Signature Not Verified v. R.l. Kheracharitabletrustrespondentthroughmr. Ajayvohrawithms. Kavitajha,Mr. Vaibhav Kulkami And Ms.bhoomika Chaudhary,Advocates

' Digitally SignedBy:AMULYA versus R.L. KHERACHARITABLETRUSTRespondentThroughMr. AjayVohrawithMs. KavitaJha,Mr. Vaibhav Kulkami and Ms.Bhoomika Chaudhary,Advocates. +ITA 336/2013 (AssessmentYear 2009-10)DIRCTOROF INCOMETAX (EXEMPTION)AppellantThroughMr. N.P. Sahniwith]^. NitinGulatiand Mr. P. Roychaoudhari,Advocates. versus M/S INTERNATIONALGOUDIYA VEDANTA TRUST RespondentThroughMs. Prem Lata Bansal, Sr. Advocatewith Mr. Ram Avtar Bansal, Mr. S.K.Khurana and Mr. Sanjay Sharma,Advocates. +ITA 449/2013 (AssessmentYear 2007-08) THE DIRECTOR OF INCOME TAX LAXMI NAGAR DELHI AppellantThroughMr. N.P. Sahni with Mr. Nitin Gulati& Mr. P. Roychaudhari, Advocates. versus TCI FOUNDATION10 RAM BAGH AZAD MARKET ROHTAKROAD NEW DELHIRespondentThroughMr. Ajay Vohra with Ms. Kavita Jha,Mr. Vaibhav Kulkami and Ms.Bhoomika Chaudhary, Advocates. CORAM:HON'BLE MR. JUSTICE SANJIV KHANNAHON'BLE MR. JUSTICE SANJEEV SACHDEVAORDER%27.11.2013 CM No.14785/2013(delav^ in ITA 449/2013 For the reasons stated in the apphcation,the appHcation isallowedandthedelayof 94 days inre-filingtheappealis condoned. ITA 7/2013,331/2013.268/2013& 449/2013 1.A commonissuearisesfor considerationintheaforesaidappeals.Hence, they are being decidedby this common order.Hence, they are being decidedby this common order. 2.The issue raised by Revenue in these appeals pertains tointerpretationof Section11(1)clause 'a' of the IncomeTax Act,1961. For the sake of convenience,the said clauseis reproducedbelow:-interpretationof Section11(1)clause 'a' of the IncomeTax Act,1961. For the sake of convenience,the said clauseis reproducedbelow:- "Section11(1)in The Income-Tax Act, 1995 (1) Subject to the provisions of sections 60to 63, the following income shall not beincluded in the total income of the previousyear of the person in receipt of the income-to 63, the following income shall not beincluded in the total income of the previousyear of the person in receipt of the income- {a) income derived from property heldundertrustwhollyforcharitableorreligious purposes, to the extent to whichsuch income is applied to such purposes inIndia; and, where any such income isaccumulated or set apart for application tosuch purposes in India, to the extent towhichthe incomeso accumulatedor set apart is not in excess of fifteenper cent ofthe incomefrom suchproperty." 3.The contentionofRevenueisthatallowedondepreciation capitalassets cannot be treated as application of income under the saidclause.In case depreciation was allowed and treated asapplication of income, then the assessee would be entitled todouble deductionas purchaseor acquisitionof capitalassets forconsiderationwas also treated as application of income. It issubmittedthat purposiveinterpretationshould be given to thesaid clause as the legislative intent was that a charitableinstitution must spend 85% of the funds available with themduringthe financialyear itselfand they shouldnot carryforwardthe funds beyond 15%. Accordingly,if an assesseehadacquiredan asset and price paid was treated as application of income andhad also claimed the said amount as expenditure in its incomeexpenditure account, depreciation on the asset should not beallowable as application of income under Section ll(l)(a) of theAct. 4.Revenue relies upon decision of the Kerala High Court in LissieMedical Institution vs. C/r(2012) 348 ITR 344 (Ker). The saiddecision, no doubt, supports the proposition propounded by theRevenueand wewouldlike toreproducethefollowingobservations:-Medical Institution vs. C/r(2012) 348 ITR 344 (Ker). The saiddecision, no doubt, supports the proposition propounded by theRevenueand wewouldlike toreproducethefollowingobservations:- 5. "Seniorcounsel,Sri A. K. J. Nambiar,a;ppearing for the assessee, submitted that thea;ppearing for the assessee, submitted that the 4.Revenue relies upon decision of the Kerala High Court in LissieMedical Institution vs. C/r(2012) 348 ITR 344 (Ker). The saiddecision, no doubt, supports the proposition propounded by theRevenueand wewouldlike toreproducethefollowingobservations:-Medical Institution vs. C/r(2012) 348 ITR 344 (Ker). The saiddecision, no doubt, supports