereof. Section 11(1)(a) does not requireinvestment of this limited accumulation in governmentsecurities. The balance income of Rs. 1,64,210.03constitutes less than 25% of the income forAssessment Year 1970-71. Therefore, the Assessee isentitled to accumulate this income and claim exemption from income tax Under Section 11(1)(a). We set aside the judgment of the Uttarakhand HighCourt dated 24th September, 2007. The reasoning ofthe ITAT (set aside by the High Court) is more inconsonance with the law laid down by this Court, andwe approve its decision. (ii) In Chief Commissioner of Income Tax, Chandigarhvs. St. Peter’s Education Society (2016) 385 ITR 66 (SC), the Supreme Court observed as under:- We may record at this stage that there was a differenceof opinion among various High Courts on the aforesaidissue. While summarizing the law, this Court approvedthe judgments of Punjab and Haryana High Court, Delhiand Bombay High Courts and reversed the view takenby the Uttarakhand High Court. In so far as thejudgment of the Punjab and Haryana High Court isconcerned, it was given in the case of PinegroveInternational Charitable Trust v. Union of IndiaMANU/PH/0146/2010 : [2010] 327 ITR 73 (P&H). Therelevant para in this behalf which also states as to howsuch cases are to be dealt with reads as under: (ii) In Chief Commissioner of Income Tax, Chandigarhvs. St. Peter’s Education Society (2016) 385 ITR 66 (SC), the Supreme Court observed as under:- We may record at this stage that there was a differenceof opinion among various High Courts on the aforesaidissue. While summarizing the law, this Court approvedthe judgments of Punjab and Haryana High Court, Delhiand Bombay High Courts and reversed the view takenby the Uttarakhand High Court. In so far as thejudgment of the Punjab and Haryana High Court isconcerned, it was given in the case of PinegroveInternational Charitable Trust v. Union of IndiaMANU/PH/0146/2010 : [2010] 327 ITR 73 (P&H). Therelevant para in this behalf which also states as to howsuch cases are to be dealt with reads as under: "25. We approve the judgments of the Punjab andHaryana, Delhi and Bombay High Courts. Since wehave set aside the judgment of the Uttarakhand HighCourt and since the Chief Commissioner of Incometax'sorders cancelling exemption which were set aside bythe Punjab and Haryana High Court were passed almostsolely upon the law declared by the Uttarakhand HighCourt, it is clear that these orders cannot stand.Consequently, the Revenue's appeals from the Punjaband Haryana High Court's judgment dated January 29,2010, and the judgments following it are dismissed. Wereiterate that the correct tests which have been culledout in the three Supreme Court judgments statedabove, namely, Surat Art Silk Cloth, Aditanar andAmerican Hotel and Lodging, would all apply todetermine whether an educational institution existssolely for educational purposes and not for purposes ofprofit. In addition, we hasten to add that the 13thproviso to Section 10(23C) is of great importance inthat assessing authorities must continuously monitorfrom assessment year to assessment year whethersuch institutions continue to apply their income andinvest or deposit their funds in accordance with the lawlaid down. Further, it is of great importance that theactivities of such institutions be looked at carefully. Ifthey are not genuine, or are not being carried out inaccordance with all or any of the conditions subject towhich approval has been given, such approval andexemption must forthwith be withdrawn. All thesecases are disposed of making it clear that the Revenue is at liberty to pass fresh orders if such necessity is feltafter taking into consideration the various provisions oflaw contained in Section 10(23C)read with Section 11of the Income-tax Act." In all those appeals which have come from the HighCourt of Punjab and Haryana and filed by theDepartment of Income-tax except one from the GujaratHigh Court, the High Court has followed its aforesaidjudgment in Pinegrove International Charitable Trust.Since this view stands approved, all these appeals aredismissed. We, however, make it clear that observations made inpara. 