9911796707
TMI Blog2012 (4) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... cquisition of assets as application of income for charitable purposes under Section 11(1)(a) and claims depreciation then in order to reflect its true income, the assessee should write back in the accounts the depreciation amount to form part of the income -assessee cannot be taken by surprise by disallowing depreciation which was being allowed for several years and to demand tax for one year after making dis-allowance - assessee should be allowed to write back the depreciation for this year and even for previous and then allow the same to be carried forward for application for subsequent years - appeal in favour of Revenue but by granting the relief to the assessee . - ITA.No. 42 of 2011 - - - Dated:- 17-2-2012 - MR.JUSTICE C.N.RAMAC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious year. According to the Assessing Officer, when the assessee claims expenditure for acquisition of assets as application of income of the charitable trust for charitable purposes, then the assessee is not entitled to claim depreciation in the computation of income. In other words, according to the Assessing Officer, when acquisition of assets is treated as application of income for charitable purposes, the value of assets stands fully written off, and over and above, if depreciation is allowed, the same will result in double deduction of capital expenditure leading to violation of the provisions of Section 11(1) which requires availability of actual income for charitable purposes. Even though the appeal filed against the assessment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books in this fashion. 3. Learned counsel for the assessee has relied on the following decisions of various High Courts in their favour. (1) Rao Bahadur Calavala's case, reported in 1982 (135) ITR 485 (Mad.) (2) CIT v. Institute of Banking, reported in 264 ITR 110 (Bom.) (3) CIT v. Society of Sisters of St.Anne, reported in 146 ITR 28 (Kar) (4) CIT v. Raipur Pallotine Society, reported in 180 ITR 579 (MP) (5) CIT v. Sheth Ranchoddas Trust, reported in 198 ITR 598 (Guj.) (6) CIT v. Manav Mangal Society, reported in 2010 (328) ITR 421 (P H); SLP filed by department against this decision dismissed by the Supreme Court in 2010 (328) ITR (St.) 9. (7) CIT v. Market Committee Pipli, reported in 2011 (330) ITR 16 (P H) (8) CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is entitled is the case pressed before us by the Senior counsel appearing for the assessee. We have no doubt in our mind that business income of charitable trust also has to be computed in the same manner as provided u/s 29 of the Income Tax Act. However, the issue that requires consideration is when the expenditure incurred for acquisition of depreciable assets itself is treated as application of income for charitable purposes u/s 11(1)(a) of the Act, should not the cost of such assets to be treated as nil for the assessee and in that situation depreciation to be granted turns out to be nil. However, if depreciation provided is claimed on notional cost after the assessee claims 100% of the cost incurred for it as application of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould reduce the possibility of revenue leakage which may be a cause for generation of black money. 7. From the above what is clear is that Central Board also confirms the view taken by us that after allowing cost of acquisition as application of income for charitable purposes and over and above if depreciation is claimed on such assets, so much of the depreciation allowed will generate income outside the books of account and unless the depreciation is simultaneously written back by the assessee as income available for application for charitable purposes in the next year, there will be violation of S.11(1)(a) of the Act. We find that the Hon'ble Supreme Court has clearly stated this position, though not in the same context, In the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
