TaxTMI 
TaxTMI 
2016 (10) TMI 493
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....w, whether the Ld. CIT(A) erred in not relying upon the decision of Hon'ble Kerala High Court in the case of Lissie Medical Institution Vs ACIT (76 DTR 372), whether it has been held that depreciation of the capital asset, is not allowable again. 4. The appellant craves leave to add, alter, modify, delete, and amend any of the grounds, as per the circumstances of the case. 5. The appellant prays leave to adduce such further evidence to substantiated its case, as the occasion may demand." 3. Facts of the case, in brief, are that the assessee is a Public Charitable Trust registered under Bombay Public Trust Act, 1950 and also registered u/s.12A of the I.T. Act. The predominant object of the trust is that of imparting Education in the field of Engineering and Management. It filed its return of income on 29- 03-2011 declaring total income at Nil. During the course of assessment proceedings the AO noted that the assessee has claimed depreciation of Rs. 2,46,56,825/- on capital assets, the cost of which had already been claimed as application of money u/s.11(1) of the I.T. Act in the preceding years. According to the AO since the cost of asset has already been al....
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....on (IBPS) 264* ITR 110 (Bombay) In this case, it has been laid down that depreciation is allowable on the assets the cost of which has been fully allowed as application of income u/s 11 in past years. (iii) CIT Vs. Society of the Sisters of St. Anne (1984) 146 ITR 28 (Karnataka) In this case, it has been laid down that for computing income for the purposes of section 11, depreciation on building has to be allowed. (iv) CIT Vs. Raipur Pallottine Society (1989) 180 ITR 579 (MP) In this case, it has been laid down that the claim of the assessee Charitable Trust in respect of depreciation on asset held by it cannot be denied on the ground that it had no business income falling u/s 28 is not justified. (v) CIT Vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust (1992) 198 ITR 598 (Gujarat) In this case, it has been laid down that income for the purpose of 11(1)(a) has 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 on house property has to be allowed. (vi) S.RM.M.CT.M. Tiruppani Trust Vs CIT 230 ITR 636 (SC) I....
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....on which is not permissible under the Act as laid down by Hon'ble Supreme Court in the case of Escorts Ltd. & Ors. Vs. Union of India (1993) 199 ITR 43 (SC). In this regard, it has been noticed that the decision relied on by the AO. is in respect of deduction of cost of an asset u/s 35 allowed as deduction for capital expenditure incurred on scientific research and further allowance of depreciation on the same asset whereas in the case under appeal, the appellant is a trust and has claimed cost of the asset as application of income u/s 11 and depreciation has been claimed in subsequent year on commercial principles. The above issue has been considered by Hon'ble Delhi High Court in the case of CIT Vs. Vishwa Jagriti Mission (A.Y.2006-07) 73 DTR 195. The relevant portion of the decision in para-13 is reproduced below - "13. The judgment of the Supreme Court in Escorts Limited Vs. Union of India (supra) has been rightly held to be inapplicable to the present case. There are two reasons as to why the judgment cannot be applied to the present case. Firstly, the Supreme Court was not concerned with the case of a charitable trust/institution involving t....
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....consecutive years of the expenditure incurred on the acquisition of the asset. The apex court observed (headnote) : "Where a capital asset used for scientific research related to the business of the assessee is also ipso - facto an asset used for the purpose of the business, it is impossible to conceive of the Legislature having envisaged a double deduction in respect of the same expenditure, one by way of depreciation under section 32 of the Income-tax Act, 1961 and other by way of allowance under section 35(1)(iv) of a part of the capital expenditure on scientific research, even though the two heads of deduction do not completely overlap and there is some difference in the rationale of the two deductions .. " 9. It was further recorded that (head note) : "There is a fundamental, though unwritten, axiom that no Legislature could have at all intended a double deduction in regard to the same business outgoing; and, if it is intended, it will be clearly expressed. In other words, in the absence of clear statutory indication to the contrary, the statute should not be read so as to permit an assessee two deductions . " In view of the above decisions ....
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.... CIT Vs. Market Committee, Pipli (AY.2005-06) 330 ITR 16 (Delhi) are AY.2006-07 & 2005-06 which are after the insertion of section 11(1)(d) w.e.f. 01/04/1989. In view of the above facts, the third contention raised by the A.O. is also rejected. It has also been noticed that recently the Hon'ble Kerala High Court in the case of Lissie Medical Institution Vs. CIT (2013) 76 DTR 372 has held that depreciation on the assets of a charitable trust is not allowable as the cost of asset is allowable as application of income. In support of the above proposition, the Hon'ble Kerala High Court has relied on the decision in the case of Escorts Ltd. & Ors. Vs. Union of India (1993) 199 ITR 43 (SC). The contention raised by the A.O, is supported by the above referred decision of Hon'ble Kerala High Court whereas the contention of the appellant is supported by the decisions of Hon'ble Bombay High Court, Karnataka High Court, Gujarat High Court, Madhya Pradesh High Court, Punjab & Haryana High Court and Delhi High Court. It is settled law that where two views are possible and where different decisions of separate High Courts are available then the decision of the Court in f....
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....ssue had come up before the Tribunal in the case of DCIT Vs. Sanjeevan Vidyalaya Trust (Supra) wherein the Tribunal after considering the decision of Hon'ble Supreme Court in the case of Escorts Ltd. and Others (Supra) and following the decision of the Hon'ble Bombay High Court in the case of DCIT Framjee Cawasjee Institute (Supra) has allowed the claim of depreciation in case of relevant asset which has already been allowed as application of income for charitable purposes. The relevant observation of the Tribunal from Para 4 onwards read as under : "4. In brief, the facts are that the respondent-assessee is a trust which is running educational institutions and is registered under section 12A(a) of the Act with the Commissioner of Income-tax. While finalising the assessment, the Assessing Officer noticed that the assessee had claimed depreciation of Rs. 59,44,712/- on assets whose cost had been treated as application of income in the past years. As per the Assessing Officer, such depreciation claim was not allowable, since 100% of the corresponding capital expenditure was already allowed as application of income to the assessee in earlier year. Therefore, the assessee'....