M/s Gugan Solanki Memorial Educational Society, v. ADIT (E),

ITA 1495/DEL/2011 | 2007-2008
Pronouncement Date: 30-03-2012 | Result: Partly Allowed

Appeal Details

RSA Number 149520114 RSA 2011
Assessee PAN OFTHE1922A
Bench Delhi
Appeal Number ITA 1495/DEL/2011
Duration Of Justice 1 year(s) 5 day(s)
Appellant M/s Gugan Solanki Memorial Educational Society,
Respondent ADIT (E),
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted Not Allotted
Tribunal Order Date 30-03-2012
Date Of Final Hearing 27-03-2012
Next Hearing Date 27-03-2012
Assessment Year 2007-2008
Appeal Filed On 25-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C DELHI) BEFORE SHRI G.D. AGRAWAL HONBLE VICE PRESIDENT AND SHRI A.D. JAIN JUDICIAL MEMBER ITA NO. 1495(DEL)2011 ASSESSMENT YEAR: 2007-08 M/S. GUGAN SOLANKI MEMORIAL EDUCATIONAL ASSTT. DIRECTOR OF I.TAX(E) SOCIETY C/O VIKAS BHARTI PUBLIC SCHOOL V. TR UST CIRCLE II DISTRICT SECTOR 24 ROHINI. DELHI-110085. CENTRE LAXMI NAGAR DELHI. ITA NO. 2000(DEL)2011 ASSESSMENT YEAR: 2007-08 ASSTT.DIRECTOR OF INCOME TAX(E) M/S.GUGA N SOLANKI MEMORIAL TRUSTCIRCLE II DISTRICT CENTRE V. EDUC ATIONAL SOCIETY C/O VIKAS LAXMI NAGAR DELHI. B HARTI PUBLIC SCHOOL SEC.24 ROHINI DELHI-110085. (APPELLANT) (RESPONDE NT) APPELLANT BY: SHRI SANJAY KU MAR AGARWAL & MS. MONIKA AGARWAL CAS RESPONDENT BY: SHRI ALO K SINGH SR. DR ORDER PER A.D. JAIN J.M. THESE ARE CROSS APPEALS FOR THE ASSESSMENT YEAR 200 7-08. WHEREAS ITA NO. 1495(DEL)2011 HAS BEEN FILED BY THE ASSESS EE AND ITA NO. 2000(DEL)2011 HAS BEEN PREFERRED BY THE DEPARTMENT. ITA NOS. 1495 & 2000(DEL)2011 2 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN ITA NO. 1495(DEL)2011:- 1. THAT THE LD. CIT(A)-XII HAS ERRED IN LAW WHILE UPHOLDING THE ADDITION OF ` 18 65 000/- ON ACCOUNT OF ANONYMOUS DONATION U/S 115 BBC OF THE INCOME TAX ACT 1961 WHEREAS TH E ASSESSEE HAS FURNISHED ALL THE EVIDENCES IN SUPPORT OF THESE TRANSACTIONS AND THEREFORE THE ADDITION OF ` 18 65 000/- IS BAD IN LAW AS THE ASSESSEE HAS DULY MAINTAINED NAMES AND ADDRESS OF T HE DONORS AND AS SUCH ADDITION OF ` 18 65 000/- MAY PLEASE BE DELETED. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW WHILE UPHO LDING THE VOLUNTARY DONATION OF ` 1 08 000/- RECEIVED DURING THE RELEVANT FINANCIAL YEAR 2006-07 AS INCOME FROM OTHER SOURCES AND IGNORING ALL THE EVIDENCES BEING FURNISHED BY THE A SSESSEE IN ITS SUPPORT AND THE ADDITION OF ` 20 000/- IN RESPECT OF DONATION HAS BEEN DELETED BY THE LD. CIT(A) IN THE SAME MANN ER OTHER DONATIONS OF ` 1 08 000/- MAY PLEASE BE DELETED. 3. THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE DISALLOWANCE OF DEPRECIATION OF ` 1 36 57 327/- CLAIMED AS APPLICATION OF INCOME BY THE ASSESSEE AND THEREFORE THE SAME MAY PLEASE BE ALLOWED AS THE SAME WAS ALSO ALLOWED BY ITAT CHAND IGARH IN THE CASE OF MARKET COMMITTEE SHAHBAD (M) V. ACIT KURUKSHETRA ITA NO. 471/CHD/2009 AND THEREFORE THE SAME MAY PLEASE BE ALLOWED. 