THE CHRISTIA LITERATURE SOCIETY,CHENNAI vs. JCIT (OSD), CHENNAI

आदेश / O R D E R

In this appeal filed by the assessee, it is aggrieved that it

was denied exemption claimed u/s.11 of the Income Tax Act, 1961 (in

short ‘’the Act’’). One other ground raised by the assessee is on

disallowance of claim of depreciation of �2,00,167/-. Depreciation

was disallowed for a reason that cost of the assets on which such

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depreciation was charged was claimed as application of income in

earlier years.

has filed a petition seeking condonation of delay. What has been

stated in the application is reproduced hereunder:-

‘’The said order of the Commissioner of Income Tax (Appeals) was received by the office of the petitioner on 13.11.2014. It is pertinent to consider the fact that the petitioner trust being a religious organization managed by the board members comprising of pastors, christian priests and retired Bible College teachers(Theologians) with limited exposure to the provisions of Income tax or Company law affairs. Further during the period under question there was a change in the office of the general secretary of the petitioner. Rev. M. Benjamin Inbaraj took charge as the new General Secretary on 01.06.2014. With the change in the General Secretary, the newly appointed General Secretary and other Board members were completely engrossed in the religious· activities of the petitioner trust and its administration proceedings. The president of the petitioner trust is by way of traditional practice the Bishop of Madras. The President during the said year, Rev Or V Devasahayam who was the Bishop in Madras also retired in August 2014 and the new Bishop was elected and consecrated only in March 2016. Although Rev Or V Devasahayam continued as the president of the petitioner trust during the interim period no major decisions or action was initiated until the new Bishop took charge. During the year 2014-15 there was also a change in the auditor of the petitioner trust when CA John Ravindran was appointed as the auditor of the petitioner trust for financial year 2013-14.

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As mentioned earlier since the General Secretary and the other Board members had no exposure to facing Income Tax appeal proceedings or the procedure involved therein, the fact of pending appeal proceedings in respect of earlier years and the status thereof was not brought to the notice of the newly appointed auditor, CA John Ravindran until in March 2016 during the assessment proceedings for AY 2013- 14. Thereafter CA John Ravindran with great efforts culled out the details of the pending appeal proceedings of the earlier years and the status thereof. The entire process involved communicating with the previous auditor and the previous General Secretary and culling out the necessary correspondences in this regard. Finally in July 2016 CA John Ravindran convened the meeting of the General Secretary and the board members to formulate the future course of action in respect of the pending appeals for the earlier years. CA John Ravindran also advised that they would take the counsel of CA T.Banusekar in this regard. Thereafter in the second week of August, 2016 the board membersd alongwith CA John Ravindran met CA T. Banusekar.

During the meeting, CA T.Banusekar had sought for details from the petitioner which could not be collated by the petitioner immediately. With great efforts CA John Ravindran collated all the details sought for by CA T.Banusekar and approached him during the second week of September, 2016. Thereafter CA T.Banusekar drafted the appeal and sent them to the petitioner trust for obtaining signature of the trustee on 26.09.2016. The papers were signed and sent to the office of CA T.Banusekar on 27.09.2016 and the appeal was finally filed on 28.09.2016 with a delay of 626days. There was hence a delay in filing the appeal by the petitioner. The petitioner most humbly submits before this Hon'ble Income Tax Appellate Tribunal that the delay was purely inadvertent. There was no intention to delay the filing of appeal. No benefit was sought to

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be derived by the delay in filing’’.

Ld. Departmental Representative did not raise any serious objection

on the condonation petition. I also find that the delay was caused due

to justifiable reasons. Delay is condoned. Appeal is admitted.

Facts apropos are that assessee a company registered u/s.25 3.

of the Companies Act, 1956 was claiming exemption u/s.11 of the Act

by virtue of a registration u/s.12A(a) of the Act, granted by ld.

