TaxTMI 
TaxTMI 
2018 (3) TMI 73
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....,29,74,728/-. Thereafter, ld. AO issued a show-cause notice to the assessee that why claim of deprecation and carried forward losses should not be disallowed. In reply, it is submitted by the assessee that depreciation and carried forward losses was rightly claimed and accordance with the provision of Income Tax law and similar claim was allowed by the ITAT in assessee's own case for Asst. Year 2008-09. But ld. AO was not agreed with the contention of the assessee. Therefore, he disallowed the claim of the assessee and made an addition of Rs. 3,52,47,500/-. 4. Against the said addition assessee preferred first statutory appeal before the ld. CIT(A) and ld. CIT(A) allowed the appeal of the assessee. 5. Now department's appeal is before us. 6. We have gone through the relevant record and impugned order. The issue of allowability of depreciation in the case of Charitable Trust has been decided by the Hon'ble Gujarat High Court in the case of CIT vs. Sheth Monilal Ranchhuddas Vishram Bhavan Trust 198 ITR 598 (Guj.) and relevant portion of the same order is reproduced as under: "The income of the assessee-trust was mainly from immovable property. For the assessment yea....
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....ground as under: "2. Assessee trust is a Charitable Trust registered with Incometax Department. Assessing Officer rejected the claim of depreciation. He relied on decision of Hon'ble Supreme Court in case of Escorts Ltd. vs. Union of India (1993) 199 ITR 43 (SC). However, facts of Escorts Ltd. are not applicable to assessee. Escorts Ltd is not a Charitable Trust. In view of above, CIT(A) allowed depreciation. Same has been opposed before us. In this regard, learned Authorized Representative relied on the decision of Hon'ble Gujarat High Court in Tax Appeal No. 933 of 2010 with 934 to 936 of 2010 in case of Director of Income Tax (Exemption) vs. Ahmedabad South Indian Association Charitable Trust, wherein Assessing Officer disallowed the depreciation. Matter travelled up to Tribunal, wherein following decision of Hon'ble Gujarat High Court in case of Commissioner of Income- Tax vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust reported in (1992) 198 ITR 598 (Guj.) decided the issue in favour of assessee. We find that in Sheth Manilal Ranchhoddas Vishram Bhavan Trust (supra) in which Court had followed earlier decision of Karnataka and Madhya Pradesh High Courts....
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....h Court in Ahmedabad South Indian Association Charitable Trust (supra) has decided the issue in favour of assessee. Thus, the issue before us i.e. allowability of depreciation of Rs. 6,47,32,014/- is decided in favour of assessee." 5. Coupled with this, it is brought to our notice that the legislature has also inserted amendment in Section 11(6) of the Act vide Finance Act (No.2) of 2014 w.e.f. 01.04.2014 to the effect that such a claim would not be admissible from prospective effect only. Learned counsel then quotes hon'ble Karnataka high court's decision in DIT(E) vs. Al- Ameen Charitable Fund Trust holding the above amendment not to be having retrospective effect. We reiterate that we are dealing with assessment year 2011-12. We therefore take into account the above legal and factual position to affirm the CIT(A)'s findings under challenge. 5. This Revenue's appeal is dismissed." 8. Hon'ble Supreme Court in the matter of CIT-III, Pune vs. Rajasthan and Gujarat Charitable Foundation Pune in Civil Appeal No.7186 of 2014 gave similar kind of relief to the assessee and relevant para of the Hon'ble Supreme Court is reproduced here as under: ....
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....e of a Charitable Trust derived form building, plant and machinery and furniture was liable to be computed in normal commercial manner although the Trust may not be carrying on any business and the assets in respect whereof depreciation is claimed may not be business assets. In all such cases, section 32 of the Income Tax Act providing for depreciation for computation of income derived from business or profession is not applicable. However, the income of the Trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the Trust. In view of the aforesatated judgment of the Bombay High Curt, we answer question No. 1 in the affirmative i.e., in favour of the assessee and against the Department. 4. Question No. 2 herein is identical to the question which was raised before the Bombay High Court in the case of Director of Income-tax (Exemption) v. Framjee Cawasjee Institute [1993] 109 CTR 463. In that case, the facts were as follows: The assessee was the Trust. It derived its income from depreciable assets. The assessee took into account depreciation on those assets in ....