4. THE LD. CIT(A) HAS ERRED IN APPLYING THE RATIO OF THE CASE WITH RESPECT OF ESCORTS LTD. V. UNION OF INDIA [199 3] 199 ITR 43(SC)IN DISALLOWING DEPRECIATION WHILE THE STATUS OF THE APPELLANT HAS BEEN IGNORED. THEREFORE DEPRECIATI ON OF ` 1 36 57 327/- MAY PLEASE BE ALLOWED. ITA NOS. 1495 & 2000(DEL)2011 3 3. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSE SSEE HAS STATED AT THE BAR THAT GROUND NO. 2 IS NOT PRESSED. REJECTED AS NOT PRESSED. 4. SO FAR AS REGARDS GROUND NO.1 THE AO OBSERVED T HE ASSESSEE TO HAVE RECEIVED AN AMOUNT OF ` 18 65 000/- AS DONATION DULY CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE WAS ASKE D TO FURNISH THE NAMES AND ADDRESSES OF THE DONORS. THE ASSESSEE COMPLIE D. THE AO OBSERVED THAT APART FROM A FEW DONATIONS THE REST WERE ALL RECEIVED IN CASH ONLY. OBSERVING THAT THE ASSESSEE COULD NOT FURNISH CONFI RMATIONS FOR THE SAME THE AO TREATED THE AMOUNT OF ` 18 65 000/- AS ANONYMOUS DONATION U/S 115 BBC OF THE ACT. 5. THE LD. CIT(A) CONFIRMED THE ABOVE ACTION OF THE CIT(A). 6. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION IS NOT SUSTAINABLE IN LAW SINCE THE ASSESSEE HAD FURNISHED ALL THE EVIDENCE I N SUPPORT OF THE DONATIONS AS REQUIRED U/S 115 BBC OF THE ACT. ATTENTION HAS BEEN INVITED TO THE PROVISIONS OF SECTION 115 BBC(3) OF THE ACT. THIS SECTION READS AS FOLLOWS:- ITA NOS. 1495 & 2000(DEL)2011 4 115 BBC(3) :- FOR THE PURPOSES OF THIS SECTION ANONYMOUS DONATION MEANS ANY VOLUNTARY CONTRIBUTION REFERRED TO IN SUB-CLAUSE (IIA) OF CLAUSE (24) OF SECTION 2 WHERE A PERSON R ECEIVING SUCH CONTRIBUTION DOES NOT MAINTAIN A RECORD OF THE IDEN TITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING SUCH CONTRIBU TION AND SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED. 7. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTEND ED THAT AS SUCH THE ASSESSEE WAS REQUIRED TO MAINTAIN REFERENCE OF THE IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING SUCH CONTRIBU TION AND SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED; AND THAT NO OTHER PARTICULARS HAVE BEEN PRESCRIBED IN THIS MATTER. ATTENTION HAS BEEN INV ITED TO PAGES 18 TO 21 OF THE ASSESSEES PAPER BOOK (APB FOR SHORT) WHICH IS A COPY OF THE DETAILS OF DONATIONS RECEIVED BY THE ASSESSEE SOCIETY DURING T HE YEAR. IT HAS BEEN POINTED OUT THAT COLUMN 3 OF THESE DETAILS GIVES TH E NAME OF THE DONOR AND COLUMN 4 THEREOF STATES THE ADDRESS OF THE DONOR. RELIANCE HAS BEEN SOUGHT TO BE PLACED ON HANS RAJ SAMARAK SOCIETY V. ADIT (E) [2011] 16 TAXMANN.COM 103(DELHI) TO STATE THAT NO OTHER WORD S CAN BE READ IN SECTION 115 BBC(3) OTHER