25, reproduced above, shall apply in these cases.One appeal is from the Gujarat High Court which hasalso followed the view taken by the Punjab andHaryana High Court in Pinegrove InternationalCharitable Trust, which also stands dismissed. We also make it clear that the observations made inpara. 25 in Queen's Educational Society v. CITMANU/SC/0287/2015 : [2015] 8 SCC 47 : [2015] 372ITR 699, 729 (SC) shall be followed. 6.2 He strongly relied on decision of this Court in thecase of Jhunjhunu Academy Sammittee Vs. Income TaxOfficer Jhunjhunu, D.B. Income Tax Appeal No.123/2006, decided on 8th February, 2017, this Courtwhile considering the identical question observed asunder: We, however, make it clear that observations made inpara. 25, reproduced above, shall apply in these cases.One appeal is from the Gujarat High Court which hasalso followed the view taken by the Punjab andHaryana High Court in Pinegrove InternationalCharitable Trust, which also stands dismissed. We also make it clear that the observations made inpara. 25 in Queen's Educational Society v. CITMANU/SC/0287/2015 : [2015] 8 SCC 47 : [2015] 372ITR 699, 729 (SC) shall be followed. 6.2 He strongly relied on decision of this Court in thecase of Jhunjhunu Academy Sammittee Vs. Income TaxOfficer Jhunjhunu, D.B. Income Tax Appeal No.123/2006, decided on 8th February, 2017, this Courtwhile considering the identical question observed asunder: “15. Before coming to the basic contentions, it is not indispute that the appellant is as by name itself suggeststhat it is an academic Samiti carrying on activities ofeducational purpose for establishing any educationalinstitution. There is need of infrastructure andexpansion of every activity whether it is a residentialaccommodation or physical or competitive requirementor other requirement and also the maintenance of theinstitution is a mandatory for which one has to collectthe funds. 16. From the record it seems that an endeavour ismade that during the relevant year they have a surplusfund which is prescribed or described by the authorityas a profit and compared to the expenses or the otherincome which has been received as 34,91,251/-. Thus,it has been stated that there is profit of 33 per cent. 17. In our view, any educational institution which isrequired to be run they have to have a surplus fund foreducational activity to sustain the consistency in theefficiency and very purpose of collecting donation is tosustain activity of institution. Merely, because surplusfund it cannot be envisaged as profit, the institutionhas not crossed one crore limit and they are well within their prescribed limit. The income was received by thetrust which is reflected in the books of accounts. 18. In our view, the view taken by the authority isrequired to be reversed and it is required to be lookedinto the foundation of the ratio laid down by theSupreme Court in the case of Queen’s EducationSociety (supra) where funds which has been surplus iswithin a corpus fund and it has been kept as reservefund which is not in dispute and they have not crossedthe limit of one crore. 19. Taking into consideration the aforesaid, we are ofthe opinion that the contention raised by Mr. Jhanwar isrequired to accepted. 20. Therefore, the first question, we answering infavour of the assessee that it is an income entitled forexemption under Section 23C(iiiad) of the Act.” 7. Thus, in view of the above, all the issues arerequired to be answered in favour of assessee andagainst the Department. 14. On depreciation he has relied upon the judgment inCommissioner of Income Tax-II, Jodhpur vs. Krishi UpajMandi Samiti (2016) 388 ITR 605 wherein it has been heldas under:- 19. Taking into consideration the aforesaid, we are ofthe opinion that the contention raised by Mr. Jhanwar isrequired to accepted. 20. Therefore, the first question, we answering infavour of the assessee that it is an income entitled forexemption under Section 23C(iiiad) of the Act.” 7. Thus, in view of the above, all the issues arerequired to be answered in favour of assessee andagainst the Department. 