HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR 1. D.B. Income Tax Appeal No. 262/2017 Commissioner of Income Tax (Exemptions), 3rd Floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur Appellant Versus Mahima Shiksha Samiti, A-18, Shanti Path, Tilak Nagar, Jaipur Respondent Connected With 2. D.B. Income Tax Appeal No. 263/2017 Commissioner of Income Tax (Exemptions), 3rd Floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur Appellant Versus Mahima Shiksha Samiti, A-18, Shanti Path, Tilak Nagar, Jaipur Respondent 3. D.B. Income Tax Appeal No. 708/2008 Commissioner of Income Tax, Jaipur-II, Jaipur. Appellant Versus Mahima Shiksha Samiti, A-18, Shanti Path, Tilak Nagar, Jaipur Respondent Connected With 4. D.B. Income Tax Appeal No. 107/2009 Commissioner of Income Tax, Jaipur-II, Jaipur. Appellant Versus Mahima Shiksha Samiti, A-18, Shanti Path, Tilak Nagar, Jaipur (2 of 39) [ ITA-262/2017] Respondent 5. D.B. Income Tax Appeal No. 67/2010 Commissioner of Income Tax, Jaipur-II, Jaipur. Appellant Versus Mahima Shiksha Samiti, A-18, Shanti Path, Tilak Nagar, Jaipur Respondent 6. D.B. Income Tax Appeal No. 68/2010 Commissioner of Income Tax, Jaipur-II, Jaipur. Appellant Versus Mahima Shiksha Samiti, A-18, Shanti Path, Tilak Nagar, Jaipur Respondent 7. D.B. Income Tax Appeal No. 70/2010 Commissioner of Income Tax, Jaipur-II, Jaipur. Appellant Versus Mahima Shiksha Samiti, A-18, Shanti Path, Tilak Nagar, Jaipur Respondent 8. D.B. Income Tax Appeal No. 126/2011 Commissioner of Income Tax, Jaipur-II, Jaipur. Appellant Versus Mahima Shiksha Samiti, A-18, Shanti Path, Tilak Nagar, Jaipur Respondent 9. D.B. Income Tax Appeal No. 118/2012 (3 of 39) [ ITA-262/2017] Commissioner of Income Tax, Jaipur-II, Jaipur. Appellant Versus Mahima Shiksha Samiti, A-18, Shanti Path, Tilak Nagar, Jaipur Respondent 10. D.B. Income Tax Appeal No. 235/2012 Commissioner of Income Tax, Jaipur-II, Jaipur. Appellant Versus Mahima Shiksha Samiti, A-18, Shanti Path, Tilak Nagar, Jaipur Respondent 11. D.B. Income Tax Appeal No. 101/2014 Commissioner of Income Tax, Jaipur-II, Jaipur. Appellant Versus Mahima Shiksha Samiti, A-18, Shanti Path, Tilak Nagar, Jaipur Respondent 12. D.B. Income Tax Appeal No. 115/2014 Commissioner of Income Tax, Jaipur-II, Jaipur. Appellant Versus Mahima Shiksha Samiti, A-18, Shanti Path, Tilak Nagar, Jaipur Respondent For Appellant(s) : Mr. Sameer Jain For Respondent(s) : Mr. Sanjay Jhanwar with Ms. Archana (4 of 39) [ ITA-262/2017] HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 03/10/2017 1. Since, this group of matters relate to same assessee, matter was heard on 23.9.2017, however, review application was filed and in view of that matter was recalled and now following questions are raised for our consideration:- 1. Appeal No. 708/2008 (i) Whether in facts and circumstances of case Tribunal was justified in law and has acted perversely in allowing benefit of section 11(1) as charitable trust to assessee despite of fact that huge surpluses earned was withdrawn by way of payments to persons referred u/s 13(3) of I.T. Act. (ii) Whether, in facts and circumstances of case Tribunal was justified in law in allowability of depreciation of assets u/s 32 even where same had already been claimed as application of income in previous years. (iii) Whether, in facts and circumstances of case Tribunal was justified in law in deleting addition made for foreign travelling expenses u/s 37 of Act despite of fact that assessee failed to prove justification of these expenses. (iv) Whether, in facts and circumstances of case Tribunal was justified in law and has acted perversely in deleting addition of disallowance of interest u/s. 36(1)(iii) despite of fact that assessee failed to discharge its onus of furnishing evidence of use of assets. (2) Appeal No. 107/2009 (i) Whether in facts and circumstances of case Tribunal was justified in law and has acted perversely in allowing benefit of section 11(1) as charitable trust to assessee despite of fact that huge surpluses earned was withdrawn by way of payments to persons referred u/s 13(3) of I.T. Act. (5 of 39) [ ITA-262/2017] (ii) Whether, in facts and circumstances of case Tribunal was justified in law in allowability of depreciation of assets u/s 32 even where same had already been claimed as application of income in previous years. (iii) Whether, in facts and circumstances of case Tribunal was justified in law in deleting addition made for foreign travelling expenses u/s 37 of Act despite of fact that assessee failed to prove justification of these expenses. (iv) Whether, in facts and circumstances of case Tribunal was justified in law and has acted perversely in deleting addition of disallowance of interest u/s. 36(1)(iii) despite of fact that assessee failed to discharge its onus of furnishing evidence of use of assets. (3) Appeal No. 67/2010 (i) Whether in facts and circumstances of case Tribunal was justified in law and has acted perversely in allowing benefit of section 11(1) as charitable trust to assessee despite of fact that huge surpluses earned was withdrawn by way of payments to persons referred u/s 13(3) of I.T. Act. (ii) Whether, in facts and circumstances of case Tribunal was justified in law in allowability of depreciation of assets u/s 32 even where same had already been claimed as application of income in previous years. (iii) Whether, in facts and circumstances of case Tribunal was justified in law in deleting addition made for foreign travelling expenses u/s 37 of Act despite of fact that assessee failed to prove justification of these expenses. (iv) Whether, in facts and circumstances of case Tribunal was justified in law and has acted perversely in deleting addition of disallowance of interest u/s. 36(1)(iii) despite of fact that assessee failed to discharge its onus of furnishing evidence of use of assets. (4) Appeal No. 68/2010 (i) Whether in facts and circumstances of case Tribunal was justified in law and has acted perversely in allowing benefit of section 11(1) as charitable trust to assessee despite of fact that huge surpluses earned was withdrawn by way of payments to persons referred u/s 13(3) of (6 of 39) [ ITA-262/2017] I.T. Act. (ii) Whether, in facts and circumstances of case Tribunal was justified in law in allowability of depreciation of assets u/s 32 even where same had already been claimed as application of income in previous years. (iii) Whether, in facts and circumstances of case Tribunal was justified in law in deleting addition made for foreign travelling expenses u/s 37 of Act despite of fact that assessee failed to prove justification of these expenses. (iv) Whether, in facts and circumstances of case Tribunal was justified in law and has acted perversely in deleting addition of disallowance of interest u/s. 36(1)(iii) despite of fact that assessee failed to discharge its onus of furnishing evidence of use of assets. (5) Appeal No. 70/2010 (i) Whether in facts and circumstances of case Tribunal was justified in law and has acted perversely in allowing benefit of section 11(1) as charitable trust to assessee despite of fact that huge surpluses earned was withdrawn by way of payments to persons referred u/s 13(3) of I.T. Act. (ii) Whether, in facts and circumstances of case Tribunal was justified in law in allowability of depreciation of assets u/s 32 even where same had already been claimed as application of income in previous years. (iii) Whether, in facts and circumstances of case Tribunal was justified in law in deleting addition made for foreign travelling expenses u/s 37 of Act despite of fact that assessee failed to prove justification of these expenses. (iv) Whether, in facts and circumstances of case Tribunal was justified in law and has acted perversely in deleting addition of disallowance of interest u/s. 36(1)(iii) despite of fact that assessee failed to discharge its onus of furnishing evidence of use of assets. (6) Appeal No. 126/2011 (i) Whether in facts and circumstances of case Tribunal was justified in law and has acted perversely in allowing benefit of section 11(1) as charitable trust to assessee despite of fact that huge surpluses earned was withdrawn by (7 of 39) [ ITA-262/2017] way of payments to persons referred u/s 13(3) of I.T. Act. (ii) Whether, in facts and circumstances of case Tribunal was