THAN THE WORDS FINDING PLACE THERE IN. IT HAS BEEN STATED THAT THE ASSESSEE HAD DULY COMPLIED WITH THE PROVIS IONS OF SECTION 115 BBC OF THE ACT AND HAD MAINTAINED DUE RECORD OF THE IDE NTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING THE CONTRIBUTION. IT HAS BEEN CONTENDED THAT AS SUCH THE LD. CIT(A) HAS GONE WRONG IN OBSE RVING THAT THE ASSESSEE ITA NOS. 1495 & 2000(DEL)2011 5 SHOULD HAVE MAINTAINED ANYTHING BEYOND THE REQUIREM ENTS OF SECTION 115 BBC(3) OF THE ACT. 8. THE LEARNED DR ON THE OTHER HAND HAS CONTENDED THAT MERELY NAME AND ADDRESS DOES NOT AMOUNT TO IDENTITY; THAT A N UMBER OF OPPORTUNITIES WERE GRANTED TO THE ASSESSEE TO PROVE THE IDENTITY OF THE DONORS AS IS AVAILABLE FROM THE IMPUGNED ORDER BUT THERE WAS NO COMPLIANCE FROM THE SIDE OF THE ASSESSEE; AND THAT THEREFORE THE LD. C IT(A) IS PERFECTLY JUSTIFIED IN UPHOLDING THE ORDER OF THE AO IN THIS REGARD. 9. UNDISPUTEDLY THE ASSESSEE HAS MAINTAINED THE RE CORD OF THE IDENTITY OF THE DONORS IN THE SHAPE OF THE NAMES OF THE DONORS AND THEIR ADDRESSES. 10. THE REQUIREMENT U/S 115 BBC(3) IS TO MAINTAIN A RECORD OF IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKIN G SUCH CONTRIBUTION AND SUCH PARTICULARS AS MAY BE PRESCRIBED. NOW THE P ROVISIONS OF SECTION ARE TO BE READ AS THEY ARE AND NOTHING MORE CAN BE SUPP LIED THERETO NOR CAN ANYTHING BE SUBTRACTED THERE-FROM WHEN THE LANGUAG E IS CLEAR AND UNAMBIGUOUS. THE OPERATIVE WORDS HERE ARE IDENTI TY INDICATING THE NAME AND ADDRESS. EVIDENTLY THERE IS NO AMBIGUITY OR NEBULOUSNESS IN THIS EXPRESSION. THE LEGISLATURE IS PROVIDED FOR MAINT AINING THE RECORD OF THE IDENTITY WHICH INDICATES NAME AND ADDRESS OF THE DO NORS. NOTHING BEYOND ITA NOS. 1495 & 2000(DEL)2011 6 CAN BE READ IN THE SECTION. MOREOVER PROVISION HA S BEEN MADE FOR PARTICULARS AS MAY BE PRESCRIBED. UNDISPUTEDLY HO WEVER NO SUCH PARTICULARS HAVE BEEN PRESCRIBED. 11. THEREFORE THE ASSESSEE CANNOT BE SAID TO BE FO UND WANTING IN DUE COMPLIANCE OF THE PROVISIONS OF SECTION 115 BB(3). 12. FURTHER IN HANS RAJ SAMARAK SOCIETY (SUPRA) CONSIDERING THE PROVISIONS OF SECTION 115 BBC(3) IT HAS BEEN INTER ALIA HELD THAT ON CONSIDERATION OF VARIOUS PROVISIONS APPLICABLE TO THE ISSUE AT HAND WE FIND THAT THE DEFINITION OF T HE EXPRESSION ANONYMOUS DONATION REQUIRES PROPER INTERPRETATION. THIS EXPRESSION HAS BEEN DEFINED IN AN EXHAUSTIVE MANNER AND THEREFORE NO OTHER WORD CAN BE READ IN SECTION 115 BBC(3) OTHER THAN THE WORDS FINDING PLACE THEREIN. THE DEFINITION IS THAT IT MEANS A VOLUNTARY CONTRIBUTION REFERRED TO IN SECTION 2(24) (IIA) WHERE A PERSON RECEIVING SUCH CONTRIBUTION DOES NOT MAINTAIN A RECORD OF THE IDENTITY INDICATING THE NA ME AND ADDRESS OF THE CONTRIBUTOR AND SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED. NO