IN THE HIGH COURT OF KARNATAKA AT BENGALURU ON THE 14TH DAY OF JANUARY, 2019 BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH AND THE HON’BLE MR. JUSTICE MOHAMMAD NAWAZ INCOME TAX APPEAL NO.278 OF 2017 BETWEEN:
1. PR. COMMISSIONER OF INCOME TAX (EXEMPTIONS), BENGALURU.
2. THE ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTIONS), CIRCLE-17(2), MISSION ROAD, BENGALURU.
(BY SRI E. I. SANMATHI, ADVOCATE) ...APPELLANTS AND:
SRI VANI EDUCATION CENTRE NO.1246, 4TH MAIN, E-BLOCK, 2ND STAGE, RAJAJINAGAR, BENGALURU-560010.
... RESPONDENT THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME-TAX ACT 1961, ARISING OUT OF ORDER DATED 08/09/2016 PASSED IN ITA NO.1100/BANG/2015, FOR THE ASSESSMENT YEAR 2009- 2010 PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 08/09/2016 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'C' BENCH, BENGALURU, IN APPEAL PROCEEDINGS NO.ITA NO.1100/BANG/2015 FOR ASSESSMENT YEAR 2009-2010, AS SOUGHT FOR IN THIS APPEAL; AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.
***** THIS INCOME TAX APPEAL COMING ON FOR HEARING THIS DAY, RAVI MALIMATH J., DELIVERED THE FOLLOWING:
JUDGMENT By the order dated 07.11.2017, the appeal was admitted to consider the following substantial questions of law:
i. Whether on the facts and in the circumstances of the case the Tribunal is right in holding that the assessee is eligible for carry forward of deficit of the assessee to the subsequent years when the income of a charitable or religious trust / institution is required to be computed by applying general commercial principles without referring to the regular provisions of Income Tax as contained under Chapter – IV and as such while arriving at the income of a charitable or religious trust / institution, various heads of income as contemplated under Section 14 and specific provisions of computation of income under respective heads as envisaged under Section 15 to 59 are not pressed into action?
ii. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessee is entitled to carry forward of deficit without appreciating that the provisions of sections – 70 to 80 of IT Act are not applicable to trusts as they only deal with carry forward and set off of loss and not carry forward of deficit?
iii. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that assessee is entitled to claim depreciation on capital assets when it amounts to double deduction as the income of the assessee is already exempt and amended provisions of the Act also denies such claim for depreciation by Trust?”
2. The learned counsel for the appellants submit that the substantial questions of law at Sl.No.(i) and (iii) are covered by the judgment of the Hon'ble Supreme Court in the case of COMMISSIONER OF INCOME TAX VS. RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA, reported in (2018) 300 CTR 0001 (SC). Following the aforesaid judgment, the substantial questions of law at Sl.No.(i) and (iii) are answered in favour of the Assessee and against the Revenue.
3. The question of law at Sl.No.(ii) is covered by the judgment of this Court passed in ITA No.312 of 2016 and ITA No.313 of 2016, dated 17.07.2018. Following the aforesaid judgment, the substantial question of law at Sl.No.(ii) is answered in favour of the Assessee and against the Revenue.
In view of answering the substantial questions of law, the appeal is accordingly disposed off.
Sd/- Sd/-
JUDGE JUDGE JJ