Depreciation Deductions for Charitable Trusts: Court Upholds Non-Retrospective Application

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Case Name:

Director of Income Tax & Ors. Vs. Al-Ameen Charitable Fund Trust (High Court of Karnataka)

ITA No. 62 of 2010 C/w ITA Nos.233-234 of 2013, 1, 56, 430 & 431 of 2013

Date: 22nd February 2016

Key Takeaways:

- The court confirmed that depreciation can be claimed by charitable trusts on assets, even if the acquisition cost was previously exempted.

- Section 11(6) (of Income Tax Act, 1961), which denies depreciation deductions, applies prospectively from April 1, 2015.

- The decision reinforces the principle that amendments imposing burdens are presumed to be prospective unless clearly stated otherwise.

Issue

Can charitable trusts claim depreciation on assets when the acquisition cost has already been exempted as income application under Section 11 (of Income Tax Act, 1961)?

Facts

Several charitable institutions, registered under Section 12AA (of Income Tax Act, 1961) and 10(23)(c) of the Income Tax Act, were denied depreciation deductions by the revenue authorities. The authorities argued that allowing depreciation would result in a double deduction since the acquisition cost of the assets had already been exempted. The institutions appealed, and the case eventually reached the High Court.

Arguments

- Revenue's Argument: Depreciation should not be allowed as it results in a double deduction, contrary to the scheme of the Act. They contended that Section 11(6) (of Income Tax Act, 1961) should apply retrospectively.

- Charitable Institutions' Argument: Depreciation is a legitimate deduction under normal commercial principles and does not constitute a double deduction. They argued that Section 11(6) (of Income Tax Act, 1961) is prospective and should not affect past assessments.

Key Legal Precedents

- Society of Sisters of St. Anne: Established that depreciation is allowable for charitable trusts.

- Escorts Ltd. vs. Union of India: Discussed the principle against double deductions but was distinguished as not applicable to charitable trusts.

- Vatika Township P. Ltd.: Provided guidance on the retrospective application of laws, emphasizing that burdensome amendments are presumed prospective.

Judgement

The court ruled in favor of the charitable institutions, allowing them to claim depreciation. It held that Section 11(6) (of Income Tax Act, 1961) is prospective, effective from April 1, 2015, and does not apply to prior assessments. The court emphasized that the principle against retrospective operation applies unless explicitly stated otherwise.

FAQs

Q1: What does this decision mean for charitable trusts?

A1: Charitable trusts can continue to claim depreciation on assets, even if the acquisition cost was previously exempted, for assessments before April 1, 2015.

Q2: Why is Section 11(6) (of Income Tax Act, 1961) considered prospective?

A2: The court found no clear legislative intent for retrospective application, and the amendment imposes a burden, which is typically presumed to be prospective.

Q3: How does this case affect future tax assessments for charitable trusts?

A3: For assessments from April 1, 2015, onwards, charitable trusts cannot claim depreciation on assets if the acquisition cost was exempted as income application.

These appeals are filed by the revenue under Section 260-A (of Income Tax Act, 1961), 1961(‘the Act’ for short) challenging the orders passed by the Income Tax Appellate Tribunal, Bangalore Bench.

2. Since, common question of law is raised in all these appeals, the matters are heard together and disposed of by this common Judgment.

3. The assessees in all these appeals are the charitable institutions registered under Section 12AA (of Income Tax Act, 1961) and 10(23)(c) of the Act. The question herein revolves around Section 11 (of Income Tax Act, 1961). For the purpose of narrating the facts, we are considering ITA No.62/2010. The assessments for the assessment

year 2005-06 were concluded under Section 144 (of Income Tax Act, 1961) denying exemption under Section 10(23) (of Income Tax Act, 1961). The addition of income was made on account of disallowance of depreciation by the Assessing Officer.

4. Being aggrieved, the assessee preferred an

appeal before the Commissioner of Income Tax

(Appeals), Bangalore. The CIT(A) after calling for the

remand report from the Assessing Officer, allowed the

appeal on merits and deleted all the additions made

by the Assessing Officer.

5. Aggrieved by the same, revenue preferred

appeal before the Tribunal. The Tribunal after

hearing the parties, dismissed the appeal of the

revenue.

6. Being aggrieved by the said order of the

Tribunal, the revenue is in appeal.