14. On depreciation he has relied upon the judgment inCommissioner of Income Tax-II, Jodhpur vs. Krishi UpajMandi Samiti (2016) 388 ITR 605 wherein it has been heldas under:- “4. The assessee is a charitable institution registeredunder Section 12-A of the Act of 1961 and 100%capital expenditure was availed by it against the assetconcerned i.e. a building. Section 32(1) of the Act of1961 provides for depreciation in respect of building,plant and machinery owned by the assessee and usedfor business purposes. Income of a charitable trust likethe present assessee derived from the depreciableheads is also liable to be computed on commercialbasis, however, while doing so it is to be kept in mindthat ultimately assessee is a charitable institution andits income for tax purposes is required to bedetermined by taking into consideration provisions ofSection 11 of the Act of 1961 after extending normaldepreciation and deductions from its gross income. Incomputing the income of a charitable institution/trustdepreciation of assets owned by such institution is anecessary deduction on commercial principles, hence,the amount of depreciation has to be deducted to arriveat the income available. 5. In view of the discussions made above, we findourselves in agreement with the view taken by BombayHigh Court in Director of Income Tax v. FramjeeCawasjee Institute (supra) and in CIT v. Institute ofBanking Personnel (supra). The substantial questionframed in the instant matter, thus, is answered in the terms that the Income Tax Appellate Tribunal rightlyallowed depreciation claimed by the assessee on capitalassets for which capital expenditure was already givenin the year under consideration.” 14.1 Decision of Punjab and Haryana High Court inCommisioner of Income Tax vs. Market Committee, Pipli(2011) 330 ITR 16 wherein it has been held as under:- 7. The Karnataka High Court in Commissioner ofIncome Tax, Karnataka v. Society of the Sisters of St.Anne. MANU/KA/0045/1983MANU/KA/0045/1983 :[1984] 146 ITR 28 drawing support from Madras HighCourt in Rao Bahadur Calavala Cunnan Chetty Charities(supra) had recorded that if depreciation is not allowedas a necessary deduction for computing the income of acharitable institution then the corpus of the trust forderiving the income cannot be preserved and that theamount of depreciation debited to the account of acharitable institution is to be deducted to arrive at theincome available for application to charitable andreligious purposes. This decision was followed byMadhya Pradesh High Court in CIT v. Raipur PallottineSociety MANU/MP/0335/1989MANU/MP/0335/1989 :[1989] 180 ITR 579. Similar view was taken by GujaratHigh Court in CIT v. Seth Manilal Ranchhoddas VishramBhawanTrust Trust MANU/GJ/0026/1992MANU/GJ/0026/1992 : [1992] 198ITR 598 by relying upon the aforesaid decisions. We arein respectful agreement with the view taken by Madras,M.P., Karnataka, Gujarat and Bombay High Courtsreferred to above. No contrary view has been broughtto our notice. Trust MANU/GJ/0026/1992MANU/GJ/0026/1992 : [1992] 198ITR 598 by relying upon the aforesaid decisions. We arein respectful agreement with the view taken by Madras,M.P., Karnataka, Gujarat and Bombay High Courtsreferred to above. No contrary view has been broughtto our notice. 8. In all fairness to the learned Counsel for theRevenue, reference is made to the judgment of theHon'ble Apex Court in Escort Limited's case (supra), onwhich reliance has been placed by the learned Counselfor the Revenue. The Hon'ble Supreme Court in thatcase was dealing with a case relating to two deductionsboth under Sections 10(2)(vi) and 10(2)(xiv) of the1922 Act or both under Sections 32(1)(ii) and 35(1)(iv)of the Act. The assessee therein had incurredexpenditure of a capital nature on scientific researchrelating to the business which resulted into acquisitionof an asset. The assessee had sought to claim aspecified percentage of the written down value of theasset as depreciation and at the same time claimeddeduction, in five consecutive years of the expenditureincurred on the acquisition of the asset. The apex Courtobserved: Where a capital asset used for scientific researchrelated to the business of the assessee is also ipso facto an asset used for the purpose of the business, itis impossible to conceive of the Legislature havingenvisaged a double deduction in respect of the sameexpenditure, one by way of depreciation under Section32 of the Income Tax Act, 1961 and other by way ofallowance under Section 35(1) (iv) of a part of thecapital expenditure on scientific research, even thoughthe two heads of deduction do not completely overlapand there is some difference in the rationale of the twodeductions....It was further recorded that: There is afundamental, though unwritten, axiom that noLegislature could have at all intended a doublededuction in regard to the same business outgoing;and, if it is intended, it will be clearly expressed. Inother words, in the absence of clear statutory indicationto the contrary, the statute should not be read so as topermit an assessee two deductions.