2011 (2) TMI 1401
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....f such income for charitable purposes and that various High Courts held that depreciation is a proper deduction in computing income of a charitable institution. III. The CIT(A) ought to have appreciated that the Parliament gave effect to the decisions of the Supreme Court in Escorts Ltd. v. Union of India [1992] 199 ITR 43(SC) and CIT v. Hico Products P Ltd. [1999] 247 ITR 797 (SC), by inserting sub-clause (iv) in section 35(2). The said section as well as the said decisions has no application to a charitable institution assessed under the special provisions of section 11 to 13. IV. The CIT(A) ought to have appreciated that the Bombay High Court in CIT v Institute of Banking 264 ITR 110 upheld the allowance of depreciation claim to charitable institutions even after pronouncement of the above decisions by the Supreme Court. V. The CIT(A) ought to have followed the decision of the Jurisdictional High Court in Govindu Naicker Estate v CIT (248 ITR 368) and other decisions of various High Courts and allowed the benefit of carry forward of excess application to subsequent years." 4. The claim of depreciation in computing the income under section 11(1) of the Income Tax Act a....
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.... reasons for disallowance for respective years are given as under: (a) The return of income filed for (i) Assessment Year 2004-05 declares NIL income and gross receipts of Rs. .18,95,45,440/- in which the claim of depreciation made at Rs. .2,72,85,356/- which was completed as "No Demand" while disallowing the depreciation claim of the assessee, the Assessing Officer has stated that when the assessee had claimed the cost of addition to assets as application of funds, claim of depreciation on the same assets could not be allowed. (b) The return of income filed for (i) Assessment Year 2005-06 declares NIL income and gross receipts of Rs. . 22,17,53,309/- in which the claim of depreciation made at Rs. .2,82,17,782/- which was completed as "No Demand" while disallowing the depreciation claim of the assessee, the Assessing Officer has stated that when the assessee had claimed the cost of addition to assets as application of funds, claim of depreciation on the same assets could not be allowed. (c) The return of income filed for (i) Assessment Year 2006-07 declares NIL income and gross receipts of Rs. .21,71,47,737/- in which the claim of depreciation made at Rs. . 2,64,72,392/- w....
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.... appeal was rejected. The Tribunal, however, took the view that when the ITO stated that full expenditure had been allowed in the year of acquisition of the assets, what he really meant was that the amount spent on acquiring those assets had been treated as "application of income" of the trust in the year in which the income was spent in acquiring those assets. This did not mean that in computing income from those assets in subsequent years, depreciation in respect of those assets can not be taken into account. This view of the Tribunal has been confirmed by the Bombay High Court in the above judgement i.e. Director of Income-tax(Exemption) v. Framjee Cawasjee Institute [1993] 109 CTR 463. Hence, this issue was covered by the decision of the Bombay High Court in the above judgement. Consequently, this issue was answered in the affirmative i.e. in favour of the assessee and against the Department. 10. The ratio of the above mentioned decision reported in 264 ITR 110 (2003) in the case of CIT vs. Institute of Banking, wherein the Bombay High Court has held that the Tribunal was right in law in directing the Assessing Officer to allow depreciation on the assets the cost of which ha....
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....OL-550-High Court-P&H-IT vide order dt.28th July, 2010, under similar facts, has decided the identical issue in favour of the assessee and while enclosing the copy of the judgement of Hon'ble Bombay High Court as well as Hon'ble Punjab & Haryana High Court, Ld. Counsel for the assessee has strongly pleaded that since the issue is squarely covered in favour of the assessee, not by one High Court but by second High Court also in which Supreme Court decision's case of Escort Ltd. Vs. UOI and others has been discussed, has concluded to hold the question proposed in favour of the assessee, therefore being covered the matter, order of the CIT(A) for all the years are liable to be upheld. It was thus urged for upholding the impugned orders and for dismissing all the appeals of the Revenue. 10. After hearing both the sides, considering the material as well as case laws cited by the rival side, we find that in the recent judgement of the Hon'ble High Court of Punjab & Haryana in the case of CIT Vs. M/s.Tiny Tots Education Society (supra) has concluded to decide the issue in favour of the assessee as per paras 4 to 7 as under:- "4. Ld. Counsel for the Revenue submits that in view of ju....