justified in law in allowability of depreciation of assets u/s 32 even where same had already been claimed as application of income in previous years. (iii) Whether, in facts and circumstances of case Tribunal was justified in law in deleting addition made for foreign travelling expenses u/s 37 of Act despite of fact that assessee failed to prove justification of these expenses. (iv) Whether, in facts and circumstances of case Tribunal was justified in law and has acted perversely in deleting addition of disallowance of interest u/s. 36(1)(iii) despite of fact that assessee failed to discharge its onus of furnishing evidence of use of assets. (7) Appeal No. 118/2012 (i) Whether in facts and circumstances of case Tribunal was justified in law and has acted perversely in allowing benefit of section 11(1) as charitable trust to assessee despite of fact that huge surpluses earned was withdrawn by way of payments to persons referred u/s 13(3) of I.T. Act. (ii) Whether, in facts and circumstances of case Tribunal was justified in law in allowability of depreciation of assets u/s 32 even where same had already been claimed as application of income in previous years. (iii) Whether, in facts and circumstances of case Tribunal was justified in law in deleting addition made for foreign travelling expenses u/s 37 of Act despite of fact that assessee failed to prove justification of these expenses. (iv) Whether, in facts and circumstances of case Tribunal was justified in law and has acted perversely in deleting addition of disallowance of interest u/s. 36(1)(iii) despite of fact that assessee failed to discharge its onus of furnishing evidence of use of assets. (8) Appeal No. 235/2012 (i) Whether in facts and circumstances of case ITAT was justified in law and has acted perversely in allowing benefit of section 11(1) as charitable trust to assessee despite of fact (8 of 39) [ ITA-262/2017] that huge surpluses earned was withdrawn by way of payments to persons referred u/s 13(3) of I.T. Act. (ii) Whether, in facts and circumstances of case ITAT was justified in law in allowability of depreciation of assets u/s 32 even where same had already been claimed as application of income in previous years. (iii) Whether, in facts and circumstances of case ITAT was justified in law in deleting addition made for foreign travelling expenses u/s 37 of Act despite of fact that assessee failed to prove justification of these expenses. (iv) Whether, in facts and circumstances of case ITAT was justified in law and has acted perversely in deleting addition of disallowance of interest u/s. 36(1)(iii) despite of fact that assessee failed to discharge its onus of furnishing evidence of use of assets. (v) Whether on facts and in circumstances of case, ITAT was justified in holding that provisions of Section 60 of Income Tax Act, 1961 cannot be invoked in present case despite fact that referred society, i.e., Ankur Udhodhak Samiti was not filing returns of income and was not registered under Section 12A of Act? (9) Appeal No. 101/2014 (i) Whether, in facts and circumstances of case Tribunal was justified in law in directing to grant approval u/s 80G(5) holding that activities of society as charitable despite of fact that society is controlled and managed by one family and motive is to earn profit which cannot be held to be charitable as defined u/s.2(15) of Act. (10) Appeal No. 115/2014 (i) Whether in facts and circumstances of case Tribunal was justified in law and has acted perversely in allowing benefit of section 11(1) as charitable trust to assessee despite of fact that huge surpluses earned was withdrawn by way of payments to persons referred u/s 13(3) of I.T. Act. (ii) Whether, in facts and circumstances of case Tribunal was justified in law in allowability of depreciation of assets u/s 32 even where same had already been claimed as application of income in previous years. (9 of 39) [ ITA-262/2017] (iii) Whether, in facts and circumstances of case Tribunal was justified in law in deleting addition made for foreign travelling expenses u/s 37 of Act despite of fact that assessee failed to prove justification of these expenses. 2. In two appeals no.262/2017 & 263/2017, appeal are admitted on following substantial question of law:- Appeal No.262/2017 (i) Whether on facts and in circumstances of case and in law, Hon ble ITAT is right in confirming decision of Ld. CIT (A) in allowing assessee s claim of exemption u/s 11 even though provisions of section 13 are attracted? (ii) Whether on facts and in circumstances of case and in law, Hon ble ITAT is right in confirming decision of Ld. CIT (A) in allowing salary expenses to member of Bakshi Family which is higher than reasonable? (iii) Whether on facts and in circumstances of case and in law, Hon ble ITAT is right in allowing contribution made to Jaipur National University during year under consideration as application of income u/s 11 of Act despite of fact that assistance provided to JNU is violation of bye laws of society as well as violation of provision of Sec.13(1)(c) and 13(2) of IT Act? (iv) Whether on facts and in circumstances of case and in law, Hon ble ITAT is right in confirming decision of ld. CIT(A) in allowing foreign traveling expenses inspite of fact that assessee society failed to prove that these expenses were incurred for objects of society? (v) Whether on facts and in circumstances of case and in law, Hon ble ITAT is right in holding that assessee is eligible to claim deduction of depreciation of Rs.62,73,413/- on assets which were claimed as application u/s 11 at time of purchase? (vi) Whether on facts and in circumstances of case and in law, Hon ble ITAT is right in allowing depreciation without appreciating fact that application of 100% expenditure of (10 of 39) [ ITA-262/2017] capital assets is already allowed as capital expenditure hence further allowance of depreciation on same capital asset would amount to double allowance? (vii) Whether on facts and in circumstances of case and in law, Hon ble ITAT is right in allowing depreciation without appreciating fact that assessee has not carried out business activities but receipts utilized for charity. As there was no business, claim of depreciation was not allowable, deprecation is allowable only in case of business or profession or in case of income from other sources ? Appeal No.263/2017 (i) Whether on facts and in circumstances of case and in law, Hon ble ITAT is right in confirming decision of Ld. CIT (A) in allowing assessee s claim of exemption u/s 11 even though provisions of section 13 are attracted? (ii) Whether on facts and in circumstances of case and in law, Hon ble ITAT is right in confirming decision of Ld. CIT (A) in allowing salary expenses to member of Bakshi Family which is higher than reasonable? (iii) Whether on facts and in circumstances of case and in law, Hon ble ITAT is right in allowing contribution made to Jaipur National University during year under consideration as application of income u/s 11 of Act despite of fact that assistance provided to JNU is violation of bye laws of society as well as violation of provision of Sec.13(1)(c) and 13(2) of IT Act? (iv) Whether on facts and in circumstances of case and in law, Hon ble ITAT is right in holding that assessee is eligible to claim deduction of depreciation of Rs.62,73,413/- on assets which were claimed as application u/s 11 at time of purchase? (v) Whether on facts and in circumstances of case and in law, Hon ble ITAT is right in allowing depreciation without appreciating fact that application of 100% expenditure of capital assets is already allowed as capital expenditure hence further allowance of depreciation (11 of 39) [ ITA-262/2017] on same capital asset would amount to double allowance? (vi) Whether on facts and in circumstances of case and in law, Hon ble ITAT is right in allowing depreciation without appreciating fact that assessee has not carried out business activities but receipts utilized for charity. As there was no business, claim of depreciation was not allowable, deprecation is allowable only in case of business or profession or in case of income from other sources ? 3. Since, matters involved common question of law and facts, they are decided by this common judgment. 