… 9. In the present case, the assessee is not claimingdouble deduction on account of depreciation as hasbeen suggested by learned Counsel for the Revenue.The income of the assessee being exempt, theassessee is only claiming that depreciation should bereduced from the income for determining thepercentage of funds which have to be applied for thepurposes of the trust. There is no double deductionclaimed by the assessee as canvassed by the Revenue.Judgment of the Hon'ble Supreme Court in Escorts Ltd.and Anr. (supra) is distinguishable for the abovereasons. It cannot be held that double benefit is givenin allowing claim for depreciation for computing incomefor purposes of Section 11. The questions proposedhave, thus, to be answered against the revenue and infavour of the assessee. 14.2 Decision of Delhi High Court in Director of Income Tax(Exemption) vs. Indraprastha Cancer Society (2015) 53Taxman.com 463 wherein it has been held as under:- 10. The aforesaid paragraph refers to the decision inthe case of Vishwa Jagriti Mission (supra) but ratio wasdistinguished on the ground that in the said case theCourt was concerned with computation of income of acharitable trust/institution on commercial principles andif so whether depreciation on fixed assets used forcharitable purposes should be allowed as a deduction.The consensus of judicial opinion on the said aspectwas referred to. It is noticeable that in CharanjivCharitable Trust (supra) it stands observed that theTribunal overlooked the fact that the cost of asset hadbeen allowed as a "deduction" and thereafterdepreciation was being claimed. The said case,therefore, appears to be a peculiar one whereindeduction as expenditure and depreciation was being 10. The aforesaid paragraph refers to the decision inthe case of Vishwa Jagriti Mission (supra) but ratio wasdistinguished on the ground that in the said case theCourt was concerned with computation of income of acharitable trust/institution on commercial principles andif so whether depreciation on fixed assets used forcharitable purposes should be allowed as a deduction.The consensus of judicial opinion on the said aspectwas referred to. It is noticeable that in CharanjivCharitable Trust (supra) it stands observed that theTribunal overlooked the fact that the cost of asset hadbeen allowed as a "deduction" and thereafterdepreciation was being claimed. The said case,therefore, appears to be a peculiar one whereindeduction as expenditure and depreciation was being claimed simultaneously, while computing the taxableincome under the head "profits and gains frombusiness". The said decision dated 18th March, 2014does not refer to the decision in Indian Trade PromotionOrganisation (supra) which was decided on 27thNovember, 2013. The judgment in the case of IndianTrade Promotion Organisation (supra) was not cited andreferred to. The judgment in the case of CharanjivCharitable Trust (supra) is authored by the same Judge,who has also authored the decision in the case ofVishwa Jagriti Mission (supra) . It is obvious that inCharanjiv Charitable Trust (supra) , the Division Benchcould not have taken a different view on the legal ratioas interpreted in Vishwa Jagriti Mission (supra) .Further, the decisions in the case of Vishwa JagritiMission and Indian Trade Promotion Organisation(supra) being prior in point of time would act as bindingprecedents and could not have been overruled ordissented from by a coordinate Division Bench. 