2017 (11) TMI 1563

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....d to appreciate the fact that the hon'ble Kerala High Court in the case of Lissie Medical Institutions v. CIT [2012] 348 ITR 344 (Ker) has held that depreciation cannot be allowed on assets, where cost of such assets has already been allowed as application of income in the year of acquisition/purchase of asset. (ii) Though the Finance Act, 2014 has amended the Income-tax Act, 1961 with regard to non-allowance of depreciation to charitable/ religious trust or institution on the value of assets which has already been allowed as application of income under section 11(1) by inserting sub-section (6) of section 11, with effect from April 1, 2015 such amendment cannot be construed as effective prospectively inasmuch as in accordance ....

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....ore, we decided to proceed with the hearing. Accordingly, the Revenue was heard. 4. On careful perusal of the orders of the lower authorities, we find that the Assessing Officer has disallowed the depreciation claimed by the assessee on the ground that it amounts to be double deduction as the assessee has claimed the exemption under section 11 of the Act. The assessee preferred an appeal before the Commissioner of Income-tax (Appeals) and the Commissioner of Income-tax (Appeals) allowed the depreciation having relied upon the judgment of CIT v. Society of the Sisters of St. Anne [1984] 146 ITR 28 (Karn). The relevant observation of the Commissioner of Income-tax (Appeals) is extracted hereunder : "7.2 Considering the facts of th....

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....re is no way to preserve the corpus of the trust for deriving the income. Accordingly, the amount of depreciation debited to the expenditure account should be deducted to arrive at the assessee's income available for application for charitable and religious purposes'. 7.4 A similar view in the matter was also taken by the hon'ble Income-tax Appellate Tribunal, Bangalore, in the case of Karnataka Reddy Janasangha v. DIT (Exemptions) in I.T.A. No. 220/Bang/2011, Karnataka State Muslim Federation v. DIT (Exemption) in I.T.A. No. 37/Bang/2013. In the case of Deputy DIT (Exemptions) v. Cutchi Memon Union [2013] 38 taxmann.com 276 (Bang), Deputy DIT (Exemption) v. Jyothi Charitable Trust [2015] 60 taxmann.com 165 (Bang), Asst....