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TMI Blog2014 (2) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... ishing the principle that double deduction is not allowable – the order of the AO and CIT(A) set aside and the claim of the depreciation is allowed – Decided in favour of Assessee. - ITA.No.1272/Hyd/2013 - - - Dated:- 7-2-2014 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Petitioner : Mr. I. Rama Rao For the Respondent : Mr. B. Yadagiri ORDER Per B. Ramakotaiah, A.M. This is an assessee's appeal against the Order of the CIT(A)-IV, Hyderabad dated 22.08.2013. The issue involved in this appeal is with reference to the claim of depreciation of Rs.7,29,036/- disallowed by the A.O. and treated as income, on the reason that assessee's assets have been allowed as application of income and so claim of depreciation is a double deduction. 2. Briefly stated, the assessee is a society registered under section 12AA of the Act and is a parent body of State Sports Bodies having 53 disciplines in Andhra Pradesh. The assessee filed return of income on 30.09.2008 showing excess of income over expenditure at Rs.87,760/-. Assessee has shown total voluntary contributions as the income at Rs.2,55,92,086/- and claimed amount applied to charitable purpose of Rs.2,55,04,32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 472 (Del.) and DCIT (Exemption) vs. Adi Sankara Trust 46 SOT 230 (Cochin) were not approved by the respective High Courts and in fact, this issue was covered elaborately by the Hon'ble Punjab and Haryana High Court in the case of CIT vs. Manav Mangal Society 328 ITR 421 (P H) (HC) and brought to our notice that the Special Leave Petition filed by the department has been dismissed by the Hon'ble Supreme Court as reported in 328 ITR (ST) 9. It was submitted that the Hon'ble Delhi High Court in the case of DIT vs. Vishwa Jagriti Mission ITA.No.140/2012 dated 29.03.2012 has analysed the entire gamut of case law and held that assessee can claim depreciation while arriving at the commercial profits. The Hon'ble Delhi High Court has also distinguished various judgments, relied upon by the learned CIT(A) while dismissing the assessee's appeal. 6. Learned D.R. however, relied on the decision of the Coordinate Bench of the Tribunal in the case of DIT vs. Audi Sankara Trust 46 SOT 230 and also decision of Delhi Tribunal in the case of Mahila Sidh Nirman Yojana vs. Inspecting Assistant Commissioner 50 ITD 472 (Del.). He also relied on the Judgment of the Hon'ble Kerala High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inate Bench, which the learned CIT(A) relied on, i.e., in the case of Sri Venkata Sai Educational Society (supra), however, did not decide the issue but restored the matter to the file of the A.O. to examine; whether assets have been claimed as exemption in earlier years on which depreciation was claimed. However, in a later order by the Coordinate Bench of ITAT, Hyderabad in the case of ADIT (Exemption)-I vs. Royal Educational Society in ITA.No. 1378/Hyd/2011 dated 28.06.2012 however, allowed the claim of depreciation and dismissed the Revenue's appeal. The Coordinate Bench relied on the decision of Hon'ble Punjab and Haryana High Court in the case of CIT vs. Manav Mangal Society 328 ITR 421 (P H) (HC) and CIT vs. Market Committee, Pipli (2011) 330 ITR 16, in arriving at that decision. Thus, there was a difference of opinion on the above issue at that point of time. 10. The Hon'ble Punjab and Haryana High Court in the case of CIT vs. Manav Mangal Society 328 ITR 421 (P H) (HC) has considered and allowed the claim of depreciation. "The amount spent on construction of School Building at Panchkula is a capital expenditure but for the purpose of section 11 it is an outgoing expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 1968, dated July 19,1968 was reproduced in the judgment in which the Board has taken the view that the income of the trust should be understood in its commercial sense. The circular is as under:- "Where the trust derives income from house property, interest on securities, capital gains, or other sources, the word 'income' should be understood in its commercial sense, i.e., book income, after adding back any appropriations or applications thereof towards the purpose of the trust or otherwise, and also after adding back any debits made for capital expenditure incurred for the purposes of the trust or otherwise. It should be noted, in this connection, that the amounts so added back will become chargeable to tax u/s. 11(3) to the extent that they represent outgoings for purposes other than those of the trust. The amounts spent or applied for the purposes of the trust from out of the income computed in the aforesaid manner, should be not less than 75 per cent. Of the latter, if the trust is to get the full benefit of the exemption u/s. 11(1)." 12. A similar view was earlier expressed by the Andhra Pradesh High Court in Commissioner of Income-tax. v. Nizam's Suppl. Religious Endowm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s outgoing is not intended unless clearly expressed. The present case is not one of this type, as rightly distinguished by the CIT(Appeals). 14. Having regard to the consensus of judicial opinion on the precise question that has arisen in the present appeal, we are not inclined to admit the appeal and frame any substantial question of law. There does not appear to be any contrary view plausible on the question raised before us and at any rate no judgment taking a contrary view has been brought to our notice. In the circumstances, we decline to admit the present appeal and dismiss the same with no order as to costs". 13. Similar view was also taken by the Coordinate Bench of the ITAT, Bangalore in the case of ACIT vs. Adichunchanagiri Shikshana Trust (2013) 31 taxmann.com 157 (Bangalore - Trib.) wherein it was held that Charitable or Religious trust registered under section 12A can claim benefit under section 11 in the form of application of funds as well as depreciation under section 32 in respect of property held under the trust. The same opinion was followed by the ITAT, Bangalore Tribunal in the case of DDIT(E), Bangalore vs. Cutchi Memon Union (2013) 38 Taxman.com 276 (Bang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nothing of that sort has been done by the A.O. in the assessment order. He has simply treated the amount disallowed (of depreciation) as income of the trust and raised demand. This sort of assessment will only lead to raising of demand unnecessarily and harassing the assessees, particularly, the assessee who are in charitable activity. The Assessing Officer is advised to follow the provisions of the Act, while computing the incomes of the assessee-trust, which in this case has not been followed, as noticed from the assessment order. 18. Even the learned CIT(A) has also erred in not following the binding order of the ITAT in assessee 's own case in earlier years which was brought to the notice of the learned CIT(A). We were informed that Revenue has accepted the order of the ITAT in those years. It is all the more binding on the CIT(A) as no appeal is pending in any higher judicial forum, atleast in assessee's own case. Therefore, CIT(A) should have followed the ITAT orders on the same issue in earlier years and should not have deferred from the binding orders of the ITAT. 19. With these observations, since the principles of law are in favour of the assessee and the Coordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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