OTHER PARTICU LAR HAS BEEN PRESCRIBED UNDER THIS PROVISION. THEREFO RE THE RECEIVER HAS THE OBLIGATION TO MAINTAIN THE IDE NTITY INDICATING THE NAME AND ADDRESS ONLY AND NOTHING MORE. THE LD. COUNSEL HAS CLEARLY BROUGHT OUT THA T BOTH THE DETAILS ARE MENTIONED IN THE DONATION RECE IPTS. THESE RECEIPTS ARE STILL IN THE CUSTODY OF THE DEPA RTMENT AS THE RECEIPT BOOKS WERE IMPOUNDED IN THE COURSE O F SURVEY. THIS FACT HAS NOT BEEN REBUTTED BY THE LD. DR. THE AO HAS TAXED THE AMOUNT BY MENTIONING THAT CONFIRMATION LETTERS FROM THE DONORS HAVE NOT BEEN FILED. SUCH CONFIRMATIONS ARE NOT REQUIRED TO BE FILED ITA NOS. 1495 & 2000(DEL)2011 7 FOR COMING TO THE CONCLUSION AS TO WHETHER THE DONA TION WAS ANONYMOUS OR NOT. THEREFORE THE CASE OF THE REVENUE REGARDING TAXATION OF THIS AMOUNT UNDER SUB - SECTION (2) FAILS ON THIS GROUND ITSELF. FURTHER THE ASSESSEE HAD SHOWN THE AMOUNT UNDER THE BUILDING FUND BUT AT THE TIME OF FILING THE RETURN THIS AM OUNT WAS ADDED TO THE INCOME. IN THE CASE OF DIT(EXEMPTION) V. KESHAV SOCIAL & CHARITABLE FOUNDATION [2005] 278 ITR 152/146 TAXMAN 569 (DELHI) IT HAS BEEN HELD THAT SECTION 68 HAS NO APPLICATION BECAUSE THE ASSESSEE HAD DISCLOSED THE DONATION OF ` 18 24 000/- AS ITS INCOME AND IT CANNOT BE DISPUTED THAT ALL RECEIPTS OTHER THAN CORPUS DONATI ON WOULD E THE INCOME IN THE HANDS OF THE ASSESSEE. THERE WAS THEREFORE FULL DISCLOSURE OF INCOME AND ITS APPLICATION FOR CHARITABLE PURPOSES. IN VIEW OF TH IS DECISION THE PROVISIONS CONTAINED IN SECTION 68 CA NNOT BE INVOKED AS THE AMOUNT HAS ALREADY BEEN DISCLOSED AS INCOME. FOLLOWING THIS DECISION IT IS HELD THAT THE AMOUNT OF ` 19 25 047/- WAS TAXABLE AS INCOME IN THE HANDS OF THE ASSESSEE. 13. THE ABOVE OBSERVATIONS IN HANS RAJ SAMARAK SOC IETY (SUPRA) SQUARELY SUPPORT OUR FOREGOING OBSERVATIONS TO THE EFFECT THAT THE ASSESSEE HAD DULY COMPLIED WITH THE PROVISIONS OF SECTION 11 5 BBC(3) OF THE ACT. IT REMAINS UNDISPUTED THAT THE FACTS INTER SE THE A SSESSEES CASE AND THOSE IN HANS RAJ SAMARAK SOCIETY (SUPRA) ARE MUTATIS MUT ANDIS . 14. AS SUCH THE ASSESSEES GRIEVANCE BY WAY OF GRO UND NO.1 IS JUSTIFIED AND IS ACCEPTED AS SUCH. ACCORDINGLY THE ADDITI ON OF ` 18 65 000/- IS HEREBY DELETED. ITA NOS. 1495 & 2000(DEL)2011 8 15. APROPOS GROUND NOS. 3&4 WHILE DISALLOWING DE PRECIATION OF ` 1 36 57 327/- WHICH WAS CLAIMED AS APPLICATION OF INCOME BY THE ASSESSEE SOCIETY THE AO OBSERVED THAT SINCE THE ASSESSEE HA S ALREADY CLAIMED THE EXPENDITURE INCURRED FOR ACQUIRING CAPITAL ASSETS IT SHOULD NOT BE ALLOWED AS DEPRECIATION THEREOF AS THIS WOULD AMOUNT TO A D OUBLE DEDUCTION. 16. THE LD. CIT(A) UPHELD THE DISALLOWANCE OF DE PRECIATION FOLLOWING ESCORTS LTD. V. UNION OF INDIA 199 ITR 43(SC) W HEREIN IT WAS HELD THAT WHEN DEDUCTION U/S 35(2)(IV) IS ALLOWED IN RESPECT OF CAPITAL EXPENDITURE ON SCIENTIFIC RESEARCH NO DEPRECIATION IS TO BE AL LOWED U/S 32 ON THE SAME ASSET. 