Commissioner of Income Tax vide his order granted in

C.No.212(431)/73, dated 21.09.1973. During the course of assessment

proceedings for the impugned assessment year, ld. Assessing Officer

after considering the objects of the assessee, came to a conclusion

that majority of them were in the nature of general public utility. As

per ld. Assessing Officer intention of the assessee was to publish and

sell literature, religious, books, treatise etc and to do allied work like

printing, book binding, selling of stationery and akin activities.

According to the ld. Assessing Officer, objects of the assessee did not

prohibit it from carrying on an exclusive business in printing,

publishing and sale of books. Further, as per ld. Assessing Officer

major source of its income were from sale of books. Ld. Assessing

Officer put the assessee on notice as why it should not be denied

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exemption claimed by it u/s.11A of the Act. Though the assessee

submitted before ld. Assessing Officer that it was a Christian Religious

Society publishing and selling Christian literature to the public, and

other activities were only ancillary and incidental to this, it was not

accepted by the ld. Assessing Officer. According to the ld. Assessing

Officer, assessee was not only selling religious books, but also other

books like dictionaries, books on social science, books on history etc.

Further, as per ld. Assessing Officer there was no particular religious

activity carried on by the assessee except selling of religious books.

According to him, assessee could not be classified as a Religious

society but only as an entity carrying on objects of general public

utility. As per the ld. Assessing Officer, receipts of the assessee from

its business activities while pursuing the objects of general public utility

exceeded the limits specified in second proviso to Sec. 2(15) of the

Act.

application filed by the assessee before the Chief Commissioner of

Income Tax seeking exemption u/s.10(23C) ( v) of the Act. As per ld.

Assessing Officer assessee had made amendments to its object clause,

without seeking prior approval of the authority which had granted it

registration u/s. 12A(a) of the Act. Relying on the judgment of

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Hon’ble Jurisdictional High Court in the case of Sakthi Charities vs. CIT

182 ITR 483, ld. Assessing Officer held that no modification could be

made in the objects clause of a trust and hence assessee’s endeavour

to modify its objects fell foul of law. Reliance was also placed on the

judgment of High Court in the case of Sakthi Charities vs. CIT 149 ITR

624 for taking a view that object clause of a trust could not be

amended. As per ld. Assessing Officer, judgment of Hon’ble Apex

Court in the case of CIT vs. Palghat Shadi Mahal Trust (2002) 254

ITR 212 Taxman 889 and Yogiraj Charity Trust vs. CIT 103 ITR 777,

fortified his view that objects of a trust could not be changed.

assessee carried a qualification regarding account of Cochin and

Trivandrum branches of the assessee being not incorporated in its

final accounts. According to ld. Assessing Officer profits of Cochin and

Trivandrum branches having not been included in the accounting

results, assets and liabilities of the assessee were not fully and truly

disclosed. For all these reasons, ld. Assessing Officer declined to give

the assessee the exemption claimed by it under section 11 of the Act.

that depreciation of �2,00,167/- claimed by the assessee were on

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assets, cost of which was already allowed as application of income.

Relying on the judgment of Apex Court in the case of Escorts Ltd and

Another vs. Union of India and Others 199 ITR 43, he denied claim of

such depreciation.

Aggrieved, assessee moved in appeal before ld. 7.

Commissioner of Income Tax (Appeals). Argument of the assessee

was that publishing and selling of religious books was a public

religious activity, and for this it relied on the judgment of Hon’ble

Andhra Pradesh High Court in the case of Arsha Vijinanna Trust vs.

DIT (Exemptions) 295 ITR 437. As per the assessee selling religious

books could not be construed as an activity in the nature of trade,

commerce or business. Further, as per the assessee it’s main activity

was distribution of religious books and tracts and only a small part of

the books sold, dealt with subjects of History, Social Science and

Literature. Contention of the assessee was that such secular books

were displayed to attract attention of the pubic to the Christian

literature. As per the assessee its activities were not in the nature of

public utility, but were purely religious. Contention of the assessee

was that even if some of the objects in its memorandum enabled it to

do activities that could benefit general public, its actual activities were

confined to printing and distributing religious books. According to the

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assessee it was not hit by substituted Sec. 2(15) which came into

effect on 01.04.2009.