4. facts of case are that respondent assessee namely Mahima Shiksha Samiti is engaged in imparting education, medical facility and other general public utility and for this purpose assessee is running two educational institutions i. Seedling Public School, Jawahar Nagar and ii. Seeding Modern High School, Mahaveer Nagar. 4.1 assessee is society registered under Rajasthan Society Registration Act, 1958 and is further registered u/s 12AA of Act w.e.f. 17.12.1990. For relevant assessment year on 15.10.2010, assessee filed its return declaring total income NIL after claiming exemption u/s 11(1)(a) of Act. case of assessee was selected for scrutiny and for that notice u/s 143(2)/142(1) were issued from time to time and assessee in compliance thereto attended proceedings and furnished required details. After considering return of income and details filed during course of assessment proceedings, ld. (12 of 39) [ ITA-262/2017] AO vide his order dt.25.3.2013, completed assessment u/s 143(3) at income of Rs.8,46,93,400/- 5. Counsel for appellant contended in view of provisions of Section 10 (x), 23 (c) and Section 11 of Income Tax Act. contention which has been raised is that provisions of Section 11 and Section 23 (3) would stand on different footing and benefits which are conferred u/s 11 will not be available in case which are granted in Sec. 23(3). 5.1 To support of his arguments, Mr. Jain has taken us Sec.2(13) of IT Act which reads as under:- (13) " business" includes any trade, commerce or manufacture or any adventure or concern in nature of trade, commerce or manufacture; 5.2 He has also taken us to definition of Charitable purpose as defined u/s 2(15) which reads as under:- charitable purpose includes relief of poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and advancement of any other object of general public utility. Provided that advancement of any other object of general public utility shall not be charitable purpose, if it involves carrying on of any activity in nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for cess or fee or any other consideration, irrespective of nature of use or application, or (13 of 39) [ ITA-262/2017] retention, of income from such activity, unless (i) such activity is undertaken in course of actual carrying out of such advancement of any other object of general public utility; and (ii) aggregate receipts from such activity or activities during previous year, do not exceed twenty per cent of total receipts, of trust or institution undertaking such activity or activities, of that previous year. 5.3 He also taken us to following provisions of Act:- Section 11 Income from property held for charitable or religious purposes . (1) Subject to provisions of sections 60 to 63, following income shall not be included in total income of previous year of person in receipt of income- (a) 3 income derived from property held under trust wholly for charitable or religious purposes, to 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 extent to which income so accumulated or set apart is not in excess of twenty- five per cent of income from such property; (b) income derived from property held under trust in part only for such purposes, trust having been created before commencement of this Act, to 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 extent to which income so set apart is not in excess of twenty five per cent of income from such property;] (c) income 4 derived] from property held under trust-(i) created on or after 1st day of April, 1952 , for charitable purpose which tends to promote international welfare in which India is interested, to extent to which such (14 of 39) [ ITA-262/2017] income is applied to such purposes outside India, and (ii) for charitable or religious purposes, created before 1st day of April, 1952 , to extent to which such income is applied to such purposes outside India: Provided that Board, by general or special order, has directed in either case that it shall not be included in total income of person in receipt of such income; (d) 1 income in form of voluntary contributions made with specific direction that they shall form part of corpus of trust or institution.] 13. 1 Section 11 not to apply in certain cases 2. (1) Nothing contained in section 11 3 or section 12] shall operate so as to exclude from total income of previous year of person in receipt thereof-(a) any part of income from property held under trust for private religious purposes which does not enure for benefit of public; (b) in case of trust- for charitable purposes or charitable institution created or established after commencement of this Act, any income thereof if trust or institution is created or established for benefit of any particular religious community or caste; (c) in case of trust for charitable or religious purposes or charitable or religious institution, any income thereof- (i) if such trust or institution has been created or established after commencement of this Act and under terms of trust or rules governing institution, any part of such income enures, or (ii) if any part of such income or any property of trust or institution (whenever created or established) is during previous year used or applied, directly or indirectly for benefit of any person referred to in sub- section (3): Provided that in case of trust (15 of 39) [ ITA-262/2017] or institution created or established before commencement of this Act, provisions of sub- clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of trust or institution for benefit of any person refer- red to in sub- section (3), if such use or application is by way of compliance with mandatory term of trust or mandatory rule governing institution: Provided further that in case of trust for religious purposes or religious institution (whenever created or established) or trust for charitable purposes or charitable institution created or established before commencement of this Act, provisions of sub- clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of trust or institution for benefit of any person referred to in sub- section (3) in so far as such use or application relates to any period before 1st day of June, 1970 ; (d) 1 in case of trust for charitable or religious purposes or charitable or religious institution, any income thereof, if for any period during previous year- (i) any funds of trust or institution are invested or deposited after 28th day of February, 1983 otherwise than in any one or more of forms or modes specified in sub- section (5) of section 11; or (ii) any funds of trust or institution invested or deposited before 1st day of March, 1983 otherwise than in any one or more of forms or modes specified in sub- section (5) of section 11 continue to remain so invested or deposited after 30th day of November, 1983 ; or (iii) any shares in company[ not being Government company as defined in section 617 of Companies Act, 19563 (1 of 1956 ), or corporation established by or under Central,. State or Provincial Act are held by trust or institution after 30th day of November, 1983. 5.4 Section 28 -Profits and gains of business or profession. (16 of 39) [ ITA-262/2017] following income shall be chargeable to income-tax under head "Profits and gains of business or profession", (i) profits and gains78 of any business or profession78 which was carried on by assessee at any time during previous year ; (ii) any compensation78 or other payment due to78 or received by78 , (a) any person, by whatever name called, managing whole or substantially whole of affairs of Indian company, at or in connection with termination of his management or modification of terms and conditions relating thereto; (b) any person, by whatever name called, managing whole or substantially whole of affairs in India of any other company, at or in connection with termination of his office or modification of terms and conditions relating thereto ; (c) any person, by whatever name called, holding agency in India for any part of activities relating to business of any other person, at or in connection with termination of agency or modification of terms and conditions relating thereto ; 79[(d) any person, for or in connection with vesting in Government, or in any corporation owned or controlled by Government, under any law for time being in force, of management of any property or business ;] Section 29. Income from profits and gains of business or profession, how computed income referred to in section 28 shall be computed in accordance with provisions contained in sections 30 to 1 43D]. 