17. IN THIS REGARD THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED BEFORE US THAT WHILE WRONGLY UPHELD THE DISALLOWANC E OF DEPRECIATION THE LD. CIT(A) HAS FAILED TO CONSIDER THAT EVEN DEPRECI ATION ON ASSETS OF A TRUST ARE TO BE DEDUCTED FOR THE PURPOSE OF CALCULATING A PPLICATION OF INCOME OF A TRUST; THAT THIS IS SO SINCE THE CONCEPT OF INCOME NECESSARILY ENVISAGES DEDUCTION OF DEPRECIATION OF ASSETS OF THE TRUST; A ND THAT IF THE DEPRECIATION IS NOT ALLOWED THERE WOULD BE NO WAY TO PRESERVE T HE CORPUS OF THE TRUST FOR DERIVING THE INCOME. RELIANCE HAS BEEN PLACE D ON CIT V. TINY TOTS EDUCATION SOCIETY 11 TAXMANN.COM 242 (P&H) (COPY PLACED ON RECORD) AND DIT (EXEMP) V. FRAMJEE CAWASJEE INSTITUTE 10 9 CTR 463(BOM) ITA NOS. 1495 & 2000(DEL)2011 9 (COPY PLACED ON RECORD) WHEREIN ESCORTS LTD.(SUP RA) HAS DULY BEEN TAKEN INTO CONSIDERATION HOLDING THAT IN SUCH A CA SE THERE IS NO DOUBLE DEDUCTION. 18. THE LD. DR ON THE OTHER HAND HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER IN THIS REGARD. 19. IN CIT V. TINY TOTS EDUCATION SOCIETY ( SUPRA) IT HAS BEEN HELD THAT DEPRECIATION IS ALLOWABLE IN THE CASE OF CHARI TABLE INSTITUTION. IT WAS HELD THAT THE JUDGMENT OF THE HONBLE HIGH COURT IN THE CASE OF ESCORTS LTD.(SUPRA) IS NOT APPLICABLE TO THE SITUATION WH ERE DEPRECIATION WAS CLAIMED BY A CHARITABLE INSTITUTION IN DETERMINING THE PERCENTAGE OF FUNDS APPLIED FOR THE PURPOSE OF CHARITABLE OBJECTS. 20. IN FRAMJEE CAWASJEE INSTITUTE (SUPRA) THE HONBLE BOMBAY HIGH COURT HAS HELD THAT DEPRECIATION ON DEPRECIABLE ASS ETS HAS TO BE TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF A TRUST ALTHOUG H THE AMOUNT SPENT ON ACQUIRING THE ASSETS HAVE BEEN TREATED AS APPLICATI ON OF INCOME OF THE TRUST DURING THE YEAR IN WHICH THE ASSETS WERE ACQUIRED. 21. ESCORTS LTD.(SUPRA) HAS ALSO BEEN DISTI NGUISHED IN CIT V. MARKET COMMITTEE PIPLI 330 ITR 16 OBSERVING INTER ALI A AS FOLLOWS:- ITA NOS. 1495 & 2000(DEL)2011 10 IN ALL FAIRNESS TO THE LEARNED COUNSEL FOR THE REV ENUE REFERENCE IS MADE TO THE JUDGMENT OF THE HONBLE AP EX COURT IN ESCORTS LIMITEDS CASE [1993] 199 ITR 43(S C) ON WHICH RELIANCE HAS BEEN PLACED BY THE LEARNED COUNS EL FOR THE REVENUE. THE HONBLE SUPREME COURT IN THAT CA SE WAS DEALING WITH A CASE RELATING TO TWO DEDUCTIONS BOTH UNDER SECTIONS 10(2)(VI) AND 10(2)(XIV) OF THE 1922 ACT OR BOTH UNDER SECTIONS 32 (1)(II) AND 35(1)(IV) OF THE ACT. THE ASSESSEE THEREIN HAD INCURRED EXPENDITURE OF A CAPITAL NATURE ON SCIENTIFIC RESEARCH RELATING TO THE BUSIN ESS WHICH RESULTED INTO ACQUISITION OF AN ASSET. THE ASSESS EE HAD SOUGHT TO CLAIM A SPECIFIED PERCENTAGE OF