Trivandrum branches were concerned, submission of the assessee was

that its Trivandrum branch was incurring loss continuously and CSI

Diocese of South Kerala had undertook to run the Trivandrum shop for

a small profit share of 25%. Further, as per the assessee there were

no profit whatsoever earned by the Trivandrum branch. As for the

Cochin branch, explanation of the assessee before ld. Commissioner of

Income Tax (Appeals) was that one Mrs. Rachel Paul who was the

manager of the said branch, claimed ownership, to said branch. As

per the assessee, it had filed a suit in Sub –Court Ernakulam numbered

as O.S.No.612 of 2009 against Mrs. Rachel Paul. Assessee also

produced a brief note on the said case from its advocates M/s. Joseph

& Kuriyan, Cochin.

submission of the assessee before ld. Commissioner of Income Tax

(Appeals) was that there were no new clause added to its objects. As per the assessee, the amendments were carried out on 16th

September, 1954 much earlier to the registration u/s.12A(a) of the Act

which was granted on 21.09.1973.

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assessee submitted that income for the purpose of application of

section 11(1)(a) of the Act had to be computed in accordance with

general commercial principles.

Ld. Commissioner of Income Tax (Appeals) after going 11.

through the submissions of the assessee held that sale of Christian

literature did not amount to any charitable or religious activity.

According to him, it could at best be considered only as an aid to

religious activity. Further, according to him, after substitution of Sec.

2(15) of the Act by Finance Act, 2008 which came into effect on

01.04.2009, definition of charitable activity underwent a sea change

and activities of the assessee would be covered by the residual clause

‘’advancement of any other object of general public utility’’. Further,

according to him, observations of the ld. Assessing Officer with regard

to amendment to the objects without prior approval of the CIT and

non incorporation of accounts of Trivandrum and Cochin branches

were also justified. He thus held that assessee was rightly denied the

claim of exemption under section 11 of the Act. On the aspect of

disallowance of depreciation also ld. CIT(A) upheld the view of the ld.

Assessing Officer. According to him, Hon’ble Delhi High Court in the

case of DIT (E) vs. Charanjiv Charitable Trust, (2014) 102 DTR 0001

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had held that depreciation could not be granted where value of the

concerned asset was treated as application of income.

assailing the orders of the lower authorities reiterated the contentions

taken by the assessee before the lower authorities. According to her,

assessee was a company registered u/s.25 of the Act and not a trust.

Further, according to ld. Authorised Representative assessee’s

activities squarely fell within the meaning of ‘religion’. It was not a

case of general public utility. Relying on the judgment of Hon’ble

Andhra Pradesh in the case of Arsha Vijinanna Trust (supra), ld.

Authorised Representative submitted that selling books relating to

Ramayana and Mahabharata were considered as a religious activity.

According to her, publication and sale of biblical books could not be

considered as trade, commerce or business.

In so far as non incorporation of Trivandrum and Cochin 13.

accounts were concerned, ld. Authorised Representative submitted

that such non inclusion was not willful. According to her, this did not

affect the surplus of the assessee since both these branches were

continuously incurring loss. Ld. Authorised Representative also pointed

out that accounts of both Trivandrum and Cochin branches were not

being incorporated since last very many years due to internal

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problems in such branches. According to her, in the earlier years this

position was accepted by the Revenue in scrutiny assessments.

Authorised Representative relying on sub section (6) to Section 11 of

the Act inserted through Finance No.2 Act 2014, submitted that prior

to the insertion of this clause which came into effect on 01.04.2015,

such claim had to be allowed, even when cost of the assets were

allowed as application of income.

supporting the orders of the authorities below submitted that selling

of religious books cannot be treated as an activity which was religious

in nature. According to him, it was only a business activity. The

objects of the assessee’s as per ld. Departmental Representative were

more in the nature of general public utility than religious. Thus,

according to him, lower authorities were justified in going by Sec.

2(15) of the Act and denying exemption claimed by the assessee

u/s.11 of the Act, relying on first proviso to Sec. 2(15) of the Act. Ld.

