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TMI Blog2013 (12) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... 478 and also claimed depreciation on assets amounting to Rs.1,13,93,492 as application of funds towards the objects of the Trust. The DIT (E) was of the view that this amounts to double deduction and following the judgment of the Hon'ble Supreme Court in the case of Escorts Ltd & Anr. v/s Union of India, (199 ITR 43) set aside the assessment passed u/s 143(3) of the Act and directed the Assessing Officer to disallow the depreciation after affording an opportunity of hearing to the assessee. The reasoning of the CIT for holding so reads as follows: "The contentions/submissions of the assessee trust are carefully considered and are not acceptable for the following reasons: a) The decisions relied on by the assessee as detailed in Para No.2 (a) above are distinguishable. The issue of double deduction was not before these High Courts. Therefore, the decisions are not applicable to the facts of the present case. In the case of CIT Vs Society of the Sisters of.Anne 146 ITR 28 (KAR) also the issue involved was whether the Tribunal was correct in holding that the amount of depreciation debited to accounts of a charitable institution is to be deducted to arrive a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of Kochi ITAT and has dealt with the issue of depreciation in detail. The Honble Kerala High has held that the various decisions of the other high courts have not dealt with the issue of double deduction and has upheld the view of the Department. Before the Hon'ble Kerala High Court, the department's Standing Counsel has also produced clarification issued by the CBDT which is as under: "The Central Board of Direct Taxes is of the considered view that where an assessee has acquired an. asset through application of income and has also claimed this amount as expenditure in its income expenditure account, depreciation on such asset would not be allowable to the assessee. Such notional statutory deductions like depreciation, if c(aimed as deduction white computing the, income of the 'the property held under trust' under the relevant head of income, is required to... be added back white computing :the income or the purpose of application in the income expenditure account. This would imply that a correct figure of surplus from the, trust property is reflected in' the Income and Expenditure account of the Trust to determine the income for the purpose of application under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cutchi Memon Union in ITA No.878/Bang/2012 dated 14.8.2013. It was submited that the above two orders of the Tribunal after having considered the various judgments of the High Courts and has decided the matter in favour of the assessee. The learned DR, on the other hand strongly relied on the reasoning given by the DIT (E) in passing his revisionary order u/s 263 of the Act. 5. We have heard the rival submissions and perused the relevant material on record. As rightly pointed out by the learned Counsel for the assessee, the Bangalore Bench of the Tribunal in the case of Karnataka Reddy Janasangha in ITA No.220/Bang/ 2011 (in which one of us is a party) after referring to the precedent on the subject has decided the issue in favour of the assessee. The relevant findings of the Tribunal reads as follows: "9. We have heard the rival submissions and carefully perused the materials on record. The income of the trust is required to be computed under section 11 on commercial principles, without reference to the heads of the income specified under section 14 of the Act. In other words, it is to be computed as per the book income and not total income as defined in section 2(4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee 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. 9.3 On reference, the Bombay High Court held "that the Tribunal was right in law in directing the Assessing Officer to allow depreciation on the assets, the cost of which had been fully allowed as application of income under section 11 in the past years". 9.4 The Hon'ble jurisdictional High Court in the case of CIT v Society of the Sisters of St. Anne 146 ITR 26 had categorically held that the amount of depreciation debited to the accounts of a charitable institution is to be deducted to arrive at the available income for the purpose of application to ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration, or obsolescence. Since income for the purposes of section 11(1) has to be computed in normal commercial manner, the amount of depreciation debited in the books is deductible while computing such income. It was so held by the Hon'ble Karnataka High Court in the case of CIT Vs. Society of Sisters of St. Anne 146 ITR 28 (Kar). It was held in CIT vs. Tiny Tots Education Society (2011) 330 ITR 21 (P&H), following CIT vs. Market Committee, Pipli (2011) 330 ITR 16 (P&H) : (2011) 238 CTR (P&H) 103 that depreciation can be claimed by a charitable institution in determining percentage of funds applied for the purpose of charitable objects. Claim for depreciation will not amount to double benefit. The decision of the Hon'ble Supreme Court in the case of Escorts Ltd. 199 ITR 43 (SC) have been referred to and distinguished by the Hon'ble Court in the aforesaid decisions. 21. The issue raised by the revenue in the ground of appeal is thus no longer res integra and has been decided by the Hon'ble Punjab & Haryana High Court in the case of CIT v. Market Committee, Pipli, 330 ITR 16 (P&H). The Hon'ble Punjab & Haryana High Court after considering several decisions on that issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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