7. Similarly, in ITA Nos.233-234/2013, ITA

No.1/2013, ITA No.433/2013, ITA No.414/2010, on

the assessment orders denying exemption under

Section 11 (of Income Tax Act, 1961) read with Section 10(23c) (of Income Tax Act, 1961) and

making an addition of income on account of

disallowance of depreciation, the assessee preferred

appeals which were allowed in favour of the assessee.

Revenue challenged the said orders of the

CIT(Appeals) before the Tribunal unsuccessfully.

The orders passed by the Tribunal are challenged in

these appeals.

8. ITA No.431/2013, ITA Nos.56/2013 and

108/2014 are filed by the revenue challenging the

orders passed by the Tribunal whereby, the orders

passed by Revisional Authority under Section 263 (of Income Tax Act, 1961) of

the Act are set-aside, restoring the assessment order,

thus, allowing the depreciation under Section 11 (of Income Tax Act, 1961) of

the Act as claimed by the assessee.

9. In all these appeals, the common

substantial question of law that arises for our

consideration is as under:

“Whether the Tribunal is correct in

holding that depreciation is allowable

under Section 11 (of Income Tax Act, 1961), and there is

no double claim of capital expenditure as

held by the Assessing Officer and the

principles enunciated by the Apex Court

in escorts Ltd., 199 ITR 43 was not

applicable and the principles enunciated

by this Hon’ble Court in Society of Sisters

St.Ann’s 146 ITR 18 was applicable?”

10. Heard the learned counsel appearing for

the parties and perused the material on record.

11. Learned counsel Sri. K.V. Aravind

appearing for the revenue would contend that the

depreciation is not allowable as deduction in

computing the total income of a charitable trust

under Section 11 (of Income Tax Act, 1961), as the amount spent on

the capital asset is already allowed as application of

income in the year of such acquisition. Claim of

deduction by way of depreciation on the same capital

asset in the subsequent years results in allowing

double deduction contrary to the scheme of the Act.

It is further contended that depreciation has to be

computed in terms of Section 32 (of Income Tax Act, 1961). He also

places reliance on Section 37 (of Income Tax Act, 1961) to point out

that any expenditure not being expenditure of the

nature described in Sections 30 to 36, not being in

the nature of capital expenditure or personal

expenses of the assessee expended wholly and

exclusively for the purposes of business or profession

shall be allowed in computing the income chargeable

under the head ‘Profit and gains of business or

profession’. Applying the same analogy if, application

of income is allowed under Section 11 (of Income Tax Act, 1961), no

depreciation can be allowed under Section 32 (of Income Tax Act, 1961) of the

Act. Reliance is placed on Section 11(6) (of Income Tax Act, 1961)

inserted by the Finance Act No.2, Act 14 with effect

from 01.04.2015 to contend that the said amendment

applies retrospectively being clarificatory in nature.

Learned counsel for the revenue placed reliance on

the following Judgments:

(1) [A] COMMISSIONER OF INCOME TAX vs.

SOCIETY OF THE SISTERS OF ST.ANNE ((1984)

CTR 9 )

(2) LISSIE MEDICAL INSTITUTIONS vs.

COMMISSIONER OF INCOME TAX ((2012) 348 ITR

0344)

(3) ESCORTS LTD. vs. UNION OF INDIA ((1993)

SC ITR Vol. 199)

12. On the other hand, learned counsel

appearing for the assessee Sri.A.Shankar would

contend that Chapter – III of the Act and Chapter – IV

of the Act play in different fields. Sections 11 to 13(B)

covered under Chapter – III of the Act, governs the

manner of computation of total income and

exemption by Charitable Trusts. Sections 14 to 59

governed by Chapter – IV of the Act deals with the

income under the five heads of income enumerated

under Section 14 (of Income Tax Act, 1961). The exemption entitlement under

Section 11 (of Income Tax Act, 1961) is based on application of

income and ‘permissible accumulations’ and the

‘balance of income’, if any, is treated as income which

is not applied for objects of the Trust and is brought

to tax under Chapter III of the Act. Chapter – IV in

no way is applicable to Section 11 (of Income Tax Act, 1961), the claim of

depreciation is not under Section 32 (of Income Tax Act, 1961) but

under normal commercial principles as laid down by

the Courts. It is further contended that allowing

exemption on the application of income on the capital

asset acquired during the relevant year and further,

allowing depreciation in the subsequent years, at any

stretch of imagination, could not be construed as

double deduction.

13. Mr.Parthasarthy, learned counsel

appearing for the assessee in some of the appeals

adopts the arguments advanced by Mr. A.Shankar.

14. Learned counsel appearing for the

assessee has placed reliance on the following

Judgments:

[1] COMMISSIONER OF INCOME-TAX vs. VATIKA

TOWNSHIP P.LTD., [(2014) 367 ITR 466 (SC)]

[2] COMMISSIONER OF INCOME-TAX vs.

INSTITUTE OF BANKING [(2003) 264 ITR 110]

[3] COMMISSIONER OF INCOME-TAX, TAMIL

NADU-I vs. RAO BAHADUR CALAVALA CUNNAN

CHETTY CHARITIES [1982) ITR 485 (MAD)]

[4] COMMISSIONER OF INCOME-TAX vs. MARKET

COMMITTEE PIPLI [(2011) 238 CTR (P&H) 103

[5] COMMISSIONER OF INCOME-TAX vs.

SOCIETY OF THE SISTERS OF ST. ANNE [(1984)

39 CTR (KAR) 9]

[6] DIRECTOR OF INCOME TAX [EXEMPTION] Vs.

COUNCIL OF SCIENTIFIC AND INDUSTRIAL

RESEARCH in ITA No.331/2013 DD 27.11.2013

15. The question involved in this case is no

more res integra. This question was considered by

this Court as far back as in the year 1984, in the

case of Society of the Sister’s of St.Anne (supra)

wherein the Division Bench of this Court has held

thus:

“9. It is clear from the above

provisions that the income derived from

property held under trust cannot be the

total income because s. 11(1) says that

the former shall not be included in the

latter, of the person in receipt of the

income. The expression "total income"

has been defined under s. 2(45) of the

Act to mean "the total amount of income

referred to in s. 5 computed in the

manner laid down in this Act". The word

"income" is defined under s. 2(24) of the

Act to include profits and gains,

dividends, voluntary payment received

by trust, etc. It may be noted that profits

and gains are generally used in terms

of business or profession as provided

u/s. 28 (of Income Tax Act, 1961). The word "income", therefore, is

a much wider term than the expression

"profits and gains of business or

profession". Net receipt after deducting

all the necessary expenditure of the

trust (sic).

10. There is a broad agreement on

this proposition. But still the contention

for the Revenue is that the depreciation

allowance being a notional income

(expenditure ?) cannot be allowed to be

debited to the expenditure account of

the trust. This contention appears to

proceed on the assumption that the

expenditure should necessarily involve

actual delivery of or parting with the

money. It seems to us that it need not

necessarily be so. The expenditure

should be understood as necessary

outgoings. The depreciation is nothing

but decrease in value of property

through wear, deterioration or

obsolescence and allowance is made for

this purpose in book keeping,

accountancy, etc. In Spicer & Pegler's

Book-keeping and Accounts, 17th Edn.,

pp. 44, 45 & 46, it has been noted as

follows :

"Depreciation is the exhaustion of the

effective life of a fixed asset owing to

'use' or obsolescence. It may be

computed as that part of the cost of the

asset which will not be recovered when

the asset is finally put out of use. The

object of providing for depreciation is to

spread the expenditure, incurred in

acquiring the asset, over its effective

lifetime; the amount of the provision,

made in respect of an accounting

period, is intended to represent the

proportion of such expenditure, which

has expired during that period."

16. Similar view is taken by the other High

Courts viz., Gujarat, Punjab and Haryana, Delhi,

Madras, Calcutta and Madhya Pradesh in the

following judgments.

[1] COMMISSIONER OF INCOME-TAX, vs

FRAMJEE CAWASJEE INSTITUTE, 109 CTR 463

[GUJ];

[2] COMMISSIONER OF INCOME-TAX, vs RAIPUR

PALLOTTINE SOCIETY,. 180 ITR 571 [MP]

[3] COMMISSIONER OF INCOME-TAX, vs SETH

MANILAL RANCHODDAS VISHRAM BHAVAN TRUST

198 ITR 598 [GUJ];

[4] COMMISSIONER OF INCOME-TAX, vs

BHORUKA PUBLIC WELFARE TRUST [1999] 240

ITR 513 [CAL];

[5] COMMISSIONER OF INCOME-TAX, vs RAO

BAHADUR CALAVALA CUNNAN CHETTY

CHARITIES 135 ITR 485 (MAD)]

[6] COMMISSIONER OF INCOME-TAX vs. MARKET

COMMITTEE PIPLI [(2011) 238 CTR (P&H) 103

Allowing depreciation in subsequent years, on the

capital asset, which has already availed the benefit of

deduction in computing the income of the trust in the

year of its acquisition is considered by the Punjab

and Haryana High Court in the case of Market

Committee, Pipli (supra) and held thus:

“9. In the present case, the

assessee is not claiming double

deduction on account of depreciation as

has been suggested by learned counsel

for the Revenue. The income of the

assessee being exempt, the assessee is

only claiming that depreciation should

be reduced from the income for

determining the percentage of funds

which have to be applied for the

purposes of the trust. There is no

double deduction claimed by the

assessee as canvassed by the Revenue.

Judgment of the Hon’ble Supreme Court

in Escorts Ltd., & Anr. (supra) is

distinguishable for the above reasons.

It cannot be held that double benefit is

given in allowing claim for depreciation

for computing income for purposes of

section 11 (of Income Tax Act, 1961). The questions proposed

have, thus, to be answered against the

Revenue and in favour of the assessee.

17. High Court of Bombay in the case of

Institute of Banking (supra) after placing reliance

on the Judgment of CIT vs Muniswarat Jain (1994

TLR 1084) on an identical issue, held:-

“In that matter also, a similar

argument, as in the present case, was

advanced on behalf of the revenue,

namely, that depreciation can be allowed

as deduction only under section 32 (of Income Tax Act, 1961) of the

Income Tax Act and not under general

principles. The court rejected this

argument. It was held that normal

depreciation can be considered as a

legitimate deduction in computing the real

income of the assessee on general

principles or under section 11(1)(a) (of Income Tax Act, 1961) of the

Income Tax Act. The court rejected the

argument on behalf of the revenue

that section 32 (of Income Tax Act, 1961) was

the only section granting benefit of

deduction on account of depreciation. It

was held that income of a Charitable

Trust derived from building, plant and

machinery and furniture was liable to be

computed in normal commercial manner

although the Trust may not be carrying

on any business and the assets in

respect whereof depreciation is claimed

may not be business assets. In all such

cases, section 32 (of Income Tax Act, 1961)

providing for depreciation for computation

of income derived from business or

profession is not applicable. However, the

income of the Trust is required to be

computed under section 11 (of Income Tax Act, 1961) on

commercial principles after providing for

allowance for normal depreciation and

deduction thereof from gross income of

the Trust. In view of the aforestated

Judgment of the Bombay High Court, we

answer question No. 1 in the affirmative

i.e., in favour of the assessee and against

the department.”

18. The Judgment in Escorts Limited (supra)

was rendered by the Apex Court in the context of

Section 10(2)(vi) (of Income Tax Act, 1961) and Section 10(2)(xiv) (of Income Tax Act, 1961) of the 1922

Act or under Section 32(1)(ii) (of Income Tax Act, 1961) and Section 35(2)(iv) (of Income Tax Act, 1961) of

the 1965 Act. It was the case of the assessee

claiming a specified percentage of the written down

value of the asset as depreciation besides claiming

deduction in 5 consecutive years of the expenditure

incurred on the acquisition of the capital asset used

for scientific research. In such circumstances, the

Apex Court held thus:

“There is an apparent plausibility

about these arguments, particularly in

the context of the alleged departure in

the language used by S.10(2)(xiv) from

that employed in S.20 of the U.K.

Finance Act, 1944. We may, however,

point out that the last few underlined

words of the English statute show that

there is really no difference between the

English and Indian Acts; the former also

in terms prohibits depreciation only so

long as the assets are used for scientific

research. In our opinion, the other

provisions of the Act to which reference

has been made - some of which were

inserted after the present controversy

started - are not helpful and we have to

construe the real scope of the provisions

with which we are concerned. We think

that all misconception will vanish

and all the provisions will fall into

place, if we hear in mind a

fundamental, through unwritten, axiom

that no legislature could have at all

intended a double deduction in regard

to the same business outgoing, and if it

is intended it will be clearly expressed.

In other words, in the absence of

clear statutory indication to the

contrary, the statute should not be read

so as to permit an assessee two

deductions both under S.10(2)(vi)

and S.10(2)(xiv) under the 1922 Act or

under S.32(1)(ii) and 35(2)(iv) of the

1922 Act - qua the same expenditure. Is

then the use of the words "in respect of

the same previous year" in clause (d) of

the proviso to S.10(2) (xiv) of the 1922

Act and S. 35(2) (iv) of the 1961 Act

contra-indication which permits a

disallowance of depreciation only in the

previous years in which the other

allowance is actually allowed. We think

the answer is an emphatic `no' and that

the purpose of the words above referred

to is totally different. If, as contended

for by the assessees, there can be no

objection in principle to allowances

being made under both the provisions

as their nature and purpose are

different, then the interdict disallowing

a double deduction will be meaningless

even in respect of the previous years for

which deduction is allowed under S.10(2)

(xiv) /S.35 in respect of the same asset.

If that were the correct principle, The

assessee should logically be entitled to

deduction by way of depreciation for

allprevious years including those for

which allowance have been granted

under the provision relating to scientific

research. The statute does not permit

this. The restriction imposed would,

therefore, be illogical and unjustified on

the basis suggested by the assessees.

On the other hand, if we accept the

principle we have outlined earlier viz.

that, there is a basic legislative scheme,

unspoken but clearly underlying the

Act, that two allowances cannot be, and

are not intended to be, granted in

respect of the same asset or

expenditure, one will easily see the

necessity for the limitation imposed by

the quoted words. For, in this view,

where the capital asset is one of the

nature specified, the assessee can get

only one of the two allowances in

question but not both.”

19. Section 11 (of Income Tax Act, 1961) deals with

application of income different from revenue

expenditure or allowance. Thus, the Judgment of the

Apex Court in the case of Escorts Ltd., [supra] is

distinguishable and as such is not applicable to the

Charitable Trusts where income is to be computed

under Chapter III of the Act. Accordingly, the

judgment of Lissie Medical Institutions [supra]

based on Escorts Ltd., [supra], is not applicable to

the facts of the present case.

20. It is also to be noticed that while in the

year of acquiring the capital asset, what is allowed as

exemption is the income out of which such

acquisition of asset is made and when depreciation

deduction is allowed in the subsequent years, it is for

the losses or expenses representing the wear and tear

of such capital asset incurred if, not allowed then

there is no way to preserve the corpus of the Trust for

deriving its income as held in Society of Sisters of

St.Anne [supra]. This judgment of co-ordinate Bench

of this Court is binding on us and we have no

reasons to disturb the settled position of law at this

length of time/depart from the said reasoning. As

such, the arguments advanced by the Revenue

apprehending double deduction is totally

misconceived.

21. Section 11 (of Income Tax Act, 1961)[6] inserted with effect from

1.4.2015 by Finance Act No.2/2014, reads as under:

“(6) In this section where any

income is required to be applied or

accumulated or set apart for

application, then, for such purposes the

income shall be determined without any

deduction or allowance by way of

depreciation or otherwise in respect of

any asset, acquisition of which has

been claimed as an application of

income under this section in the same or

any other previous year.”

22. The plain language of the amendment

establishes the intent of the legislature in denying the

depreciation deduction in computing the income of

Charitable Trust is to be effective from 1.4.2015.

This view is further supported by the Notes on

Clauses in Finance [No.2} Bill, 2014, memo

explaining provisions and circulars issued by the

Central Board of Direct Taxes in this regard. Clause

No.7 of the Notes on Clauses reads thus:

“Clause 7. of the Bill seeks to amend

section 11 (of Income Tax Act, 1961) relating

Income from property held for charitable

or religious purposes. The existing

provisions of the aforesaid section

contain a primary condition that for

grant of exemption in respect of income

derived from property held under trust,

such income should be applied for the

charitable purposes in India, and where

such income cannot be so applied

during the previous year, it has to be

accumulated in the prescribed modes.

It is proposed to insert sub-sections (6)

and (7) in the said section so as to

provide that-

(i) where any income is required

to be applied or accumulated or set

apart for application, then, for such

purposes the income shall be

determined without, any deduction or

allowance by way of depreciation or

otherwise in respect of any asset,

acquisition of which has been claimed

as an application of income under this

section in any previous year, and

(ii) where a trust or an institution

has been granted registration under

clause (b) of sub-section (1) of section

12AA or has obtained registration at

any time under section 12A (of Income Tax Act, 1961) [as it stood

before is amendment by the Finance

(No.2) Act, 1996] and the said

registration is in force for any previous

year, then, nothing contained in section

10 [other than clause(1) and clause

(23C) thereof] shall operate to exclude

any income derived from the property

held under trust from the total income of

the person in receipt thereof for that

previous year.

This amendment will take effect

from 1st April, 2015 and will,

accordingly, apply in relation to the

assessment year 2015-16 and

subsequent years”.

The Memo explaining the provisions in Finance [No.2]

Bill, 2014 reads thus:

“ The second issue which has arisen is

that the existing scheme of section 11 (of Income Tax Act, 1961)

as well as section 10(23C) (of Income Tax Act, 1961) provides

exemption in respect of income when it

is applied to acquire a capital asset.

Subsequently, while computing the

income for purposes of these sections,

notional deduction by way of

depreciation etc. is claimed and such

amount of notional deduction remains to

be applied for charitable purpose.

Therefore, double benefit is claimed by

the trusts and institutions under the

existing law. The provisions need to be

rationalized to ensure that double

benefit is not claimed and such notional

amount does not excluded from the

condition of application of income for

charitable purpose”.

23. Paragraphs 7.5, 7.5.1, 7.6 of Central

Board of Direct Taxes Circular reported in 371 ITR

22 makes it clear that the said amendment shall take

effect from 1.4.2015 and will accordingly apply in

relation to the assessment year 2015-16 and

subsequent assessment years.

24. The Constitution Bench of the Apex Court

in Vatika Township [P] Ltd.,’s case [supra], had laid

down general principles concerning retrospectivity in

Paragraphs 33 and 34, and the same is extracted

hereunder:

“33. We would also like to point

out, for the sake of completeness, that

where a benefit is conferred by a

legislation, the rule against a

retrospective construction is different. If

a legislation confers a benefit on some

persons but without inflicting a

corresponding detriment on some other

person or on the public generally, and

where to confer such benefit appears to

have been the legislators object, then

the presumption would be that such a

legislation, giving it a purposive

construction, would warrant it to be

given a retrospective effect. This exactly

is the justification to treat procedural

provisions as retrospective. In

Government of India & Ors. v. Indian

Tobacco Association, the doctrine of

fairness was held to be relevant factor

to construe a statute conferring a

benefit, in the context of it to be given a

retrospective operation. The same

doctrine of fairness, to hold that a

statute was retrospective in nature, was

applied in the case of Vijay v. State of

Maharashtra & Ors. It was held that

where a law is enacted for the benefit of

community as a whole, even in the

absence of a provision the statute may

be held to be retrospective in nature.

However, we are confronted with any

such situation here.

34. In such cases, retrospectively is

attached to benefit the persons in

contradistinction to the provision

imposing some burden or liability where

the presumption attaches towards

prospectivity. In the instant case, the

proviso added to Section 113 (of Income Tax Act, 1961)

is not beneficial to the assessee. On the

contrary, it is a provision which is

onerous to the assessee. Therefore, in a

case like this, we have to proceed with

the normal rule of presumption against

retrospective operation. Thus, the rule

against retrospective operation is a

fundamental rule of law that no statute

shall be construed to have a

retrospective operation unless such a

construction appears very clearly in the

terms of the Act, or arises by necessary

and distinct implication. Dogmatically

framed, the rule is no more than a

presumption, and thus could be

displaced by out weighing factors”.

25. The Apex Court in the said judgment,

while interpreting the proviso, whether to be applied

retrospectively or prospectively, has considered the

Notes on Clauses appended, the Finance Bill and the

understanding of the Central Board of Direct Taxes in

this regard. The Apex Court has also taken

cognizance of the fact that the legislature is fully

aware of 3 concepts in so far as amendments made to

a statute:

(i) prospective amendments with

effect from a fixed date;

(ii) retrospective amendments with

effect from a fixed anterior date; and

(iii) clarificatory amendments

which are prospective in nature.

Keeping in view, the aforesaid principles enunciated

by the Apex Court, in Vatika Township [P] Ltd.,’s

case [supra], it would be safely held that Section

11[6] of the Act is prospective in nature and operates

with effect from 01.04.2015. This is further clarified

when compared with certain other provisions which

have been made retrospectively in the same Finance

Act.

26. For the foregoing reasons, we answer the

question of law in favour of the Assessee and against

the Revenue.

27. In the result, all the appeals are

dismissed.

Sd/-

JUDGE

Sd/-

JUDGE