the proposition propounded by theRevenueand wewouldlike toreproducethefollowingobservations:- 5. "Seniorcounsel,Sri A. K. J. Nambiar,a;ppearing for the assessee, submitted that thea;ppearing for the assessee, submitted that the assessee has been filing income-tax returnsfor several years includingthe assessmentyear 2005-06,and disallowanceis made onlyfor this year. Since business income has tobe as stated in section 29 by granting alldeductions provided under sections 30 to43D which includes depreciation undersection 32, the assessee is entitled is the casepressed before usby the senior counselappearing for the assessee. We have no doubtinourmindthatbusinessincomeofcharitabletrust also has to be computed inthe same manner as provided under section29 of the Income-tax Act. However,theissue that requires consideration is when theexpenditure incurred foracquisition ofdepreciableassetsitselfistreatedasapplicationofincomeforcharitablepurposes under section ll(l)(a)of the Act,should not the cost ofsuch assets to betreatedas nil for the assesseeand in thatsituationdepreciationto be grantedturns outto be nil. However, if depreciationprovidedis claimed on notional cost after the assesseeclaims 100 per cent, of the cost incurred forit as application of income for charitablepurposes, the depreciation so claimed has tobe written back as income available.In fact,going by the several decisions of the variousHigh Courts, we are sure that based on thesedecisionsall the charitableinstitutionswillbe generating unaccountedincome equal totheamount claimed on an depreciation yearto year basis which is nothing but blackmoney. This aspect is not seen considered inany of these decisions.We, therefore,soughtthe views fromthe Central Board of DirectTaxes. Senior standing counsel, Sri P. K. R. y v; Menon,appearingfor the Revenue,producedclarificationobtainedfromtheCentralBoard whereinthey have stated as follows :"The Central Board of Direct Taxes is of theconsideredview thatwhere an assessee hasacquired an asset through application ofincome and has also claimed this amount asexpenditure in its incomeexpenditureaccount,depreciationon such asset wouldnotbeallowabletotheassessee.Suchnotionalstatutorydeductionslikedepreciation, if claimed as deduction whilecomputingthe income of the 'the propertyheld under trust' under the relevanthead ofincome, is required to be added back whilecomputing the income for thepurpose ofapplication intheincomeexpenditureaccount. This wouldimply that a correctfigure of surplus from the trust property isreflected in the income and expenditureaccount of the trust to determinethe incomefor the purpose of application under section11 of the Income-taxAct. This would reducethe possibility of revenue leakagewhichmay be a cause for generation of blackmoney," 6.From the above, what is clear is thatthe CentralBoard also confirmstheviewtaken by us that after allowing cost ofacquisition as application ofincome forcharitable purposes and over and above ifdepreciation isclaimed on such assets, somuchof thedepreciationallowedwillgenerateincomeoutsidethebooksofaccountandunlessthedepreciationissimultaneously written back by the assessee \> as income availablefor for applicationcharitable in the next there purposes year,will be violation of section ll(l)(a) of theAct. We find that the hon'ble SupremeCourthas clearly statedthis position,thoughnot inthe same context. In the decision inEscortsLtd. V. Union of India [1993] 199 ITR 43(SC) relied on by theTribunal wherein thehon'ble Supreme Court states as follows(page 60): 6.From the above, what is clear is thatthe CentralBoard also confirmstheviewtaken by us that after allowing cost ofacquisition as application ofincome forcharitable purposes and over and above ifdepreciation isclaimed on such assets, somuchof thedepreciationallowedwillgenerateincomeoutsidethebooksofaccountandunlessthedepreciationissimultaneously written back by the assessee \> as income availablefor for applicationcharitable in the next there purposes year,will be violation of section ll(l)(a) of theAct. We find that the hon'ble SupremeCourthas clearly statedthis position,thoughnot inthe same context. In the decision inEscortsLtd. V. Union of India [1993] 199 ITR 43(SC) relied on by theTribunal wherein thehon'ble Supreme Court