Departmental Representative also pointed out that assessee had

made amendments to its objects without getting prior sanction of the

ld. CIT and had also failed to incorporate the results of its Cochin and

Trivandrum branches, thereby vitiating the reliability of its final

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accounts statements. Thus, according to him, assessee was not

eligible to claim exemption u/s.11 of the Act.

orders of the authorities below. First question is whether activities of

the assessee society could be classified as one of general public utility

or as religious. Objects clause of the Memorandum of Association of

the assessee has been reproduced by the ld. Assessing Officer at page

1 & 2 of the assessment order. This is reproduced hereunder once

again for better understanding the nature of such objects. a.‘’To take over the whole or any part either absolutely or in trust or as lessess of the immovable and movable property in India belonging to the United Society for Christian Literature whose head officers are situated at 4 Bouveries Street in the city of London, England.

b.To promote the circulation, gratuitously and otherwise of religious tracts, books and treatises. c.To make grants of money, paper and literature to Protestant Christian Churches, Missions, Missionaries and other throughout India

d.To carry on business as proprietors and publishers of newspapers, journals, magazines, books and other literary works and undertaking of a religious. educational or useful character.

e.To carry on business as printers, booksellers, bookbinders, paper makers, stationers; engravers, photographers, photographic printers, stereotypers, electrotypers, lithographers. mechanists or mechanical engineers, ink manufacturers, and any other business or manufacture that may seem for or conducive to the objects of the Association.

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i.To subscribe or guarantee money for charitable or benevolent objects or for any exhibition for any public, general or useful object in India.

m.To borrow or raise money at interest on the issue of or upon bonds, debentures, debenture stock, bills of exchange, promissory notes, or other obligations or securities of the Association or upon mortgage or charge of the property of the Association or otherwise in such manner as may seem expedient.

n.To undertake and execute any trust or any agency business which may seem directly or indirectly conducive to any of the objects of the Association’’. o. To invest and deal with any money of the Association not immediately required for any of the objects aforesaid in such names and in such manner as the Association may deem fit.

The crux of the dispute between assessee and the Revenue is

regarding the nature of the objects and activities carried on by the

assessee. As per Revenue, objects of the assessee were more in the

nature of general public utility than religious. As against this,

submission of the assessee is that its objects were religious in nature.

It is not disputed by the Revenue that assessee was publishing and

distributing Christian religious books and tracts. It is also an admitted

position that alongwith such religious books, assessee was also

distributing dictionaries, books on history and social science and

literature, though as per the assessee, realizations from the latter,

were significantly lower than the former. At this juncture, it is

interesting to note the argument advanced by the assessee as to why

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it was distributing books other than religious ones. As per the

assessee such books were displayed so as to attract general public to

the Christian religious books. It is not disputed by either party that

major receipts of the assessee came from distribution of Christian

religious books, though this was supplemented by realizations from

sale of other books. In my opinion sale of other books in the nature of

dictionaries, history, social science, literature etc can only be

considered as incidental to its major activity which was publishing and

distributing religious books and tracts. Such incidental activity alone,

in my opinion cannot jacket the assessee as one pursuing an object,

different from distribution of religious books. Thus, the claim of the

assessee that it’s main activity was confined to object clauses (b) and

(c), in my opinion carries much strength. Object clause (d) onwards

can be considered only as incidental to clause (b) and (c).

Now the question is whether circulation and grant of 17.

religious books and tracts, or in other words, publication and

distribution of religious books can be considered a religious activity. It

is here the judgment of Hon’ble Andhra Pradesh High Court in the case

of Arsha Vijinanna Trust (supra) comes to the aid of the assessee.

