TaxTMI 
TaxTMI 
2016 (3) TMI 143
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....lowing the appeal of the assessee. i) The Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in deleting the disallowance of depreciation of Rs. 18,93,672/- made by the Assessing Officer. ii) The Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in allowing depreciation on the assets, the cost of which has already been allowed as a deduction on account of application on income as this would amount to double deduction in view of the decision of the Hon'ble Supreme Court in the case of Escorts Ltd., 199 ITR 43 and the decision of Kerala High Court in the case of Lissie Medical Institutions V/s. Commissioner of Income Tax, Kochi, 348 ITR 344. iii) Whether, on the facts and in ....
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....gaged in any business, the income is not assessable under this head and hence, depreciation is not allowable for this reason also. In this regard, we would like to observe that it was held by Hon'ble Gujarat High Court and Hon'ble Bombay High Court that although, the income of the assessee trust does not fall under the head income from business but still such income has to be computed on the basis of commercial principles and therefore, depreciation has to be allowed. In the case of CIT Vs Seth Maniklal Ranchoddas Vishram Bhavan Trust (supra), Hon'ble Gujarat High Court has agreed with the view taken by Hon'ble Madras High Court on this issue. Hon'ble Madras High Court has taken this view in the case of CIT Vs Rao Bahadur Calavala Cunnan Ch....
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....ainly to build fund to facilitate replacement of asset when it is worn out because of wear & tear or obsolesce and hence, it cannot be alleged that there will be leakage if depreciation is allowed. Regarding various submissions to say that the judgment of Hon'ble Gujarat High Court is not applicable in the present case, we do not find any in the same because we have already seen that granting of exemption u/s 11 and then depreciation u/s 32 does not amount to granting double deduction because exemption u/s 11 is not a deduction but exemption of an income from the liability of tax on fulfilment of certain conditions. For the same reasons, reliance placed on 211 ITR 293, 211 ITR 635 and 155 ITR 120 is misplaced because there is no do....
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....ing that, while computing income under section 11(1) (a) of the Income tax Act, 1961, depreciation has to be allowed? 2. Whether the Tribunal was right in law in holding that, having regard to the scheme of the Act, 'income' referred to in section 11(1) (a) of the Act is to be computed not in accordance with the provisions of the Act but in accordance with the normal rules of accountancy under which the depreciation has to be allowed while computing such income under section 11 (1) (a) of the Act?" Hon'ble High Court answered the questions in the affirmative holding that income from the property held under the Trust should be computed in accordance with the normal rules of accountancy in which depreciation on house propert....
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....on to charitable purposes then 25% of the receipts would be treated as deficiency which should be subjected to tax and 15% is allowed to be carried forward. In our considered view, Hon'ble Bombay and Gujarat High Court in the above referred cases were concerned with the computation of income of the trust in the normal commercial sense and had not considered whether the amount of depreciation would be considered as application to arrive at 85% of the receipts in addition to investment in the asset already allowed as application in an earlier year. The allowance of depreciation as further application of receipts in subsequent year would apparently be a double application which, in our humble view, would be apparently inconsistent as not so pr....