THE WRITT EN DOWN VALUE OF THE ASSET AS DEPRECIATION AND AT THE SAME TIME CLAIMED DEDUCTION IN FIVE CONSECUTIVE YEARS OF THE EXPENDITURE INCURRED ON THE ACQUISITION OF THE ASS ET. THE APEX COURT OBSERVED (HEAD NOTE): WHERE A CAPITAL ASSET USED FOR SCIENTIFIC RESEARCH RELATED TO THE BUSINESS OF THE ASSESSEE IS ALSO IPS O FACTO AN ASSET USED FOR THE PURPOSE OF THE BUSINESS IT IS IMPOSSIBLE TO CONCEIVE OF THE LEGISLATURE HAVING ENVISAGED A DOUBLE DEDUCTION IN RESPECT OF THE SAME EXPENDITURE ONE BY WAY OF DEPRECIATION U/S 32 OF THE I.T. ACT 1961 AND OTHER BY WAY OF ALLOWANCE U/ S 35(1)(IV) OF A PART OF THE CAPITAL EXPENDITURE ON SCIENTIFIC RESEARCH EVEN THOUGH THE TWO HEADS OF DEDUCTION DO NOT COMPLETELY OVERLAP AND THERE IS SOME DIFFERENCE IN THE RATIONALE OF THE TWO DEDUCTIONS.. IT WAS FURTHER RECORDED THAT (HEAD NOTE): THERE IS A FUNDAMENTAL THOUGH UNWRITTEN AXIOM THAT NO LEGISLATURE COULD HAVE AT ALL INTENDED A DOUBLE DEDUCTION IN REGARD TO THE SAME BUSINESS OUTGOING AND IF IT IS INTENDED IT WILL BE CLEARL Y EXPRESSED. IN OTHER WORDS IN THE ABSENCE OF CLEAR STATUTORY INDICATION TO THE CONTRARY THE STATUTE SHOULD NOT BE READ SO AS TO PERMIT AN ASSESSEE TWO DEDUCTIONS.. ITA NOS. 1495 & 2000(DEL)2011 11 IN THE PRESENT CASE THE ASSESSEE IS NOT CLAIMING D OUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION AS HAS BEEN SUGGESTED BY LEARNED COUNSEL FOR THE REVENUE. THE INCOME OF THE ASSESSEE BEING EXEMPT THE ASSESSEE I S ONLY CLAIMING THAT DEPRECIATION SHOULD BE REDUCED FROM T HE INCOME FOR THE PERCENTAGE OF FUNDS WHICH HAVE TO BE APPLIED FOR THE PURPOSES OF THE TRUST. THERE IS N O DOUBLE DEDUCTION CLAIMED BY THE ASSESSEE AS CANVASSED BY T HE REVENUE. THE JUDGMENT OF THE HONBLE SUPREME COUR T IN ESCORTS LTD. CASE [1993] 199 ITR 43 IS DISTINGUISHA BLE FOR THE ABOVE REASONS. IT CANNOT BE HELD THAT DOUBLE B ENEFIT IS GIVEN IN ALLOWING CLAIM FOR DEPRECIATION FOR COMPUT ING INCOME FOR PURPOSES OF SECTION 11. THE QUESTIONS PROPOSED HAVE THUS TO BE ANSWERED AGAINST THE REV ENUE AND IN FAVOUR OF THE ASSESSEE. 22. NO DECISION CONTRARY TO EITHER TINY TOTS EDUCA TION SOCIETY (SUPRA) OR FRAMJEE CAWASJEE INSTITUTE (SUPRA) OR MARKE T COMMITTEE PIPLI (SUPRA) HAVE BEEN PRESSED INTO SERVICE BY THE DEPA RTMENT AND ACCORDINGLY THE GRIEVANCE OF THE ASSESSEE IN THIS REGARD BY WA Y OF GROUND NOS. 3&4 IS ALSO ACCEPTED. 23. CONSEQUENTLY THE APPEAL FILED BY THE ASSESSEE IS ALSO PARTLY ALLOWED AS INDICATED. 24. TURNING TO THE DEPARTMENTS APPEAL THE DEPARTM ENT CONTENDS THAT THE LD. CIT(A) HAS ERRED IN ALLOWING REPAYMENT OF LOAN AS APPLICATION OF INCOME AS IT HAS ALREADY BEEN CLAIMED AS CAPITAL EXPENDITU RE IN EARLIER YEARS. ITA NOS. 1495 & 2000(DEL)2011 12 25. THE AO DID NOT TREAT THE REPAYMENT OF LOAN OF ` 1 46 38 551/- AS APPLICATION OF INCOME. HE OBSERVED THAT THE ASSESS EE HAD CLAIMED INTEREST OF THESE AMOUNTS AS APPLICATION OF INCOME DUE TO WHIC H THE REPAYMENT OF LOAN WOULD AMOUNT TO DOUBLE DEDUCTION. 