There the question was whether an assessee which was selling texts

of all Vedas, Vedangas, Upangas and leading Darshanas, Ithihasaas

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and books like Ramayana, Mahabharatha and Bhagavatham, and

works on Indian philosophy, lectures, art and all works on Indian

culture, would be eligible for recognition under section 80G(5) of the

Act. Assessee while seeking recognition u/s.80G of the Act had

claimed that it was not a religious trust. However, Hon’ble Andhra

Pradesh High Court held that publication of such books was only a

religious activity. Their Lordship held that concerned assessee was a

religious trust. In the same vein, in my opinion, printing and publishing

of Christian books can only be considered as a religious activity. That

the activity pursued by the assessee was intended to promote

Christian religion has not been disputed. Requirements that are to be

satisfied for an organization to be considered as religious have been

set out by Hon’ble Apex Court in the case of Radhasoami Satsang vs.

CIT 193 ITR 321. Their Lordships after considering the judgment in the

case of Acharya jagdishwaranand Avadhuta & Ors. Vs. CIT (1983) 4

SCC 522 had held as under;

‘’ The words ‘religious denomination in Art. 26 of the Constitution must take their colour from the word ‘religion’ and if this be so, the expression ‘religious denomination’ must also satisfy three conditions:

(i) It must be a collection of individuals who have a system of belief’s or doctrines which they regard as conducive to their spiritual well-being, that is, a common faith; (ii) Common organization; and

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(iii) Designation by a distinctive name’’.

Thus the publishing and distributions Christian books by an

organization which satisfy the criteria of a religious denomination, will

be a religious activity.

A reading of section 11 of the Act, clearly indicate that 18.

exemption is available to both public religious and public charitable

institutions. Once an organization is classified as a religious one, in my

opinion the question whether its activities come within the purview of

definition of charitable purpose u/s.2(15) of the Act becomes

irrelevant. Though Act has defined ‘’charity’’ it has left the term

‘religion‘ undefined, probably considering the contours given to it by

the Constitution. Only reasonable conclusion that can be drawn is that

any institution formed to encourage religious activity has to be

understood as a religious one. Title to Sec.11 of the Act itself reads

"Income from property held for charitable or religious purposes".

Sec. 11(1)(a) of the IT Act exempts income derived from

property held under trust wholly for charitable or religious

purposes. Since the connecting word is ‘’or’’, there can be no

objection to grant of such exemption to a public religious

institution Sec. 13(1)(b), does, provide that in the case of a trust

for charitable purpose or a charitable institution established

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after the commencement of the 1961 Act, its income, if it is for

the benefit of any particular religious community or caste will be

ineligible from claiming the exemption. But it is pertinent to note

that section 13(1)(b) talks about "trust for charitable purposes or

charitable institution which is for the benefit of any particular

religious community or caste’’. A public religious institution cannot

be treated on par with a charitable institution or trust which

confines its charity only for the benefit of any particular religious

community or caste’’. In other words, Section 13(1)(b) covers

only such charitable institutions where the benefit is confined to

people of a particular religion or caste. This interpretation is quite

possible because the words used in s. 13(1)(b) refers to "trusts

for charitable purposes" while a distinction is noted in other

provisions like s. 13(1)(c), which refers to a "trust for charitable

or religious purposes". There is similar reference under s.

13(1)(d) as well. Hence the prohibition under cl. (b) cannot

possibly cover religious institutions. It stands to reason that a

religious institution, even if public, may not be able to avoid the

brand of a particular religion. In other words, when public

religious institutions are exempt, it cannot possibly mean that

they should not be of any particular religion. As said earlier, there

is no definition of the term 'religion' or 'religious purpose' under

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the Act. A religion generally has its basis in a system of beliefs and

doctrines, which are regarded by those who profess that religion

to be conducive to their spiritual well-being. In a sense, 'religious

purpose' can be said to be wider in its meaning than the words

'charitable purpose'. When it is used in the context of gifts of

property, it means all acts of piety and benevolence. Under the

Hindu law, 'charity' whether secular or religious, is a part of the

'Dharma'. In Christianity also charity has no outer parameters, for

the good Samaritan, in the most quoted parable of Bible was not

a Christian.