5.5 He further contended that in view of decision of Supreme Court in Escorts Limited and anr. vs. Union of India & ors. reported in 199 ITR 49 wherein it has been held as under:- Section 32(1)(ii) provides for depreciation. As under 1922 Act, it is allowed at percentage of written down value of certain capital assets employed in business. topic of scientific research expenditure is dealt with by Section 35. Section 35(1) provides for deduction of four types of expenditure on scientific (17 of 39) [ ITA-262/2017] research and what we are concerned with is deduction provided under Section 35(1) (iv), which is to following effect: (iv) in respect of any expenditure of capital nature on scientific research related to business carried on by assessee, such deduction as may be admissible under provisions of Sub-section (2). Sub-section (2) provides that, for purposes of Clause (iv) of Sub-section (1), one-fifth of capital expenditure incurred in any previous year shall be deducted for that previous year; and balance of expenditure shall be deducted in equal installments in each of four immediately succeeding previous years. There is explanation which is not relevant for our present purposes. Reading Section 35(2) further, it provides in Clauses (iv) and (v) as follows: (iv) where deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by asset, no deduction shall be allowed under Clauses (i), (ii) and (iii) of Sub-section (1) of Section 32 for same previous year in respect of that asset; (v) where asset mentioned in Clause (ii) is used in business after it ceases to be used for scientific research related to that business, depreciation shall be admissible under Clauses (i), (ii) and (iii) of Sub-section (1) of Section 32. 5. Reference must also be made to Explanation 1 to Section 43(1) in this context. It read as follows at relevant time: Explanation : Where asset is used in business after it ceases to be used for scientific research related to that business and deduction has to be made under Clause (i), Clause (ii) or Clause (iii) of Sub- section (1) or Sub-section (1A) of Section 32 in respect of that asset, actual cost of asset to assessee, as reduced by amount of any deduction allowed under Clause (iv) of subsection (1) of Section 35 or under any corresponding provision of Indian Income-tax Act, 1922 (11 of 1922). (18 of 39) [ ITA-262/2017] 6. From above it will be seen that provisions of Section 32(1)(ii) and Section 35(2)(i)(iv) and (v) read with Explanation 1 to Section 43(1) virtually repeat provisions contained in Section 10(2)(vi) and Section 10(2)(xiv) of 1922 Act, so that question earlier posed still loomed in background of 1961 Act. 7. In 1968 there was amendment in provisions of Section 35(2). Sub-section was amended to read as follows: (2) For purposes of Clause (iv) of subsection (1),: (i) in case where such capital expenditure is incurred before 1st day of April, 1967, one-fifth of capital expenditure incurred in any previous year shall be deducted for that previous year; and balance of expenditure shall be deducted in equal installments for each of four immediately succeeding previous years; (i-a) in case where such capital expenditure is incurred after 31st day of March, 1967, whole of such capital expenditure incurred in any previous year shall be deducted for that previous year. effect of this amendment was only to provide that entire amount of capital expenditure incurred in relation to scientific research was allowed as deduction in one year instead of being spread over period of five years as was position earlier. 10. At this stage, Finance (No. 2) Act, 1980 intervened. It amended Section 35(2) (iv) to read as follows: (iv) where deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by asset, no deduction shall be allowed under Clauses (i), (ii) and (iii) of Sub-section (1) of Section 32 for same or any other previous year in respect of that asset. Finance Act made this amendment retrospective w.e.f. 1-4-62, that is, date of commencement of 1961 Act. contention on behalf of assessees was that allowances in respect of (19 of 39) [ ITA-262/2017] depreciation on one hand and in respect of capital expenditure on scientific research on other are two totally different and independent heads of allowances. One is notional allowance to provide for wear and tear of capital asset employed in business as years roll by; other is allowance for actual expenditure of capital nature granted, on eve of our country's independence, in order to give fillip to new industrial innovations and development of indigenous know-how and techniques by proper planning on research and development by various business houses. It is therefore suggested that there is nothing absurd in construing statutes act as providing cumulatively for both types of deductions in respect of same capital asset. only limitations on this right are two placed by statute itself. first limitation, contained in Clause (d) of proviso to Section 10(2)(xiv) and Section 35(2)(iv) is that both deductions cannot be claimed "for same previous year" in respect of same capital asset. second limitation is found in Clause (e) of proviso to Section 10(2)(xiv) and Section 35(2)(v) which say that if capital asset used for scientific research ceases to be so used but is thereafter brought into business for use therein, actual cost for purposes of granting depreciation in respect of asset thereafter should be taken as amount of its original cost reduced by amount of deductions allowed under Section 10(2)(xiv) or Section 35(2). In other words, contention of assessee was and is that both types of allowances are permissible under statute except to extent limited by Clauses (d) and (e) of proviso to Section 10(2)(xiv) of 1922 Act and reproduced in Clauses (iv) and (v) of Section 35(2) of 1961 Act. 9. Before us it is claimed on behalf of assessee that this interpretation of statutory provisions is very clear, patent and unambiguous. It is alleged that, despite this, some Income-tax Officers started disallowing claim of depreciation in respect of such capital assets even in previous years during (20 of 39) [ ITA-262/2017] which no deduction was claimed or allowed under Section 10(2)(xiv) or Section 35(2), contrary to clear language of Clause (d) of Section 10(2)(xiv) and Section 35(2)(iv). These orders were reversed on appeal either by Appellate Commissioner or by Tribunal. It was suggested that these decisions were almost unanimously in favour of assessee but department persisted in pursuing matter up to stage of High Court. Only one reference on this topic came up before High Courts and is reflected in decision of Karnataka High Court, reported as CIT v. Indian Telephone Industries Ltd. MANU/KA/0158/1980MANU/KA/0158/1980 : [1980]126ITR548(KAR) . This was reference of year 1977 made at instance of Commissioner of Income-tax and Commissioner of Income-tax lost this reference. High Court re-affirmed position contended for by assessee as one and only possible interpretation of statutory provisions. It is, therefore, contended that there was, and could have been, no doubt that assessee was entitled to claim depreciation allowance in respect of such assets in respect of previous years other than those in which allowance had been allowed under other head. We shall revert later to this aspect of matter. 