TaxTMI 
TaxTMI 
2022 (6) TMI 127
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....ct, 1961(hereinafter referred to as the "Act") pertaining to Assessment Year (A.Y) 2014-15. 2. The solitary issue in the present appeal relates to disallowance of claim of depreciation amounting to Rs. 32,70,994/- in the background of the facts that the assessee is a charitable trust registered as such u/s. 12AA of the Act and the depreciation was denied for the reason that the assessee had claimed the investment in fixed assets, to which the depreciation related, as application of its income u/s 11 of the Act while as per the Revenue the claim of depreciation in the subsequent years therefore tantamounted to double deduction. The relevant findings of the A.O. at Para 3.2 of the order is as under: 3.2 In the case of a trust the ....
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....ntention of assessee that it is not double deduction is not tenable. The assessee has not claimed that the said assets were not claimed as application. Therefore the action of AO in disallowing the deduction of depreciation, being double deduction, calls for no interference. The ground of appeal no 1 is rejected. No argument have been advanced in support of the ground of appeal no. 2. The addition is therefore sustained. Ground of appeal is rejected. 4. The ground raised by the assessee challenging the order of the ld. CIt(A) in this regard is as under: 1.0 The Learned Commissioner of Income Tax (Appeals)- 2, Rajkot has erred in law and facts in disallowing claim of depreciation of Rs. 32,70,994/-, which may kindly allo....
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....ssee, categorically holding that the assessee is entitled to the same. We have noted that the Hon'ble Apex Court has taken note of the amendment to the Act in this regard in Section 11 (6) vide Finance Act 2/2014,denying claim of depreciation in such circumstances and has held the same to be prospective in nature, with effect from assessment year 2015-16. The relevant findings of the Hon'ble Apex Court in the regard is as under: 1. These are the petitions and appeals filed by the Income Tax Department against the orders passed by various High Courts granting benefit of depreciation on the assets acquired by the respondents-assessees. It is a matter of record that all the assessees are charitable institutions registered under Sectio....
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....tion 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 with the Commissioner of Income Tax, Pune. The assessee derived income from the temple property which was a Trust property. During the course of assessment proceedings for assessment years 1977-78, 1978-79 and 1979-80, the assessee claimed depreciation on the value of the building @2½% and they also claimed depreciation on furniture @ 5%. The question which arose before the Court for determination was :....
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.... 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 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 ....
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....quently, 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 no need to interfere with the same. It may be mentioned that most of the High Courts have taken the aforesaid view with only exception thereto by the High Court of Kerala which has taken a contrary view in 'Lissie Medical Institutions v. Commissioner of Income Tax'. It may also be mentioned at this stage that the legislature, realising that there was no specific provision in this behalf in the Income Tax Act, has made a....