states as follows(page 60): "The merefactthata baselessclaimwasraised by some overenthusiastic assesseeswho sought a double allowance or that suchclaim may perhaps have been accepted bysome authoritiesis notsufficient to attributeany ambiguity or doubt as to the true scopeof the provisions as they stood earlier."For the forgoing reasons, we dispose of theappeal by confirming theorder of theTribunal. However, as rightly pointed out bythe counsel for theassessee the system ofallowing depreciation was followed by theassesseeforseveralyearsanditwasconsistent with the view taken by severalHighCourts in India in the decisions abovecited.Wefindforceinthiscontentionbecause assessee cannot be taken by surpriseby disallowing depreciationwhich wasbeingallowed for several yearsand todemand tax for one yearafter makingdisallowance.We feel the assessee should beallowed to writeback the depreciation forthis year and even for previous and thenallow thesame to be carriedforwardforapplication for subsequent years. It is for theassessee to write back depreciationand if Hi >- V done the AssessingOfficerwill modify theassessment determining higher income andallowrecomputedincomewiththedepreciationwritten back by the assessee tobe carried forward for subsequentyears forapplication forcharitable purposes.Theappeal is disposed of as above by answeringthe questionin favourof the Revenue but bygranting the relief to the assessee as above." 5.As is clear from paragraph6 above, the Kerala High Court hasrelied upon the decision of the Supreme Court in the case ofEscorts Ltd. vs. Union of India, (1993) 199 ITR 43 (SC). Weshall refer to this judgment subsequently. In order to appreciatethe contentionraisedby the Revenue,we would like to give oneexample which would clarify the contention or the issue raisedbefore us. An assessee, a charitable institution, say has incomefrom propertyheld underTrustof Rs.1,00,000/-. As per mandateof clause 'a', 85% of the said amount i.e. Rs.85,000/- should bespent in the said financial year. The said assessee spends andacquires a capital asset for Rs.50,000/-. The purchase price foracquisition of the capital asset i.e. Rs.50,000/- is treated asapplication of income for the purpose of clause 'a' to Section11(1). On the capital asset, the assessee also claims depreciationsay @ 20%.Accordingly, theassesseeclaims that theapplication of income would include Rs.10,000/- which is to beallowed as depreciation as to this extent, the asset purchased hasdepreciated.In other words, Rs.60,000/- is to be treated asapplication of money for the purpose of clause 'a' to Section v.. V 11(1). 6.Initially we were inclined to accept the submission raised by theRevenuethat there are several good reasonswhy we havedeclined to interfere and refer the matter to a larger bench toconsider judgment of this Court in DIT vs. Vishwa JagritiMission, ITA No. 140/2012 (Del.). 7.The controversy in question is not new and has been subjectmatter of judicial opinion and decisions from 1984. In the saidyear Kamataka High Court in Commissioner ofIncome Tax V5.Society of The Sisters of St. Anne 146 ITR 28 (Kar) had afterreferring to the provisions in question, held;- v.. V 11(1). 6.Initially we were inclined to accept the submission raised by theRevenuethat there are several good reasonswhy we havedeclined to interfere and refer the matter to a larger bench toconsider judgment of this Court in DIT vs. Vishwa JagritiMission, ITA No. 140/2012 (Del.). 7.The controversy in question is not new and has been subjectmatter of judicial opinion and decisions from 1984. In the saidyear Kamataka High Court in Commissioner ofIncome Tax V5.Society of The Sisters of St. Anne 146 ITR 28 (Kar) had afterreferring to the provisions in question, held;- "It is clear from the above provisions that theincome derived fromproperty held undertrust cannot be the total incomebecauses.11(1)says that the former shall not beincluded in the latter, of the person in receiptof the income. The expression " total income" has been defined under s. 2(45) of the Acttomean"thetotalamountof incomereferred to in s. 5 computed in the mannerlaid down in this Act".The word " income "is defined under s. 2(24) of the Act to includeprofitsand gains, dividends, voluntarypayment received by trust, etc. Itmay benoted