24. Revenue says that deduction provided by Section 35(1)(iv) is in alternative to deduction provided by Cls. (i), (ii) and (iii) of Sub-section (1) and Sub- section (1A) of Section 32. If one is availed of, other is not available, not only during year or years in which deduction under Section 35(1)(iv) is availed of, but permanently. reason, according to them, is obvious: if both are allowed to be availed of, it amounts to grant of 200% deduction .viz., 100% under Section 35(1)(iv) and another 100% under Sub-sections (1) and (1A) of Section 32. This is totally outside contemplation of Act, they say. On other hand, case of assessees is that bar created by Clause (iv) of Sub-section (2) applies only to that previous year or those previous years during which said expenditure is allowed as deduction. That is express language of clause. (21 of 39) [ ITA-262/2017] bar does not extend beyond year or years in which deduction under Section 35(1)(iv) is , availed. There is no reason -- more so in ' taxing enactment -- to extend said bar beyond limit prescribed by statute. They say, if intention of Parliament was to bar claim of depreciation in respect of such asset for all time to come, nothing was easier than to say so in clear words, as was done by Sub- section (4) of Section 20 of U.K. Finance Act, 1944. It is pointed out that Clause (xiv) of Sub-section (2) of Section 10 was introduced in Indian Income-tax Act within two years of introduction of similar provision in English Act, evidently inspired by Amendment in English Act. But while incorporating said provision, conscious departure was made by Indian Legislature, say assessees. Having regard to scant investment in scientific research in India, it is submitted, legislature must have thought it necessary to provide . additional inducement over and above 'deduction on account of depreciation. Considerations of equity have no place in interpretation of taxing enactments, they say further. 5.6 He also relied upon decision Kerala High Court in Lissie Medical Institutions Vs. Commissioner of Income Tax 2012 (348) ITR 344 wherein it has been held as under:- 3. We do not find in any of these decisions this aspect is considered and discussed by any of High Courts. Learned senior counsel though referred Circular No. 5P (LLX- 6), dated June 19, 1968 (See endnote 1 on page 349), which is with regard to computation of income of charitable trusts, strangely depreciation is not specifically dealt with in circular. No decision is seen rendered by Supreme Court on merits on this issue, even though one of special leave petitions filed by Department against one of above decisions was dismissed by Supreme (22 of 39) [ ITA-262/2017] Court. No amendment is seen made to statute requiring trust claiming depreciation to write back depreciation as income of previous year, if payment for acquisition of assets is treated as application of income for charitable purposes. 4. It is settled position through several decisions of High Courts and Supreme Court that when business is held in trust by charitable institutions income from business has to be computed by granting deductions provided under sections 30 to 43D as provided under section 29 of Income-tax Act. 5. Senior counsel, Sri A.K.J. Nambiar, appearing for assessee, submitted that assessee has been filing income-tax returns for several years including assessment year 2005-06, and disallowance is made only for this year. Since business income has to be as stated in section 29 by granting all deductions provided under sections 30 to 43D which includes depreciation under section 32, assessee is entitled is case pressed before us by senior counsel appearing for assessee. We have no doubt in our mind that business income of charitable trust also has to be computed in same manner as provided under section 29 of Income-tax Act. However, issue that requires consideration is when expenditure incurred for acquisition of depreciable assets itself is treated as application of income for charitable purposes under section 11(1)(a) of Act, should not cost of such assets to be treated as nil for assessee and in that situation depreciation to be granted turns out (23 of 39) [ ITA-262/2017] to be nil. However, if depreciation provided is claimed on notional cost after assessee claims 100 per cent of cost incurred for it as application of income for charitable purposes, depreciation so claimed has to be written back as income available. In fact, going by several decisions of various High Courts, we are sure that based on these decisions all charitable institutions will be generating unaccounted income equal to depreciation amount claimed on year to year basis which is nothing but black money. This aspect is not seen considered in any of these decisions. We, therefore, sought views from Central Board of Direct Taxes. Senior standing counsel, Sri P.K.R. Menon appearing for Revenue, produced clarification obtained from Central Board wherein they have stated as follows : Central Board of Direct Taxes is of considered view that where assessee has acquired asset through application of income and has also claimed this amount as expenditure in its income expenditure account, depreciation on such asset would not be allowable to assessee. Such notional statutory deductions like depreciation, if claimed as deduction while computing income of 'the property held under trust' under relevant head of income, is required to be added back while computing income for purpose of application in income expenditure account. This would imply that correct figure of surplus from trust property is (24 of 39) [ ITA-262/2017] reflected in income and expenditure account of trust to determine income for purpose of application under section 11 of Income-tax Act. This would reduce possibility of revenue leakage which may be cause for generation of black money. 5.7 He also contended that in view of fact that it is trust, Section 13 prohibits persons who are beneficiary or trustee or founder of trustees will not be entitled for expenses namely salary and other benefits which are granted like Foreign Trip and other benefits will not be allowed and they will not be covered u/s 13. In that view of matter, it is contended that on close scrutiny of Sec.11 & 13, expenses will not be admissible u/s 13. 6. Taking into account, he contended that tribunal has committed serious error in allowing appeal preferred by assessee and dismissing appeal preferred by department. 7. On issue of depreciation, he contended that in view of Sec.28 read with Sec.23 in view of expenses which are for charitable purpose, therefore, depreciation claimed is not business expenses and Section 32 will not be admissible to charitable purpose in view of fact that it is not for business purpose nor profession. 8. In that view of matter, while relying upon decision in Escorts and Kerala High Court (supra) he contended that in view (25 of 39) [ ITA-262/2017] of two decisions, double benefit cannot be granted and tribunal has committed serious error. 9. On Foreign Trip, it has been contended that tribunal has not appreciated fact that it was personal trip under guise of student exchange programme and tribunal has wrongly granted benefit to trust. 10. On other issue of transfer of money of excess profit systematic service which has been created by primary school where transfer by sponsoring University is contrary to very object of Sec.11 and in that view of matter, it is clear that Sec.13 (1) C and 13 (2) will not apply. 11. He also contended that money which is transferred to private university is also controlled by same family members who are same trustees in university and they are controlling affairs and indirectly they are transferring money which is surplus to meet higher education and they are taking double benefit of Sec.11 readwith Sec.13 in another education institution which is not part of trust which has been exempted u/s 12AA of Act. 12. Counsel for respondent has taken us to judgment of tribunal and contended that tribunal being fact finding authority has given well reasoned judgment. 13. On first issue, case is covered by reasoning of this court in case of same assessee in ITA No.708/2008 wherein it has been held as under:- (26 of 39) [ ITA-262/2017] 5. Counsel for appellant contended that issue is required to be viewed seriously inasmuch as tours and other expenditure which are made are not in consonance with object of Trust. 6. Counsel for respondent has relied upon observations made by Tribunal in para 10, 17, and 19 which reads as under: 10. ld A/R submitted that legislature is not averse to earning of income by charitable institutions bu desires that if income is earned through pursuing charitable objects, such income should be re-applied into charitable objects and for charitable purpose so that society and nation can enjoy larger benefits from such charitable institutions. logic behind devising such scheme is that even after collection of taxes Government applies same towards public charitable purposes therefore why to at all collect tax from such institutions which are themselves utilizing their incomes for charitable purposes. Therefore to all those charitable institutions, which plough back their earnings for charitable purposes, fiscal incentive of exemption under section 11 is allowed and no tax is being charged. 