2018 (6) TMI 1040

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.... as application of income. 2. We have heard the ld. Counsel for both sides. 3. Assessing Officer had denied the claim of depreciation made by the assessee which is a trust registered u/s.12A(a) of the Income Tax Act, 1961 (in short '' the Act'') relying on the judgment of Kerala High Court in the case of M/s Lissie Medical Mission vs. CIT, 348 ITR 344. Ld. Assessing Officer had taken a view that allowing a claim of depreciation on assets, cost of which were claimed as application of income would result in double deduction. Ld. Commissioner of Income Tax (Appeals) on the other hand had held in favour of the assessee. The issue in our opinion is no more resintegra, in view of judgment of Hon'ble Apex in the case of CIT vs. Rajasthan and Guj....

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....primarily followed the judgment of the Bombay High Court in 'Commissioner of Income Tax v. Institute of Banking Personnel Selection (IBPS)' [(2003) 131 Taxman 386 (Bombay)].In the said judgment, the contention of the Department predicated on double benefit was turned down in the following manner: 3. As stated above, the first question which requires consideration by this Court is: whether depreciation was allowable on the assets, the cost of which has been fully allowed as application of income under section 11 in the past years? In the case of CIT v. Munisuvrat Jain 1994 Tax Law Reporter, 1084 the facts were as follows. The assessee was a Charitable Trust. It was registered as a Public Charitable Trust. It was also registered wi....

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....y under section 32 of the Income Tax Act and not under general principles. The Court rejected this argument. It was held that normal depreciation can be considered as a legitimate deduction in computing the real income of the assessee on general principles or under section 11(1)(a) of the Income Tax Act The Court rejected the argument on behalf of the revenue that section 32of the Income Tax Act was the only section granting benefit of deduction on account of depreciation. It was held that income 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 ma....

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....pplication 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 cannot be taken into account. This view of the Tribunal has been confirmed by the Bombay High Court in the above judgment. Hence, Question No. 2 is covered by the decision of the Bombay High Court in the above Judgment. Consequently, Question No. 2 is answered in the Affirmative i.e., in favour of the assessee and against the Department." After hearing learned counsel for the parties, we are of the opinion that the aforesaid view taken by the Bombay High Court correctly states the principles of law and there is ....