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Income Tax Appellate Tribunal, “B”, BENCH KOLKATA
Before: SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM
आदेश / O R D E R Dr. A.L. Saini, AM:
The captioned appeal filed by the assessee, pertaining to assessment year 2012-13, is directed against the order passed by the Commissioner of Income Tax (Appeal)-25, Kolkata in appeal no. 37/CIT(A)-25/Kol/2018-19, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 ( in short the Act) dated 29/03/2015.
The grounds of appeal raised by the assessee reads as follows: 1. That the ld. CIT(A) was wrong in confirming the action of ld. A.O. by allowing exemption of @ 15% on the net receipt (Rs. 52,14,148/-) in place of gross receipt (Rs. 2,91,60,237/-) as per the provisions of section 11 of the
M/s Sahara Utsarga Welfare Society M/s Sahara Utsarga Welfare Society ITA No. ITA No.2436/Kol/2018 Assessment Year: Assessment Year:2012-13 Act. Hence confirming the imp Act. Hence confirming the impugned addition based on the action of ld. ugned addition based on the action of ld. A.O. is unjustified and needs to be deleted. A.O. is unjustified and needs to be deleted. 2. That the ld. CIT(A) was wrong in confirming the action of ld. A.O. by not 2. That the ld. CIT(A) was wrong in confirming the action of ld. A.O. by not 2. That the ld. CIT(A) was wrong in confirming the action of ld. A.O. by not allowing the depreciation to the assessee while calculating the application allowing the depreciation to the assessee while calculating the application allowing the depreciation to the assessee while calculating the application of funds. Therefore, the addition made by the ld. A.O. and confirmed by the efore, the addition made by the ld. A.O. and confirmed by the efore, the addition made by the ld. A.O. and confirmed by the ld. CIT(A) is unjustified and needs to be deleted. ld. CIT(A) is unjustified and needs to be deleted.
That the assessee craves to leave or add, alter, amend or withdraw any 3. That the assessee craves to leave or add, alter, amend or withdraw any 3. That the assessee craves to leave or add, alter, amend or withdraw any or all of the ground(s) of appeal before or at the time of hearing. or all of the ground(s) of appeal before or at the time of hearing. or all of the ground(s) of appeal before or at the time of hearing.
Ground no. 1 raised by the assessee relates to sed by the assessee relates to exemption of @ 15% on the net exemption of @ 15% on the net receipt (Rs. 52,14,148/-) in place of gross receipt (Rs. 2,91,60,237/ ) in place of gross receipt (Rs. 2,91,60,237/ ) in place of gross receipt (Rs. 2,91,60,237/-) as per the provisions of section 11 of the Act. provisions of section 11 of the Act.
Brief facts qua the issue are that 4. Brief facts qua the issue are that during the assessment proceedings ssment proceedings the Assessing Officer made computation of income of the assessee Assessing Officer made computation of income of the assessee Assessing Officer made computation of income of the assessee which is as follows:
The assessee’s grievance is that the Assessing Officer ought to have allowed 15% grievance is that the Assessing Officer ought to have allowed 15% grievance is that the Assessing Officer ought to have allowed 15% exemption on gross receipts of Rs. 2,91,60,237/ exemption on gross receipts of Rs. 2,91,60,237/- instead of net re instead of net receipt of Rs. 3,47,60,989/- as per provisions of Section 11 of the Act. as per provisions of Section 11 of the Act. In order to adjudicate this In order to adjudicate this issue first of all , let us go through the provisions of Section 11 of the Act which is irst of all , let us go through the provisions of Section 11 of the Act which is irst of all , let us go through the provisions of Section 11 of the Act which is reproduced below for ready reference: reproduced below for ready reference:
M/s Sahara Utsarga Welfare Society ITA No.2436/Kol/2018 Assessment Year:2012-13 11. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income— 35[(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of [fifteen] per cent of the income from such property; (b) income derived from property held under trust in part only for such purposes, the trust having been created before the commencement of this Act, to the extent to which such income is applied to such purposes in India; and, where any such income is finally set apart for application to such purposes in India, to the extent to which the income so set apart is not in excess of [fifteen] per cent of the income from such property; (c) income [derived] from property held under trust— (i) created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote international welfare in which India is interested, to the extent to which such income is applied to such purposes outside India, and (ii) for charitable or religious purposes, created before the 1st day of April, 1952, to the extent to which such income is applied to such purposes outside India: Provided that the Board, by general or special order, has directed in either case that it shall not be included in the total income of the person in receipt of such income; [(d) income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution.] Explanation.- For the purposes of clauses (a) and (b),- (1) in computing the twenty- five per cent of the income which may be accumulated or set apart, any such voluntary contributions as are referred to in section 12 shall be deemed to be part of the income; (2) if, in the previous year, the income applied to charitable or religious purposes in India falls short of seventy- five per cent of the income derived during that year from property held under trust, or, as the case may be, held under trust in part, by any amount- (i) for the reason that the whole or any part of the income has not been received during that year, or (ii) for any other reason, then- (a) in the case referred to in sub- clause (i), so much of the income applied to such purposes in India during the previous year in which the income is received or during the previous year immediately following as does not exceed the said amount; and (b) in the case referred to in sub- clause (ii), so much of the income applied to such purposes in India during the previous year immediately following the previous year in which the income was derived as does not exceed the said amount, may, at the option of the person in receipt of the income (such option to be exercised in writing before the expiry of the time allowed under sub- section (1) ] of section 139] for furnishing the return of income) be deemed to be income applied to such purposes during the previous year in which the income was derived; and the income so deemed to have been applied shall not be taken into account in calculating the amount of income applied to such purposes, in the case Page | 3
M/s Sahara Utsarga Welfare Society ITA No.2436/Kol/2018 Assessment Year:2012-13 referred to in sub- clause (i), during the previous year in which the income is received or during the previous year immediately following, as the case may be, and, in 1. Inserted by the Direct Tax Laws (Amendment) Act, 1989, w. e. f. 1- 4- 1989. 2. Substituted by the Taxation Laws (Amendment) Act, 1975, w. e. f. 1- 4- 1976. The Explanation was also substituted by the Finance Act, 1970, w. e. f. 1- 4- 1971 3. The words" or sub- section (2)" omitted by the Direct Tax Laws (Amendment) Act, 1989, w. e. f. 1- 4- 1989. 4. The words", whether fixed originally or on extension", omitted, ibid. the case referred to in sub- clause (ii), during the previous year immediately following the previous year in which the income was derived.) (1A) For the purposes of sub- section (1),- (a) where a capital asset, being property held under trust wholly for charitable or religious purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then, the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, namely- (i) where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of such capital gain; (ii) where only a part of the net consideration is utilised for acquiring the new capital asset, so much of such capital gain as is equal to the amount, if any, by which the amount so utilised exceeds the cost of the transferred asset; (b) where a capital asset, being property held under trust in part only for such purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then, the appropriate fraction of the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, namely:- (i) where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of the appropriate fraction of such capital gain; (ii) in any other case, so much of the appropriate fraction of the capital gain as is equal to the amount, if any, by which the appropriate fraction of the amount utilised for acquiring the new asset exceeds the appropriate fraction of the cost of the transferred asset. Explanation.- In this sub- section,- (i) " appropriate fraction" means the fraction which represents the extent to which the income derived from the capital asset transferred was immediately before such transfer applicable to charitable or religious purposes; (ii) " cost of the transferred asset" means the aggregate of the cost of acquisition (as ascertained for the purposes of sections 48 and 49) of the capital asset which is the subject of the transfer and the cost of any improvement thereto within the meaning assigned to that expression in sub- clause (b) of clause (1) of section 55; (iii) " net consideration" means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.]
We note that in the provisions of section 11(1) it has been clearly mentioned “… 15% of the income”, hence it is gross income of the assessee trust and not the net income. Therefore, based on this factual position as mentioned in Section 11(1) as
M/s Sahara Utsarga Welfare Society ITA No.2436/Kol/2018 Assessment Year:2012-13 noted above, we direct the Assessing Officer to allow 15% exemption on gross receipts.
In second ground the solitary issue is that the Assessing Officer did not allow the depreciation expenses to the assessee while calculating the application of funds. We note that Hon’ble Supreme Court in the case of Rajasthan Gujrati Charitable Foundation (2018) 402 ITR 441 (SC) held that amendment in section 11(1) brought by the Finance Act, 2014 w.e.f A.Y. 2015-16 which prohibited the allowance of depreciation is prospective in nature. That is amendment of the Finance Act, 2014, is applicable from A.Y. 2015-16. In assessee’s case the assessment year is 2012-13, therefore amendment of Finance Act, 2014 does not apply to the assessee, hence, assessee is entitled for depreciation allowance. Therefore, we direct the Assessing Officer to allow the depreciation.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 22.12.2020
Sd/- Sd/- (S.S.GODARA) (A.L.SAINI) �या�यकसद�य / JUDICIAL MEMBER लेखासद�य / ACCOUNTANT MEMBER कोलकाता /Kolkata; �दनांक/ Date: 22/01/2020 (SB, Sr.PS)
Copy of the order forwarded to: 1. M/s Sahara Utsarga Welfare Society 2. DCIT(E), Circle-1, Kolkata 3. C.I.T(A)- 4. C.I.T.- Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File.