11. By Finance (No. 2) Act of 2014, subsection (6) toSection 11 stands inserted with effect from 1st April,2015 to the effect that where any income is required tobe applied, accumulated or set apart for application,then for such purposes the income shall be determinedwithout any deduction or allowance by way ofdepreciation or otherwise in respect of an asset, theacquisition of which has been claimed as application ofincome under this Section in the same or any otherprevious year. The legal position, therefore, wouldundergo a change in terms of Section 11(6) , which hasbeen inserted and applicable with effect from 1st April,2015 and not to the assessment years in question. Thenewly enacted sub- section relates to application ofincome. 14.3 Decision of Punjab & Haryana High Court inCommissioner of Income Tax vs. Tiny Tots Education Society(2011) 330 ITR 21 wherein it has been held as under:- 6. The matter was discussed in our recent judgmentdated July 5, 2010 in I. T. A. No. 535 of 2009 CIT v.Market Committee, Pipli [2011] 330 ITR 16 (P and H).After referring to the judgments in CIT v. Sheth ManilalRanchhoddas Vishram Bhavan Trust [1992]198 ITR 598(Guj) and CIT v. Institute of Banking PersonnelSelection (IBPS) [2003] 264 ITR 110 (Bom) : [2003]131 Taxman 386 (Bom), CIT v. Rao Bahadur CalavalaCunnan Chetty Charities [1982]135 ITR 485 (Mad), CITv. Society of the Sisters of St. Anne [1984] 146 ITR 28(Kar)and CIT v. Raipur Pallottine Society [1989]180 ITR579 (MP), the judgment of the hon'ble Supreme Courtin Escorts Ltd. [1993]199 ITR 43, was held not to beapplicable to the situation where depreciation was claimed by a charitable institution in determiningpercentage of funds applied for the purposes ofcharitable objects. It was observed (page 20 supra): claimed by a charitable institution in determiningpercentage of funds applied for the purposes ofcharitable objects. It was observed (page 20 supra): 9. In the present case, the Assessee is not claimingdouble deduction on account of depreciation as hasbeen suggested by learned Counsel for the Revenue.The income of the Assessee being exempt, theAssessee is only claiming that depreciation should bereduced from the income for determining thepercentage of funds which have to be applied for thepurposes of the trust. There is no double deductionclaimed by the Assessee as canvassed by the Revenue.The judgment of the hon'ble Supreme Court in EscortsLtd. [1993]199 ITR 43 is distinguishable for the abovereasons. It cannot be held that double benefit is givenin allowing claim for depreciation for computing incomefor purposes of Section 11. The questions proposedhave, thus, to be answered against the Revenue and infavour of the Assessee. 17. On the other issue, whether the expenses which aregranted or which has been considered by the authority, herelied upon the judgment of this court in Commissioner ofIncome Tax, Jaipur-II vs. Consulting Engineering Group Ltd.(2014) 365 ITR 284 wherein it has been held as under:- 17. In view of what we have discussed hereinabove, onall the three issues, the Tribunal, after appreciation ofevidence, has come to the conclusion that thedisallowance out of job work charges, soil testing andsurveying charges and directors' remuneration is notproper and it had been rightly deleted by the CIT(A)and we do not find any infirmity or perversity in thesaid order of the Tribunal. It is purely a finding of factand no question of law much less substantial questionof law can be said to emerge out of the said order ofthe Tribunal so as to call for any interference of thisCourt. In our view, no substantial question of law arisesout of the order passed by the Tribunal. Consequently,the appeal, being devoid of merit, is hereby dismissedin limine. No order as to costs. 19. He has relied upon the judgment of this court in MurariLal Khandelwal vs. CIT (2003) 263 ITR 642 wherein it hasbeen held as under:- 4. Learned counsel for the assessee Mr. Jhanwarsubmits that the amount of salary claimed on accountof payment to the sons i.e., Anoop and Alock wasreasonable, as both are looking after the business andassessee has got paralytic attack in the year 1983,therefore, the payment of salary to these persons atthe rate of Rs. 6,000 and Rs. 5,000 per month,submits that the amount of salary claimed on accountof payment to the sons i.e., Anoop and Alock wasreasonable, as both are looking after the business andassessee has got paralytic attack in the year 1983,therefore, the payment of salary to these persons atthe rate of Rs. 6,000 and Rs. 5,000 per month, respectively, was justified. 