Tribunal allows appeal, emphasizes following judicial precedents

The Tribunal allowed the appeal of the assessee, directing that the depreciation claimed be allowed. The Tribunal emphasized the importance of following binding precedents set by the Hon'ble jurisdictional High Court and the Hon'ble Supreme Court, stressing judicial discipline.

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Issues Involved:
1. Disallowance of depreciation claimed by the assessee trust.
2. Retrospective application of the amendment in Section 11(5) of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Disallowance of Depreciation Claimed by the Assessee Trust:
The primary issue in this appeal is the disallowance of depreciation amounting to Rs. 15,04,010 out of the total claim of Rs. 19,69,869 by the Ld. CIT(A). The assessee trust argued that the assets for which depreciation was claimed were acquired in earlier years, and their cost had been fully shown as application of income in those years. The assessee contended that for determining the income of a charitable trust eligible for exemption under Section 11, income should be construed in a commercial sense, which includes the deduction of depreciation on the assets of the trust. This position was confirmed by the CBDT Circular No. 5.P(LXX-6) dated 19.06.1968.

The Ld. CIT(A) disallowed the claim based on the amendment in Section 11 of the Act effective from 01.04.2015, which states that depreciation is to be disallowed from the assessment year 2015-16 onwards. However, the assessee argued that this amendment is prospective and not applicable to the assessment year in question (2009-10). The Tribunal noted that the Hon’ble Supreme Court in CIT Vs. Rajasthan & Gujarati Charitable Foundation (2018) 402 ITR 441 (SC) held that the amendment in Section 11(6) of the Act is effective from AY 2015-16 and is prospective in nature. Therefore, the Tribunal allowed the claim of the assessee for depreciation, following the decision of the Hon’ble Supreme Court.

2. Retrospective Application of the Amendment in Section 11(5) of the Income-tax Act, 1961:
The Ld. CIT(A) upheld the action of the AO in denying the depreciation claim on the ground that the amendment in Section 11(5) of the Act is retrospective in operation. However, the Tribunal disagreed with this view, citing the Hon’ble Supreme Court's decision that the amendment is prospective and applicable from AY 2015-16 onwards. The Tribunal emphasized that the law laid by the Hon’ble jurisdictional High Court is binding and should be followed by the lower authorities.

Conclusion:
The Tribunal allowed the appeal of the assessee, directing that the depreciation claimed be allowed. The Tribunal reiterated the importance of following the binding precedents set by the Hon’ble jurisdictional High Court and the Hon’ble Supreme Court, emphasizing judicial discipline.

Order Pronounced:
The appeal of the assessee is allowed, and the order was pronounced in the open court on 29th November 2019.

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