that profits and gains are generallyused in terms of business or profession asprovided u/s. 28. The word " income ",therefore,is a much wider term than theexpression profits and gains of business orprofession". Net receipt after deductingallthe necessaryexpenditureof the trust (sic). ^ ^ Thereisabroadagreementonthisproposition.But still the contention for theRevenue is that the depreciation allowancebeing a notionalincome (expenditure ?)cannotbeallowedtobedebitedtotheexpenditureaccount of the trust. Thiscontention appears toproceedontheassumption that theexpenditure shouldnecessarily involve actual delivery of orwith the It seemsto us that itparting money.need not necessarilybe so. The expenditureshould be understood as necessary outgoings.The depreciationis nothing but decrease invalue of propertythroughwear, deteriorationor obsolescenceand allowanceis made forthis purpose in book keeping, accountancy,etc. In Spicer & Pegler's Book-keepingandAccounts, 17th Edn., pp. 44, 45 & 46, it hasbeen noted as follows :"Depreciation is the exhaustion of theeffective life of a fixed asset owing to ' use 'or obsolescence. It may be computed as thatpartofthe costofthe assetwhichwillnotberecovered when the asset is finally put out ofuse. The objectofprovidingfor depreciationis to spread the expenditure, incurred inacquiringthe asset,overitseffectivelifetime;the amount of the provision, made in respectof an accounting period, isintended torepresentthe proportionof such expenditure,whichhas expiredduringthat period." "At the end of its effectivelife, the assetsceases to earn revenue, i.e., the capital valuehas expired and the asset will have to bereplacedor a substitutefound provisionfor V depreciation is the setting aside, out of therevenueofanaccountingperiod,theestimated amount by which thecapitalinvestedin the asset has expired during thatperiod. It is the provision made for the lossor expense incurred through rising the assetfor earning profits, and should, therefore, becharged against those profitsas they areearned." "If depreciation is not provided for, the bookswill not contain atrue record of revenue orcapital. If the asset were hired instead ofpurchased, the hiring fee would be chargedagainst the profits; havingbeen purchasedthe asset is, in effect, then hired by capital torevenue,and the true profitcannotbeascertained until a suitable charge for the useof the asset has been made. Moreover, unlessprovisionismadefordepreciation,the. balance-sheet will not present a true and fairview of the state of affairs ; assets should beshown at a figure which representthat partof their value on acquisition, which has notyet expired." "If depreciation is not provided for, the bookswill not contain atrue record of revenue orcapital. If the asset were hired instead ofpurchased, the hiring fee would be chargedagainst the profits; havingbeen purchasedthe asset is, in effect, then hired by capital torevenue,and the true profitcannotbeascertained until a suitable charge for the useof the asset has been made. Moreover, unlessprovisionismadefordepreciation,the. balance-sheet will not present a true and fairview of the state of affairs ; assets should beshown at a figure which representthat partof their value on acquisition, which has notyet expired." InCITVIndianJuteMillsAssociation1982] 134 ITR 68, the Calcutta High Court,whileconstructingtheexpression"expenditureincurred " in s. 44A of the Act,observed:"depreciationclaimedshallincludetheexpenditure incurred."There are only tworecognised methods of accounting : (1) cashbasis,and (ii) mercantile basis. Under thecashbasisonlycashtransactionsarerecorded. It is only cash receipts and cash payments which find entries in the books ofaccount.Mercantilesystem of accountingwas explainedby the Supreme Court inKeshav Mills Ltd. v. CIT [1953]23 ITR 230at 230 in the following words : " The mercantilesystem of accountingorwhat is otherwise known as the double entrysystem is opposed to the cash system of bookkeepingunder which a record is kept ofactualcashreceiptsandactualcashpayments, entries being made only whenmoney is actually collected or disbursed.That system brings into credit what is due,immediately it becomes legally due andbefore it, is actually received and it bringsinto debit expenditure the amount for which alegal liability has been incurred before it isactually disbursed. It is not in dispute that if the mercantilesystemisfollowed,thedepreciationallowance in respect of the trust propertyshould be allowed. xxxxxxxxxxxxxxxx The depreciation if it is not allowed as anecessary deduction forcomputing theincome from the charitableinstitutions,thenthere is no way to preserve the corpus of thetrust for derivingthe income.The Board alsoappears to have understood the " income "u/s. 11(1) in itscommercial sense. Therelevant portion of the Circular No. 5-P(LXX-6)of 1968,datedJuly 19, 1968,reads: Where the trust derives income from house property, interest on securities, capital gains,or other sources, the word 'income' should beunderstood in its commercial sense, i.e., bookincome,afteraddingbackanyappropriationsorapplicationsthereoftowardsthepurposeofthetrustorotherwise, and also after adding back anydebits made for capital expenditure incurredfor the purposes of the trust or otherwise.ltshould be noted, in this connection, that theamountssoaddedbackwillbecomechargeableto tax u/s. 11(3)to the extent thatthey represent outgoings for purposes otherthan those of the trust. The amounts spent orappliedfor the purposesof the trust fi-om outof the income computed in the aforesaidmanner, should be not less than 75 per cent.of the latter, if the trust is toget the fiillbenefit of the exemption u/s. 11(1)." 8.The aforesaid paragraph quotes the Board Circular No.5-P(LXX-6) of 1968 dated 19.07.1968. After the decision of the Kerala High Court in Lissie MedicalInstitution vs. CIT (supra),the Board issued a fi-esh circularorclarification dated 02.02.2012 and has observed;- "The view of the CBDT to be conveyed to theCourt in this regard is as under:- The Central Board of DirectTaxesis of theconsideredviewthatwherean assesseehasacquiredan assetthroughapplicationof incomeand has also claimed this amount as expenditurein its income expenditureaccount, depreciationon such asset would not be alloweable to theassessee.Such notional statutory deductions 8.The aforesaid paragraph quotes the Board Circular No.5-P(LXX-6) of 1968 dated 19.07.1968. After the decision of the Kerala High Court in Lissie MedicalInstitution vs. CIT (supra),the Board issued a fi-esh circularorclarification dated 02.02.2012 and has observed;- "The view of the CBDT to be conveyed to theCourt in this regard is as under:- The Central Board of DirectTaxesis of theconsideredviewthatwherean assesseehasacquiredan assetthroughapplicationof incomeand has also claimed this amount as expenditurein its income expenditureaccount, depreciationon such asset would not be alloweable to theassessee.Such notional statutory deductions like depreciation,if claimedas deductionwhilecomputing the income of 'the property heldunder trust' under the relevant head of income,is required to be added back while computingthe income for the purpose of applicationin theincome expenditureaccount. This would implythat a correct figure of surplus from the trustproperty isreflected intheIncome&Expenditureaccountofthetrustto determinetheincome for the purpose of application undersection 11 of the Income Tax Act.This wouldreducethe possibilityof revenueleakagewhich causemaybe aforgenerationof blackmoney." 10. We also note that the KeralaHigh Court, in fact, has noted theclarificationswhichwere earlierissuedby the Boardin respectof1968 circular. It is clear from the reasoning given by the Kerala Court that have not theofclarificationswhichwere earlierissuedby the Boardin respectof1968 circular. It is clear from the reasoning given by the Kerala Court that have not theofHigh they gone by expresslanguageSection11(a)andhavepurposivelyinterpretedthe provision.Section11(a)andhavepurposivelyinterpretedthe provision. 