It may be true that many activities prompted by religious 19.

faith and beliefs can come under the phrase "any other object of

general public utility" in the definition of 'charitable purpose' in section 2(15) of the Act. Examples could be establishment of

gaushalas and punjrapoles [Vallabhdas Karsondas Natha vs. CIT (1947) 15 ITR 32 (Bom) and CIT vs. Swastik Textile Trading Co. (P) Ltd. 1977 CTR (Guj) (1978) 113 ITR 852 (Guj)]; repairs

and maintenance of samadhis of gurus held in reverence by

people at large who pay homage and worship at such samadhis and holding of fairs [CIT vs. Guryani Brij Balabh Kaur Trust (: (1980) 125 ITR 381 (P&H)]; promotion of unity and brotherhood

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amongst members of a community [CIT vs. Ahmedabad Rana Caste Association (1983) 140 ITR 1 (SC)]. Such activities

prompted by religious sentiments have been held to be pursuance

of a charitable purpose. But overlapping of charity in a religion

will not convert a religious activity to one of ‘’general public

utility’’.

used in many places. Terms like 'religion', 'religious denomination',

'matters of religion', 'religious', appear in various Articles. Article

25(1) of the Constitution confers freedom of conscience and the

right freely to profess, practice and propagate religion, subject to

public order, morality, health, etc. Articles 26, 27 and 28 also

cover other aspects relating to religion. A fundamental change

concerning religion was brought about in the Constitution by the

42nd Amendment Act, 1976, which inserted in the Preamble the

words 'Socialist Secular' before the words 'Democratic Republic'.

This amendment serves no other purpose than making explicit

what was already provided in the Constitution. The traditional

word 'secular' is intended only to reconfirm the position in regard

to the secular character of the State, i.e., the State will have no

religion of its own. In Keshavanand Bharti vs. State of Kerala AIR

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1973 SC 1461, Khanna, J. said (in para 1437) that the word

'secular' implies that, "the State shall not discriminate against any

citizen on the ground of religion only". In Indira Nehru Gandhi vs. Raj Narain AIR 1975 SC 2299, Chandrachud, J. explained the

basic feature of secularism saying that "the State shall have no

religion of its own" and all persons shall be equally entitled to the

freedom of conscience and the right to freely profess, practice and

propagate religion. Thus pursuing a religious purpose through

printing and distribution of religious books, of a religion of choice,

can in no way be considered as a taboo or against public policy.

This raises the issue whether a public religious 21.

institution, which is printing and distributing religious books can

be discriminated against, on the ground of religion. As already

mentioned, 'Religion' in its broadest sense includes all forms of

belief in the existence of superior beings capable of exercising

power over the human race. As commonly accepted, it means the

formal recognition of a universal God. It does not mean mere

fundamentalism. The Supreme Court in the case of Commissioner,

Hindu Reglious Endowments vs. Sri Lakshmindra Thirtha Swamiar of Shirur Math AIR 1954 SC 282, has discussed the meaning and

concept of 'religion' saying that religion is a matter of faith with

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individuals or communities and it is not necessarily theistic. A

religion undoubtedly has its basis in a system of beliefs or

doctrines, which are regarded by those, who profess that religion

as conducive to their spiritual well-being. A religion may not only

lay down a code of ethical rules for its followers to accept, it might

prescribe rituals and observances, ceremonies and modes of

worship, which are regarded as integral parts of religion, and

these forms and observances might extend even to matters of

food and dress. Their Lordship in this case made the following

pertinent observation.

"Freedom of religion in our Constitution is not confined to religious beliefs only; it extends to religious practices as well subject to the restrictions, which the Constitution itself has laid down. Under Article 26(b), therefore, a religious denomination or organization enjoys complete autonomy in the matter of deciding as to what rites and ceremonies are essential according to the religion they hold and no outside authority has any jurisdiction to interfere with their decision in such matters".