17. ld. A/R pointed out that appellant society was granted registration under section 12A, as charitable institution, by ld. Commissioner of Income Tax after considering and examining objects and activities of society. This registration under section 12A/12AA is in force even as on date. Therefore, ld. AO is not entitled to raise questions in relation to charitable purpose which appellant is persuading consistently for past several years. There is no denial to fact that AO is entitled to examine application of income for charitable purpose and can also examine breach of any condition/falling into any disqualification criteria under section 13 but he cannot be allowed to go into existence of trust for charitable purpose . This is for reason that else it would imply that subordinate authority has set at naught judgment of superior authority. This is against principles of Administrative law as well as jurisprudence. charitable Purpose can be questioned only by Commissioner and he has been granted statutory powers even to cancel registration if doubt arises about charitable purpose subsequent to granting of registration. 19. Without prejudice to above, reliance is placed on decision of Hon ble Rajasthan High Court in case of Deputy Commissioner Income-Tax v. Cosmopolitan Education Society 244 ITR 494 where appeal of (27 of 39) [ ITA-262/2017] department was rejected by affirming finding of ld. Income Tax Appellate Tribunal and ld. Commissioner of Income-Tax Appeals that in case there was any misutilisation of funds of society or mismanagement of activities of society, action could be taken against members of society as per provisions of various statues governing society. However, even such misutilisation or mismanagement by members could not be basis of rejection of claim of exemption ot assessee educational society. Special Leave Petition against this judgment also stood dismissed vide 241 ITR (St) 132. Therefore, these grounds of disallowance of exemption are not sustainable in law. 6.1 He also relied upon following decisions:- 3.3 (i) In Queen s Education Society vs. CIT reported in (2015) 372 ITR 699 (SC), Supreme Court held as under:- 19. It is clear, therefore, that Uttarakhand High Court has erred by quoting non existent passage from applicable judgment, namely, Aditanar and quoting portion of property tax judgment which expressly stated that rulings arising out of Income Tax Act would not be applicable. Quite apart from this, it also went on to further quote from portion of said property tax judgment which was rendered in context of whether educational society is supported wholly or in part by voluntary contributions, something which is completely foreign to Section 10(23C) (iiiad). final conclusion that if surplus is made by educational society and ploughed back to construct its own premises would fall foul of Section 10(23C) is to ignore language of Section and to ignore tests laid down in Surat Art Silk Cloth case, Aditanar case and American Hotel and Lodging case. It is clear that when surplus is ploughed back for educational purposes, educational institution exists solely for educational purposes and not for purposes of profit. In fact, in S.RM.M.CT.M. Tiruppani Trust v. Commissioner of Income Tax MANU/SC/0107/1998 : (1998) 2 SCC 584, this Court in context of benefit claimed Under Section 11 of Act held: 9. In present case, Assessee is not claiming any benefit Under Section 11(2) as it cannot; because in respect of this assessment year, Assessee has not complied with conditions laid down in Section 11(2). Assessee, however, is entitled to claim benefit of Section 11(1)(a). In present case, Assessee has (28 of 39) [ ITA-262/2017] applied Rs. 8 lakhs for charitable purposes in India by purchasing building which is to be utilised as hospital. This income, therefore, is entitled to exemption Under Section 11(1). In addition, Under Section 11(1)(a), Assessee can accumulate 25% of its total income pertaining to relevant assessment year and claim exemption in respect thereof. Section 11(1)(a) does not require investment of this limited accumulation in government securities. balance income of Rs. 1,64,210.03 constitutes less than 25% of income for Assessment Year 1970-71. Therefore, Assessee is entitled to accumulate this income and claim exemption from income tax Under Section 11(1)(a). We set aside judgment of Uttarakhand High Court dated 24th September, 2007. reasoning of ITAT (set aside by High Court) is more in consonance with law laid down by this Court, and we approve its decision. (ii) In Chief Commissioner of Income Tax, Chandigarh vs. St. Peter s Education Society (2016) 385 ITR 66 (SC), Supreme Court observed as under:- We may record at this stage that there was difference of opinion among various High Courts on aforesaid issue. While summarizing law, this Court approved judgments of Punjab and Haryana High Court, Delhi and Bombay High Courts and reversed view taken by Uttarakhand High Court. In so far as judgment of Punjab and Haryana High Court is concerned, it was given in case of Pinegrove International Charitable Trust v. Union of India MANU/PH/0146/2010 : [2010] 327 ITR 73 (P&H). relevant para in this behalf which also states as to how such cases are to be dealt with reads as under: "25. We approve judgments of Punjab and Haryana, Delhi and Bombay High Courts. Since we have set aside judgment of Uttarakhand High Court and since Chief Commissioner of Income- tax's orders cancelling exemption which were set aside by Punjab and Haryana High Court were passed almost solely upon law declared by Uttarakhand High Court, it is clear that these orders cannot stand. Consequently, Revenue's appeals from Punjab (29 of 39) [ ITA-262/2017] and Haryana High Court's judgment dated January 29, 2010, and judgments following it are dismissed. We reiterate that correct tests which have been culled out in three Supreme Court judgments stated above, namely, Surat Art Silk Cloth, Aditanar and American Hotel and Lodging, would all apply to determine whether educational institution exists solely for educational purposes and not for purposes of profit. In addition, we hasten to add that 13th proviso to Section 10(23C) is of great importance in that assessing authorities must continuously monitor from assessment year to assessment year whether such institutions continue to apply their income and invest or deposit their funds in accordance with law laid down. Further, it is of great importance that activities of such institutions be looked at carefully. If they are not genuine, or are not being carried out in accordance with all or any of conditions subject to which approval has been given, such approval and exemption must forthwith be withdrawn. All these cases are disposed of making it clear that Revenue is at liberty to pass fresh orders if such necessity is felt after taking into consideration various provisions of law contained in Section 10(23C)read with Section 11 of Income-tax Act." In all those appeals which have come from High Court of Punjab and Haryana and filed by Department of Income-tax except one from Gujarat High Court, High Court has followed its aforesaid judgment in Pinegrove International Charitable Trust. Since this view stands approved, all these appeals are dismissed. We, however, make it clear that observations made in para. 25, reproduced above, shall apply in these cases. One appeal is from Gujarat High Court which has also followed view taken by Punjab and Haryana High Court in Pinegrove International Charitable Trust, which also stands dismissed. We also make it clear that observations made in para. 25 in Queen's Educational Society v. CIT MANU/SC/0287/2015 : [2015] 8 SCC 47 : [2015] 372 ITR 699, 729 (SC) shall be followed. 