11. Clause 'a' of Section 11(1) stipulatesthat income derivedfromproperty held under trust wholly for charitable or religiousis to befor suchin India and wherepurposes applied purposessuch income is set aside or accumulated, it should not be inexcessof 15% of the incomefrom such property. Thus, there isan and fromor embargo probation accumulating setting apartincome derived from propertyheld under trust beyond 15% ofincome from such property. If there is a violationof the saidprovision,proportionateincome is deemedto be taxableand notexempt under Section 11(1). The language of the Section is \ peculiar and proceeds on its own wording. This aspect has beenhighlighted and pointed out in the judgment of Commissioner ofIncome Tax vs. Society of The Sisters of St. Anne (supra).Decision in the case of Escorts Ltd. (supra) was considered bythe Delhi High Court in DIT vs. Vishwa Jagriti Mission (supra)decided on 29^^ March, 2012 and was distinguishedfor thefollowing reasons. "13. The judgment of the Supreme Court inEscorts Limited Vs. Union ofIndia (supra)has been rightly held to be inapplicable tothe present case. There are two reasons as towhy the judgment cannot be applied to thepresent case. Firstly, the Supreme Court wasnot concernedwith the case of a charitabletrust/institution involving the question as towhether its income should be computed oncommercial principles in order to determinetheamountofincomeavailableforapplication to charitable purposes. It was acase where the assessee was carrying onbusinessandthestatutorycomputationprovisionsof ChapterIV-D of the Act wereapplicable. In the present case, we are notconcerned with the applicability of theseprovisions.We are concernedonly with theconceptofcommercialincomeasunderstood from the accounting point ofview.Evenundernormalcommercialaccountingprinciples,there is authority forathe proposition that depreciation isnecessary charge in computing the netincome. Secondly, the Supreme Court wasconcerned with the case where the assesseehad claimeddeductionof the cost of the asset under Section 35(1) of the Act, whichallowed deduction for capital expenditureincurred on scientific research. The questionwas whether after claiming deduction inrespect of the cost of the asset under Section35(1),cantheassesseeagainclaimdeductionon account of depreciationinrespect of the same asset. The SupremeCourt ruled that, under general principles oftaxation,double deductionin regard to thesamebusinessoutgoingis notintendedunless clearly expressed. The present case isnot one of this type, as rightly distinguishedby the CIT(Appeals)." 12. We would like to reproduce Section 35 (2B)(c). "Section 35(2B)(a) (b)(c) Wherea deductionallowedfor anypreviousyearunderthissub-sectioninrespect of expenditure represented wholly orpartly by an asset, no deduction shall beallowed in respect of that asset under [clause(ii) of sub-section (1)] of section 32 for thesame or any subsequent previous year." 13. The language of the sub-clause 'c'to Section 35(2B) isconspicuous and entirely different and wordings are clear andlucid.The language of Section 11(1), as noticed above, isdistinguished and not worded in a similar manner.In EscortsLtd. (supra), the SupremeCourt was consideringthe said specificprovision and the wordings therein. While dealing with the term"expenditure" and noticing the language it was held that noconspicuous and entirely different and wordings are clear andlucid.The language of Section 11(1), as noticed above, isdistinguished and not worded in a similar manner.In EscortsLtd. (supra), the SupremeCourt was consideringthe said specificprovision and the wordings therein. While dealing with the term"expenditure" and noticing the language it was held that no duplication or double deduction should be allowed towardsdepreciation in the same or subsequent year. Thus, the issue wasdecided against the assessee. Language of Explanation 1 toSection 43(1) can also be referred to and we notice that thelanguage of the said explanation is absolutely different jfrom thelanguage used in Clause (a) to Section 11(1). Section 11(1)(a) isa peculiar provision which postulates application of income andit is not dealing with expenditure as such. The legislative desireis that money should be applied for the purpose of charity.InEscorts(supra), the Supreme Court had observed that theywere concerned with expenditure and since the entire costs of thecapital assets had been allowed and had been set off against thebusiness profit in five years or in one previous year, it wasunconceivable that the depreciation should be allowed again onthe same asset. 