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TMI Blog2013 (12) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... /2011 - - - Dated:- 7-9-2012 - Shri George George K And Shri Jason P. Boaz,JJ. For the Appellant : Smt. Sheetal Borkar, Advocate For the Respondent : Smt. Susan Thomas Jose, JCIT ORDER Per Jason P. Boaz : This appeal instituted by the assessee is directed against the order of The Director of Income-tax (Exemptions), Bangalore, dated 12.01.2011 passed under section 263 of the Act. The relevant assessment year is 2006-07. 2. The grounds of appeal raised read as follows:- 1. In law and on the facts and in the circumstances of the case, there being no error in the assessment order dated 5.12.2008 under section 143(3), the DIT erred in invoking section 263 of the Act. 2. Without prejudice, the Director of Income Tax (E) ought to have appreciated that without admitting the assessment order under section 143(3), may at best be an order prejudicial but that being not an erroneous order, the provisions of section 263 are not attracted and therefore the DIT s order is required to be set aside. 3. Without prejudice, the Director of Income Tax (E) ought to have appreciated that the appellant is a Trust; the surplus is not computed as business income; Secondly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions), amounted to double deduction. According to The Director of Income-tax (Exemptions), the Apex Court judgement in the case of Escorts Limited Another v Union of India reported in 199 ITR 143 is applicable to the facts of this case, wherein it was held that when the entire investment on the capital assets has been allowed as a deduction under section 35(2)(iv) in respect of capital expenditure on scientific research, no depreciation under section 32 on the same asset is to be allowed . The Director of Income-tax (Exemptions) therefore issued a show-cause notice proposing to disallow the deprecation amounting to Rs.1,61,04,398/- as application of funds towards objects of the trust, since according to him, it amounted to double deduction. 4. The assessee objected to invocation of revisionary jurisdiction under section 263 of the Act vide its letter dated 27/12/2010. The assessee Trust, placing reliance of the judgements of Hon ble Apex Court in the case of Malabar Industrial Co. Ltd. (243 ITR 83) and CIT v Max India Ltd. (295 ITR 282) contended that when two views are possible and the Assessing Officer had chosen one of the views, the Director of Income-tax (Exemptions) is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation amounting to Rs.1,61,04,398, after affording necessary opportunity of being heard to the assessee. 6. The assessee-trust being aggrieved by the order of The Director of Income-tax (Exemptions) is in appeal before us. 7. The learned AR submitted that the issue in question is squarely covered by the judgement of the Hon ble jurisdictional High Court in the case of (i) CIT v Society of the Sisters of St. Anne (1984) 146 ITR 28 (Kar); (ii) CIT v Institute of Banking (2003) 264 ITR 110 (Bom.) and (iii) The Director of Income-tax (Exemptions) v Framjee Cawasjee Institute (1993) 109 CTR (Bom) 463. 8. The learned DR on the other hand submitted that the recent order of the Cochin Bench of the Tribunal in the case of DDIT(E), Range -2, Ernakulam v Lissie Medical Institutions in ITA No.1010/Coch/2008 Co. No.6/COch/2009 is directly on the issue. The Cochin Bench of the Tribunal held that when cost of an asset is allowed as an application of income towards objects of the trust, depreciation in respect of the same asset cannot be allowed as a deduction in order to arrive at the income of the trust. It was submitted by the learned DR that the Cochin Bench order of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act. The object of the assessee was charitable in nature. The income of the assessee was exempt u/s 11 of the I T Act. The assessee had claimed depreciation which was rejected by the Assessing Officer on the ground that capital expenditure incurred during the accounting year was allowed as a deduction from the income of the assessee. Further, the assessee had claimed depreciation on furniture and fixtures to the tune of Rs.49,453/- at 10% of the written down value which was disallowed by the Assessing Officer on the ground that the said assets had been received by the assessee on transfer from National Institute of Bank Management. That institute was a charitable trust. Its income was also exempt u/s 11 of the I T Act. The Assessing Officer did not allow depreciation on fixtures and furniture on the ground that full deduction had been allowed in respect of capital cost of furniture and fixtures and if the depreciation was allowed, as claimed by the assessee, it would result in double deduction. The assessee carried the matter in appeal and the appellate authority decided the matter in favour of assessee. The decision of the appellate authority was confirmed by the Tribunal. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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