6.2 He strongly relied on decision of this Court in case of Jhunjhunu Academy Sammittee Vs. Income Tax Officer Jhunjhunu, D.B. Income Tax Appeal No. 123/2006, decided on 8th February, 2017, this Court while considering identical question observed as under: (30 of 39) [ ITA-262/2017] 15. Before coming to basic contentions, it is not in dispute that appellant is as by name itself suggests that it is academic Samiti carrying on activities of educational purpose for establishing any educational institution. There is need of infrastructure and expansion of every activity whether it is residential accommodation or physical or competitive requirement or other requirement and also maintenance of institution is mandatory for which one has to collect funds. 16. From record it seems that endeavour is made that during relevant year they have surplus fund which is prescribed or described by authority as profit and compared to expenses or other income which has been received as 34,91,251/-. Thus, it has been stated that there is profit of 33 per cent. 17. In our view, any educational institution which is required to be run they have to have surplus fund for educational activity to sustain consistency in efficiency and very purpose of collecting donation is to sustain activity of institution. Merely, because surplus fund it cannot be envisaged as profit, institution has not crossed one crore limit and they are well within their prescribed limit. income was received by trust which is reflected in books of accounts. 18. In our view, view taken by authority is required to be reversed and it is required to be looked into foundation of ratio laid down by Supreme Court in case of Queen s Education Society (supra) where funds which has been surplus is within corpus fund and it has been kept as reserve fund which is not in dispute and they have not crossed limit of one crore. 19. Taking into consideration aforesaid, we are of opinion that contention raised by Mr. Jhanwar is required to accepted. 20. Therefore, first question, we answering in favour of assessee that it is income entitled for exemption under Section 23C(iiiad) of Act. 7. Thus, in view of above, all issues are required to be answered in favour of assessee and against Department. 14. On depreciation he has relied upon judgment in Commissioner of Income Tax-II, Jodhpur vs. Krishi Upaj Mandi Samiti (2016) 388 ITR 605 wherein it has been held as under:- (31 of 39) [ ITA-262/2017] 4. assessee is charitable institution registered under Section 12-A of Act of 1961 and 100% capital expenditure was availed by it against asset concerned i.e. building. Section 32(1) of Act of 1961 provides for depreciation in respect of building, plant and machinery owned by assessee and used for business purposes. Income of charitable trust like present assessee derived from depreciable heads is also liable to be computed on commercial basis, however, while doing so it is to be kept in mind that ultimately assessee is charitable institution and its income for tax purposes is required to be determined by taking into consideration provisions of Section 11 of Act of 1961 after extending normal depreciation and deductions from its gross income. In computing income of charitable institution/trust depreciation of assets owned by such institution is necessary deduction on commercial principles, hence, amount of depreciation has to be deducted to arrive at income available. 5. In view of discussions made above, we find ourselves in agreement with view taken by Bombay High Court in Director of Income Tax v. Framjee Cawasjee Institute (supra) and in CIT v. Institute of Banking Personnel (supra). substantial question framed in instant matter, thus, is answered in terms that Income Tax Appellate Tribunal rightly allowed depreciation claimed by assessee on capital assets for which capital expenditure was already given in year under consideration. 14.1 Decision of Punjab and Haryana High Court in Commisioner of Income Tax vs. Market Committee, Pipli (2011) 330 ITR 16 wherein it has been held as under:- 7. Karnataka High Court in Commissioner of Income Tax, Karnataka v. Society of Sisters of St. Anne. MANU/KA/0045/1983MANU/KA/0045/1983 : [1984] 146 ITR 28 drawing support from (32 of 39) [ ITA-262/2017] Madras High Court in Rao Bahadur Calavala Cunnan Chetty Charities (supra) had recorded that if depreciation is not allowed as necessary deduction for computing income of charitable institution then corpus of trust for deriving income cannot be preserved and that amount of depreciation debited to account of charitable institution is to be deducted to arrive at income available for application to charitable and religious purposes. This decision was followed by Madhya Pradesh High Court in CIT v. Raipur Pallottine Society MANU/MP/0335/1989MANU/MP/0335/1989 : [1989] 180 ITR 579. Similar view was taken by Gujarat High Court in CIT v. Seth Manilal Ranchhoddas Vishram Bhawan Trust MANU/GJ/0026/1992MANU/GJ/0026/1992 : [1992] 198 ITR 598 by relying upon aforesaid decisions. We are in respectful agreement with view taken by Madras, M.P., Karnataka, Gujarat and Bombay High Courts referred to above. No contrary view has been brought to our notice. 8. In all fairness to learned Counsel for Revenue, reference is made to judgment of Hon'ble Apex Court in Escort Limited's case (supra), on which reliance has been placed by learned Counsel for Revenue. Hon'ble Supreme Court in that case was dealing with case relating to two deductions both under Sections 10(2)(vi) and 10(2)(xiv) of 1922 Act or both under Sections 32(1)(ii) and 35(1)(iv) of Act. assessee therein had incurred expenditure of capital nature on scientific research relating to business which resulted into acquisition of asset. assessee had sought to claim specified percentage of written down value of asset as depreciation and at same time claimed deduction, in five consecutive years of expenditure incurred on acquisition of asset. apex Court observed: Where capital asset used for scientific research related to business of assessee is also ipso facto asset used for purpose of business, it is impossible to conceive of Legislature having envisaged double deduction in respect of same expenditure, one by way of depreciation under (33 of 39) [ ITA-262/2017] Section 32 of Income Tax Act, 1961 and other by way of allowance under Section 35(1) (iv) of part of capital expenditure on scientific research, even though two heads of deduction do not completely overlap and there is some difference in rationale of two deductions....It was further recorded that: There is fundamental, though unwritten, axiom that no Legislature could have at all intended double deduction in regard to same business outgoing; and, if it is intended, it will be clearly expressed. In other words, in absence of clear statutory indication to contrary, statute should not be read so as to permit assessee two deductions. 9. In present case, assessee is not claiming double deduction on account of depreciation as has been suggested by learned Counsel for Revenue. income of assessee being exempt, assessee is only claiming that depreciation should be reduced from income for determining percentage of funds which have to be applied for purposes of trust. There is no double deduction claimed by assessee as canvassed by Revenue. Judgment of Hon'ble Supreme Court in Escorts Ltd. and Anr. (supra) is distinguishable for above reasons. It cannot be held that double benefit is given in allowing claim for depreciation for computing income for purposes of Section 11. questions proposed have, thus, to be answered against revenue and in favour of assessee. 14.2 Decision of Delhi High Court in Director of Income Tax (Exemption) vs. Indraprastha Cancer Society (2015) 53 Taxman.com 463 wherein it has been held as under:- 10. aforesaid paragraph refers to decision in case of Vishwa Jagriti Mission (supra) but ratio was distinguished on ground that in said case Court was concerned with computation of income of charitable trust/institution on commercial principles and if so whether depreciation on fixed assets used for charitable purposes should be allowed as deduction. (34 of 39) [ ITA-262/2017] consensus of judicial opinion on said aspect was referred to. It is noticeable that in Charanjiv Charitable Trust (supra) it stands observed that Tribunal overlooked fact that cost of asset had been allowed as "deduction" and thereafter depreciation was being claimed. said case, therefore, appears to be peculiar one wherein deduction as expenditure and depreciation was being claimed simultaneously, while computing taxable income under head "profits and gains from business". said decision dated 18th March, 2014 does not refer to decision in Indian Trade Promotion Organisation (supra) which was decided on 27th November, 2013. judgment in case of Indian Trade Promotion Organisation (supra) was not cited and referred to. judgment in case of Charanjiv Charitable Trust (supra) is authored by same Judge, who has also authored decision in case of Vishwa Jagriti Mission (supra) . It is obvious that in Charanjiv Charitable Trust (supra) , Division Bench could not have taken different view on legal ratio as interpreted in Vishwa Jagriti Mission (supra) . Further, decisions in case of Vishwa Jagriti Mission and Indian Trade Promotion Organisation (supra) being prior in point of time would act as binding precedents and could not have been overruled or dissented from by coordinate Division Bench. 