26. THE LD. CIT(A) HOWEVER TREATED THE REPAYMENT OF LOAN AS APPLICATION OF INCOME. 27. THE LD. DR HAS CONTENDED THAT WHILE WRONGLY ACC ORDING SUCH TREATMENT TO THE REPAYMENT OF LOAN THE LD. CIT(A) HAS FAILED TO CONSIDER AS OBSERVED BY THE AO THAT THE ASSESSEE HAVING CLAIME D INTEREST ON THE LOANS AS APPLICATION OF INCOME THE REPAYMENT OF LOAN WOULD AMOUNT TO DOUBLE DEDUCTION. 28. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OT HER HAND HAS STRONGLY SUPPORTED THE IMPUGNED ORDER CONTENDING THAT THE R EPAYMENT OF LOAN TAKEN FOR CONSTRUCTION OF BUILDING HAS BEEN HELD TO BE A VALID APPLICATION OF INCOME IN DIT(EXEMP) V. SPAN FOUNDATION 178 TAXMANN 436 (DEL) AS REFERRED BY THE LD. CIT(A); THAT IT IS NOT NECESSARY THAT IN ORDER TO BE APPLICATION WITHIN THE MEANING OF SECTION 11 OF THE ACT AND TH E AMOUNT SHOULD BE SPENT FOR CHARITABLE PURPOSES ONLY AFTER THE TRUST HAS EA RNED THE PROFITS AND THAT IT IS NOT NECESSARY THAT THE AMOUNT OF DIFFERENCE SPENT O N CHARITABLE PURPOSE MUST ITA NOS. 1495 & 2000(DEL)2011 13 BE OUT OF THE INCOME EARNED DURING THE YEAR. IT HA S BEEN SUBMITTED THAT EMPHASIS IN SECTION 11(1)(A) OF THE ACT IS ON SPEND ING OF INCOME AND NOT ON CONFIRMING THE SOURCE OF INCOME SPENT BUT THE INCO ME EARNED DURING THE PREVIOUS YEAR. IT HAS BEEN SUBMITTED THAT THE REPA YMENT OF THE LOAN WAS UNDOUBTEDLY MADE OUT OF THE INCOME EARNED BY THE AS SESSEE SOCIETY; THAT THE FACTUM OF THE ASSESSEE HAVING USED THE LOAN FOR PUR CHASE OF BUSES FOR THE SCHOOL WHICH IS A PART OF FULFILLING THE OBJECT OF THE TRUST ALSO REMAINS UNCHALLENGED. 29. HERE ALSO WE FIND THE ORDER OF THE LD. CIT(A) TO BE JUST AND PROPER. IN SPAN FOUNDATION (SUPRA) IT HAS BEEN HELD THAT REPAYMENT OF THE LOAN TAKEN FOR CONSTRUCTION OF BUILDING IS A VALID APPLI CATION. MOREOVER SECTION 11(1)(A) OF THE ACT LAYS EMPHASIS ON SPENDING OF IN COME AND IT DOES NOT CONFINE THE SOURCE OF THE AMOUNT SPENT BUT INCOME EARNED DURING THE YEAR. BESIDES IN THE PRESENT CASE THE DEPRECIATION IS O F ` 1.36 CRORES AND THE INCOME IS ` 55 LAKHS. AS SUCH EVEN IF THE CLAIM OF THE ASSES SEE IS DISALLOWED AS HAS BEEN DONE IT WOULD HAVE NO EFFE CT. 30. THEREFORE THE GRIEVANCE OF THE DEPARTMENT IN T HIS REGARD IS REJECTED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. ITA NOS. 1495 & 2000(DEL)2011 14 31. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AS INDICATED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.03.2012. SD/- SD/- (G.D. AGRAWAL) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: 30.03.2012 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER ASSISTANT REGISTRAR