14. From the year 1984 onwards, there have been a number ofdecisions of various High Courts taking a similar and identicalview, as that of Society of the Sisters ofSt Anne (supra). Theseare as under:- Income Tax vs. Market Committee, Pipli (2011) 330 ITR 16(P&H), Income Tax vs. Tiny Tots Education Society, (2011)330 ITR 21 (P&H), Commissioner of Income Tax vs. ManavMangal Society, (2010) 328 ITR 421 (P&H), CommissionerofIncome Tax vs. Sheth Manilal RanchhoddasVishram BhavanTrust, (1992) 198ITR 598 (Guj.), Commissioner ofIncome Tax V/ Vy vs. RaipurPallottineSociety, (1989) 180 ITR 579 (M.P.),Commissioner of Income Tax vs. Institute of Banking, (2003)264 ITR 110 (Bom), and CITvs. Shakuntala Tharal CharitableFoundation,(2013) 358 ITR 452 (MP). 14. From the year 1984 onwards, there have been a number ofdecisions of various High Courts taking a similar and identicalview, as that of Society of the Sisters ofSt Anne (supra). Theseare as under:- Income Tax vs. Market Committee, Pipli (2011) 330 ITR 16(P&H), Income Tax vs. Tiny Tots Education Society, (2011)330 ITR 21 (P&H), Commissioner of Income Tax vs. ManavMangal Society, (2010) 328 ITR 421 (P&H), CommissionerofIncome Tax vs. Sheth Manilal RanchhoddasVishram BhavanTrust, (1992) 198ITR 598 (Guj.), Commissioner ofIncome Tax V/ Vy vs. RaipurPallottineSociety, (1989) 180 ITR 579 (M.P.),Commissioner of Income Tax vs. Institute of Banking, (2003)264 ITR 110 (Bom), and CITvs. Shakuntala Tharal CharitableFoundation,(2013) 358 ITR 452 (MP). 15. Kerala High Court was also conscious of the said decisions andthe fact that Section ll(l)(a) had been interpreted in a differentmanner.It was in these circumstancesthat the Kerala HighCourt in the last portion of paragraph 6, as quoted above, hasstatedthattheassesseewouldbeentitledtowritebackdepreciationandif done,the AssessingOfficerwouldmodifytheassessmentdeterminingthehigherincomeandallowrecomputationof depreciationwritten back for the purpose of income future orapplication of for charitable purposes insubsequentyears.This may lead to its own difficultiesandproblemsas suddenlythe entire depreciationwrittenoff wouldhave to be added first and then in one year substantialapplicationof incomewouldberequired.This may be impracticaland woulddisturbthe workingofmany a charitableinstitutions. The legalinterpretationwhich has continuedsince 1984, if disturbedandimplemented,wouldnot appropriatelyresolved. Consistencyandcertainty is more appropriate. 16. The equallyplausibleand consistentinterpretationof clause (a)of Section11(1) of the Act is that incomederivedfi:om propertymust be calculatedas theof the Act. The said per principlesof Section11(1) of the Act is that incomederivedfi:om propertymust be calculatedas theof the Act. The said per principlesclause is not a computationprovisionand does not disturb the r .j V" ^ % "income" earned or available but postulates that the "income" ascomputed in accordance with the provisions of the Act to theextent of 86% must be applied.Application of income may .include purchase of a capital asset. The said purchase is validand takeninto considerationfor the purposeof ensuringcompliance,i.e., applicationof money or funds and is not a factorwhich determines and decides the quantum of income derivedfrom property held under trust.Computation of income isseparateand distinct and has to be made on commercialbasis byapplying provisions of the Act. 17.In ITA No. 336/2013 - Director of Income Tax (Exemption) Vs.M/s. InternationalGoudiyaVedanta Trust, Revenue has raised anadditionalquestionrelatingto subscriptionof Rs.2400/-receivedfrom the members.The Tribunalheld that the subscriptionshould be treated as a part of the corpus. Keeping in view thesmall amount involved, we are not inclined to decide thiscontroversyin the presentappeal and leave the issue open to bedecidedin ancase. appropriateM/s. InternationalGoudiyaVedanta Trust, Revenue has raised anadditionalquestionrelatingto subscriptionof Rs.2400/-receivedfrom the members.The Tribunalheld that the subscriptionshould be treated as a part of the corpus. Keeping in view thesmall amount involved, we are not inclined to decide thiscontroversyin the presentappeal and leave the issue open to bedecidedin ancase. appropriate 18. In view of the aforesaid position, we do not find merit in thepresentappealsonthe saidaspectandthe samearedismissed.presentappealsonthe saidaspectandthe samearedismissed. SANJIVKHANNA,J (I i (LJL/J •= ^ C SlAN^EEVSACHDEVA,J NOVEMBER 27,2013/st