TaxTMI 
TaxTMI 
2015 (11) TMI 590
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....ted 25- 04-2012 for the Assessment Year 2010-11), vide his order dated 06-01-2014, which is quite illegal, arbitrary, unjustified, unreasonable, factually incorrect, contrary to the provisions of law, bad in law and as such the same should be allowed, the said disallowance be deleted and the said assessment order be directed to be rectified accordingly. 2. On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) -V, Bangalore, has erred in considering advance fee received k for subsequent year (previous year 2010-11) relevant to assessment year 2011-12 from students at Rs. 2,81,90,128/- as the income of previous year 2009-10 itself and directing AO to recompute the income of appellant trust, application of income for exemption and surplus, if any, vide his order dated 06-01-2014 for the Assessment Year 2010-11 which, in view of the facts, Audited Balance Sheet and Accounting Standards, Accepted Accounting Principles and the provisions of section 11 and that too, without giving any opportunity to your appellants and as such the same is quite illegal, arbitrary, unjustified. Unreasonable, factually incorrect, contrary to the provisions of....
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....as submitted that though the CIT(A), on principle, has accepted the claim of depreciation, however, while giving direction to the AO, he has held that addition to the fixed assets during the year shall be excluded for the purpose of depreciation. The learned AR of the assessee has relied upon the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Institute of Banking Personnel Selection (264 ITR 110) and submitted that the Hon'ble High Court has taken a view that depreciation was allowable even on those assets whose actual cost has been allowed as deduction being application of income u/s 11 in computing income of the earlier years. The learned AR of the assessee has then relied upon the judgment of the Hon'ble jurisdictional High Court in the case of CIT vs. Society of Sisters of St.Anne (146 ITR 28) and submitted that the Hon'ble High Court has held that depreciation is a necessary deduction for preserving the corpus of the trust for deriving the income. Therefore, the amount of depreciation debited to the accounts of the charitable institution is to be deducted to arrive at the income available for application to charitable and religious purpose. The learned AR....
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.... in computing income from those assets in subsequent years, depreciation in respect of those assets cannot be taken into account. This view of the Tribunal has been confirmed by, the Bombay High Court in the above judgment. Hence, Question No. 2 is covered by the decision of the Bombay High Court in the above judgment. Consequently, Question No. 2 is answered in the affirmative i.e., in favour of the assessee and against, the department." We further note that this view has been reiterated by the Hon'ble High Court in the case of Lilavathi Kirthilal Mehta Medical Trust & others (229 Taxman 276) wherein it has been held that prior to amendment vide Finance Act,2014 w.e.f.1/4/2015 depreciation on capital asset would be allowed as deduction in computing income under section 11. 9. We further note that the co-ordinate bench of this Tribunal in the case of Adichunchangiri Sikshana Trust (supra) has held in paragraphs 13 & 14 as under: "13. We have heard the rival submissions and perused the materials on record. The Tribunal in the assessee's own case for the assessment year 2006-07 at paragraph 7 of its order has decided the issue in favour of the assessee. The relevant find....
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....ny, due from students at the end of the accounting year is also recognized as income of the year though the same has not been received during the year. The learned AR of the assessee has referred to the accounting standard 9 issued by the Institute of Chartered Accountants of India and submitted that as per appendix 2 to, the accounting standard 9, the revenue arising from the tuition fee should be recognized over the period of instruction. If the academic year of the school and the accounting years are different then, it is possible that some fees may be received in advance or is outstanding at the end of the accounting year. The assessee is showing the advance fee received from students in the balance-sheet. Similarly, the expenses that arise in the course of ordinary activities of the school are debited only to the extent of the financial year relevant to the assessment year on the basis of the criteria and principle of accrual. Thus, under the accrual basis of accounting, the expenses are recognized on the basis of identification of the revenue transaction where the cost directly associated with the revenue recognized during the relevant period are considered as expenses and ch....
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....the Act. 12. There is no dispute that the assessee has shown the gross receipt/income at Rs. 14,57,81,212/- for the year under consideration. Apart from this amount of receipt, the assessee has also shown a sum of Rs. 2,81,90,128/- on account of advance fee in the balance-sheet as on 31/3/2010. While completing the assessment u/s 143(3), the AO has accepted this amount of advance fee being a balance-sheet item as pertaining to the future period being the next academic session. The CIT(A), while deciding the appeal of the assessee, has also enhanced the assessment by directing the AO to treat this advance fee received by the assessee pertaining to the next academic session which is outside the previous year relevant to assessment year under consideration as income of the year under consideration. The findings of the CIT(A) are given in para.15.3 as under: "15.3 The balance sheet as on 31.3.2010 clearly shows that the appellant received Rs. 281,90,128/- on account of advance fee, which has not been treated as income of the trust. In my considered view, the advance fees (relating to future periods/terms or academic session) should be treated as income of the appellant from prope....