5. The facts on record reveal that both are graduatesand Anoop, to whom assessee has paid Rs. 6,000 p.m.in the year under consideration was getting only Rs.1,000 p.m. just in the preceding year. So far paralyticattack to the assessee is concerned, it happened in theyear 1983. The assessee has carried on the businesseven after paralytic attack without the help of thesetwo sons. 6. We also notice that in the preceding year i.e., 1991,assessee has disclosed income of Rs, 70,000. This yearhe has disclosed only income of Rs. 45,673. On thesefacts, there is no justification of paying such heavysalary to the sons of the assessee, who are employedby the assessee for the purpose of his business. 7. It is also pertinent to note that what should be thereasonable salary is basically a question of fact andTribunal is a fact-finding final body in this regard.Finding of the Tribunal cannot be said to be perverse onthese facts. No interference is called for in the order ofTribunal. In the result, we answer the question inaffirmative i.e., in favour of the Revenue and againstthe assessee. 6. We also notice that in the preceding year i.e., 1991,assessee has disclosed income of Rs, 70,000. This yearhe has disclosed only income of Rs. 45,673. On thesefacts, there is no justification of paying such heavysalary to the sons of the assessee, who are employedby the assessee for the purpose of his business. 7. It is also pertinent to note that what should be thereasonable salary is basically a question of fact andTribunal is a fact-finding final body in this regard.Finding of the Tribunal cannot be said to be perverse onthese facts. No interference is called for in the order ofTribunal. In the result, we answer the question inaffirmative i.e., in favour of the Revenue and againstthe assessee. 20. On the first issue as stated above, the same is requiredto be answered in favour of the assessee that u/s 11 & 13,the expenses which are transferred to the private universitywhile holding Sec.13 definition and explanation andsubstantial controlled or substantial transferred are not intheir name. It may be private institution which is a creationof statue having controlled by the same trustee and will notindirectly covered u/s 13 merely because the trustees of thebeneficiaries of the trust or any person controlling the trustwhich is part of another institution. The object is to seewhere even transfer for educational purpose or not that hasbeen done. In that view of the matter, the contention thatthe university will be covered u/s 13, in our consideredopinion merely because same trustees or the directors or thepersons are there, Sec.13 except with the explanation isrequired to be considered and the tribunal has rightlyconsidered that the trustees will not be covered u/s 13. 21. Regarding depreciation in view of the amendmentSec.11(6) it will be prospective and in view of jurisdictionalhigh court judgment binding on us and we are following thesame. 22. In that view of the matter, depreciation is rightlyallowed. On the question of foreign trip after taking intoconsideration the student exchange programme the tribunalhas come to the conclusion that it is covered under thepurpose of the trust object and are done for the educational institution and benefit of the students, in our consideredopinion, the expenses of foreign trip are also rightly allowed.23. In view of the above, we are in complete agreement withthe view taken by the tribunal. All the issues are answered infavour of the assessee and against the department." 4.The view taken in the aforesaid judgment has been affirmedby the Hon'ble Supreme Court in (2018) 89 taxmann.com 127(SC) (Commissioner of Income Tax-III, Pune vs. Rajasthan &Gujarati Charitable Foundation Poona) wherein in para 5, it hasbeen observed as under :- "5. It also follows that once assessee is allowed depreciation,he shall be entitled to carry forward the depreciation aswell." 5.Taking into consideration the aforesaid decisions, all theissues are answered in favour of the assessee and against thedepartment. 6.Accordingly, the instant appeals are dismissed. (DR. PUSHPENDRA SINGH BHATI)J. (K. S. JHAVERI)J. S.Phophaliya/-