11. By Finance (No. 2) Act of 2014, sub- section (6) to Section 11 stands inserted with effect from 1st April, 2015 to effect that where any income is required to be applied, accumulated or set apart for application, then for such purposes income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of asset, acquisition of which has been claimed as application of income under this Section in same or any other previous year. legal position, therefore, would undergo change in terms of Section 11(6) , which has been inserted and applicable with effect from 1st April, 2015 and not to assessment years in question. newly enacted sub- section relates to application of income. (35 of 39) [ ITA-262/2017] 14.3 Decision of Punjab & Haryana High Court in Commissioner of Income Tax vs. Tiny Tots Education Society (2011) 330 ITR 21 wherein it has been held as under:- 6. matter was discussed in our recent judgment dated July 5, 2010 in I. T. A. No. 535 of 2009 CIT v. Market Committee, Pipli [2011] 330 ITR 16 (P and H). After referring to judgments in CIT v. Sheth Manilal Ran- chhoddas Vishram Bhavan Trust [1992]198 ITR 598 (Guj) and CIT v. Institute of Banking Personnel Selection (IBPS) [2003] 264 ITR 110 (Bom) : [2003] 131 Taxman 386 (Bom), CIT v. Rao Bahadur Calavala Cunnan Chetty Charities [1982]135 ITR 485 (Mad), CIT v. Society of Sisters of St. Anne [1984] 146 ITR 28 (Kar)and CIT v. Raipur Pallottine Society [1989]180 ITR 579 (MP), judgment of hon'ble Supreme Court in Escorts Ltd. [1993]199 ITR 43, was held not to be applicable to situation where depreciation was claimed by charitable institution in determining percentage of funds applied for purposes of charitable objects. It was observed (page 20 supra): 9. In present case, Assessee is not claiming double deduction on account of depreciation as has been suggested by learned Counsel for Revenue. income of Assessee being exempt, Assessee is only claiming that depreciation should be reduced from income for determining percentage of funds which have to be applied for purposes of trust. There is no double deduction claimed by Assessee as canvassed by Revenue. judgment of hon'ble Supreme Court in Escorts Ltd. [1993]199 ITR 43 is distinguishable for above reasons. It cannot be held that double benefit is given in allowing claim for depreciation for computing income for purposes of Section 11. questions proposed have, thus, to be answered against Revenue and in favour of Assessee. (36 of 39) [ ITA-262/2017] 15. He contended that jurisdictional high court has considered Kerala High Court judgment which has been sought to be relied upon and allowed expenses. 16. However, Mr. Jain has contended that in view of tax limit, same has not been challenged. He also contended that in view of amendment u/s 11 subclause (6) w.e.f. 1.4.2015, they have not claimed any benefit after 1.4.2015 and all appeals are prior to 1.4.2015. In that view of matter, law which was prevailing prior to 31.3.2015 will be covered by jurisdictional high court judgments. 17. On other issue, whether expenses which are granted or which has been considered by authority, he relied upon judgment of this court in Commissioner of Income Tax, Jaipur-II vs. Consulting Engineering Group Ltd. (2014) 365 ITR 284 wherein it has been held as under:- 17. In view of what we have discussed hereinabove, on all three issues, Tribunal, after appreciation of evidence, has come to conclusion that disallowance out of job work charges, soil testing and surveying charges and directors' remuneration is not proper and it had been rightly deleted by CIT(A) and we do not find any infirmity or perversity in said order of Tribunal. It is purely finding of fact and no question of law much less substantial question of law can be said to emerge out of said order of Tribunal so as to call for any interference of this Court. In our view, no substantial question of law arises out of order passed by Tribunal. Consequently, appeal, being devoid of merit, is hereby dismissed in limine. No order as to costs. (37 of 39) [ ITA-262/2017] 18. He contended that view taken by tribunal is on consideration of facts and it is not question of law. 19. He has relied upon judgment of this court in Murari Lal Khandelwal vs. CIT (2003) 263 ITR 642 wherein it has been held as under:- 4. Learned counsel for assessee Mr. Jhanwar submits that amount of salary claimed on account of payment to sons i.e., Anoop and Alock was reasonable, as both are looking after business and assessee has got paralytic attack in year 1983, therefore, payment of salary to these persons at rate of Rs. 6,000 and Rs. 5,000 per month, respectively, was justified. 5. facts on record reveal that both are graduates and Anoop, to whom assessee has paid Rs. 6,000 p.m. in year under consideration was getting only Rs. 1,000 p.m. just in preceding year. So far paralytic attack to assessee is concerned, it happened in year 1983. assessee has carried on business even after paralytic attack without help of these two sons. 6. We also notice that in preceding year i.e., 1991, assessee has disclosed income of Rs, 70,000. This year he has disclosed only income of Rs. 45,673. On these facts, there is no justification of paying such heavy salary to sons of assessee, who are employed by assessee for purpose of his business. 7. It is also pertinent to note that what should be reasonable salary is basically question of fact and Tribunal is fact-finding final body in this regard. Finding of Tribunal cannot be said to be perverse on these facts. No interference is called for in order of Tribunal. In result, we answer question in affirmative i.e., in favour of Revenue and against assessee. (38 of 39) [ ITA-262/2017] 20. On first issue as stated above, same is required to be answered in favour of assessee that u/s 11 & 13, expenses which are transferred to private university while holding Sec.13 definition and explanation and substantial controlled or substantial transferred are not in their name. It may be private institution which is creation of statue having controlled by same trustee and will not indirectly covered u/s 13 merely because trustees of beneficiaries of trust or any person controlling trust which is part of another institution. object is to see where even transfer for educational purpose or not that has been done. In that view of matter, contention that university will be covered u/s 13, in our considered opinion merely because same trustees or directors or persons are there, Sec.13 except with explanation is required to be considered and tribunal has rightly considered that trustees will not be covered u/s 13. 21. Regarding depreciation in view of amendment Sec.11(6) it will be prospective and in view of jurisdictional high court judgment binding on us and we are following same. 22. In that view of matter, depreciation is rightly allowed. On question of foreign trip after taking into consideration student exchange programme tribunal has come to conclusion that it is covered under purpose of trust object and are done for educational institution and benefit of (39 of 39) [ ITA-262/2017] students, in our considered opinion, expenses of foreign trip are also rightly allowed. 23. In view of above, we are in complete agreement with view taken by tribunal. All issues are answered in favour of assessee and against department. 24. appeals stand dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Bmg 11 & 12, 28 to 37. Commissioner of Income-tax (Exemptions), Jaipur v. Mahima Shiksha Samiti