Thus, in my opinion assessee which was pursuing printing,

publishing and distribution of Christian literature and tracts as

its main activity, could be considered only as a religious one. In

my opinion lower authorities fell in error by applying section 2(15)

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to it, when said Section has no applicability on religious

institutions.

objects, admittedly, assessee was a company incorporated u/s.25 of

the Companies Act, 1956. When an association is incorporated as a

company under Companies Act, 1956, it is governed by the said Act

and cannot be equated to a trust as such. Amendments to objects

clause of a Company registered in accordance to Sec. 25 of the

Companies Act, 1956, necessarily has to follow the requirements

under the said law. Assessee never claimed itself as a trust. It was

granted registration u/s.12A(a) of the Act in its status as a company

registered under section 25 of the Companies Act. Sec. 11(1) of the

Act does not say that only a trust is be eligible for claiming exemption

mentioned therein. It only say that income should be derived from

property held under trust. There is no case for the Revenue that the

property held by assessee in the status of the company u/s.25 of the

Act was not under trust. Therefore the case laws relied on by the

lower authorities for coming to a conclusion that no amendments

could have been made to the objects of the assessee have no

applicability. These case laws are relevant only for a trust. Assessee

being a company u/s.25 of the Act, it could change its objects as per

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the prescription under the Companies Act. Even otherwise letter

dated 21.09.1973 issued by CIT, intimating acceptance of assessee’s

application for registration u/s.12A(a) of the Act does not contain in it

any condition requiring the assessee to obtain a prior permission

before amending its objects.

to incorporate the results of its two branches in Cochin and

Trivandrum would be fatal to its claim for exemption, what I find is

that in respect of Cochin branch, there was a suit filed by the

assessee against its Manager who claimed ownership to the said

branch. As for the Trivandrum branch, assessee had entrusted its

operation to CSI Diocese of South Kerala through an MOU dated

01.04.2004. It has also not been disputed by the Revenue that the

said branch was running in a loss. In any case accounts of these

branches were not incorporated since 31.03.2005 and the position

continued so since many years. In other words, Revenue had

accepted the factual position with regard to these branches in the

earlier years and the claim for exemption u/s.11 of the Act was

granted to the assessee in such earlier despite similar comments in

the audit report. In any case non incorporation of the accounts of the

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branches was not due to any fault of the assessee but due to factors

beyond its control.

that there are judgments of various High Court in favour of the

assessee as well as against assessee. Hon’ble Kerala High Court in

the case of Lissie Medical Institutions vs. CIT (2012) 348 ITR 344 as

well as Hon’ble Delhi High Court in the case of Charanjiv Charitable

Trust (supra) had taken a view claim of depreciation on assets, value

of which was allowed as application of income could not be allowed. As

against this Hon’ble High Courts of Madhya Pradesh, Karnakata,

Punjab & Haryana and Bombay in CIT vs. Raipur Pallattine Society

180 ITR 579, CIT vs. Society of the Sisters of St. Anne 146 ITR 28, CIT

vs. Market Committee, Pipli 330 ITR 16 and CIT vs. Institute of

Banking 264 ITR 110, respectively, had held that such a claim was

allowable. Hon’ble P & H High Court had held so, after considering the

Apex Court judgment in the case of Escorts Ltd and Another vs. Union

of India and others 199 ITR 43 relied on by the ld. Departmental

Representative. Further, I find that Hon’ble Apex Court has granted

leave of appeal to the assessee, against the judgment of Hon’ble Delhi

High Court in the case of Charanjiv Charitable Trust (supra) (2015)

228 Taxmann 58. Neither Revenue or assessee was able to point out

ITA No. 2818/Mds/2016 :- 25 -:

before me, any judgment of Hon’ble Jurisdictional High Court directly on this aspect. I am therefore of the opinion that assessee can take advantage of judgments which went in its favour. Claim of depreciation has to be allowed.

In the result, I set aside the orders of the lower authorities 25.

and direct that the assessee be granted exemption claimed by it u/s.11 of the Act and also allowed depreciation.

In the result, appeal of the assessee stands allowed. 26.

Order pronounced on Friday, the 21st day of April, 2017, at Chennai.

Sd/- (अ�ाहम पी. जॉज�) (ABRAHAM P. GEORGE) लेखा सद�य/ACCOUNTANT MEMBER चे�नई/Chennai �दनांक/Dated:21st April, 2017 KV आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF