High Court reverses earlier decision, aligns with Supreme Court ruling on Income Tax Act.

The High Court initially rejected the appeals based on a previous judgment but reconsidered after a Supreme Court decision aligned with most High Courts. The subsequent Supreme Court judgment allowed the claim of the assessee, emphasizing the prospective application of Section 11(6) of the Income Tax Act from 2015-2016. As the assessment years were before this period, the appeals were allowed in favor of the assessee, with no costs imposed.

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Issues:
1. Interpretation of the judgment in Lissy Medical Institution v. Commissioner of Income Tax
2. Impact of the subsequent judgment in Commissioner of Income Tax v. Rajasthan and Gujarati Charitable Foundation
3. Application of Section 11(6) of the Income Tax Act

Analysis:
1. The High Court initially rejected the appeals based on the judgment in Lissy Medical Institution v. Commissioner of Income Tax, where it was held that a charitable institution claiming expenditure for asset acquisition as application of income for charitable purposes cannot claim further depreciation on the same asset. However, the counsel for the assessee highlighted a later Supreme Court judgment in Commissioner of Income Tax v. Rajasthan and Gujarati Charitable Foundation, which led to the reconsideration of the judgment.

2. The subsequent Supreme Court judgment affirmed the decision of the Bombay High Court, stating that the view taken by most High Courts aligns with the principles of law. It was noted that the amendment in Section 11(6) of the Income Tax Act, effective from the assessment year 2015-2016, has a prospective nature. The Supreme Court's decision allowed the claim of the assessee, emphasizing that Section 11(6) applies prospectively. As the assessment years in the present appeals were prior to 2015-2016, the appeals were allowed in favor of the assessee.

3. The Supreme Court's detailed examination of the case in the subsequent judgment clarified that while the earlier judgment did not delve into the merits, the later judgment considered and allowed the assessee's claim. The retrospective effect of Section 11(6) from 2015-2016 onwards was emphasized, leading to the allowance of the appeals in favor of the assessee and against the Revenue. The judgment concluded by allowing the Income Tax Appeals with no costs imposed.

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