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TMI Blog2015 (10) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... Karnataka High Court in the cases of CIT v. Institute of Banking [2003 (7) TMI 52 - BOMBAY High Court ] and CIT v. Society of the Sisters of St. Anne [1983 (8) TMI 44 - KARNATAKA High Court ] respectively and also this Tribunal in the assessee's own case, we sustain the order of the Commissioner of Income- tax (Appeals) on this issue to held that Depreciation should be allowed even on assets, the cost of which had been allowed as exempt under section 11 in the preceding years - Decided against revenue. - ITA.No.1930/Mds/2014 - - - Dated:- 31-10-2014 - SHRI A.MOHAN ALANKAMONY AND SHRI CHALLA NAGENDRA PRASAD, JJ. For the Appellant : Mr. Guru Bhashyam, JCIT For the Respondent : Mr. R.K.V.Sundar, Advocate ORDER Challa Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med depreciation while computing its income for the respective assessment years. The Assessing Officer was of the opinion that when the cost of addition to assets was claimed by the assessee as application of income for the respective assessment years, the assessee could not further claim depreciation on the very same assets. Reliance was placed on the decision of the hon'ble apex court in the case of Escorts Ltd. v. Union of India [1993] 199 ITR 43 (SC). Appeals of the assessee before the Commissioner of Income-tax (Appeals) were unsuccessful. According to the Commissioner of Income-tax (Appeals), the decision of the Delhi Bench of this Tribunal in the case of Mahila Sidh Nirman Yojna v. IAC [1994] 50 ITD 472 (Delhi) as well as the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the total income as defined in section 2(45) of the Act. This position is confirmed in CIT v. Trustee of H. E. H. The Nizam's Supplemental Religious Endowment Trust [1981] 127 ITR 378 (AP), CIT v. Rao Bahadur Calavala Cunnan Chetty Charities [1982] 135 ITR 485 (Mad) and CIT v. Estate of V. L. Ethiraj [1982] 136 ITR 12 (Mad). This position is also confirmed by the Central Board of Direct Taxes vide its Circular No. 5-P (LXX-6) dated June 19, 1968. The concept of commercial income necessarily envisages deduction of depreciation on assets of the trust. Depreciation on assets of a trust is to be deducted for the purpose of calculating income of a trust. This is because of the fact that the concept of commercial income necessarily envisage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lal Ranchhoddas Vishram Bhavan Trust [1992] 198 ITR 598 (Guj) it was held by the hon'ble Gujarat High Court that depre ciation should be allowed while computing such income under section 11(1)(a) of the Act. The Assessing Officer's stand that 'provision of computation of income under section 11' does not contain any provision which may entitle an assessee to claim weighted deduction for any expenses incurred is not acceptable as section 11 provides that the income of the trust is to be computed on commercial basis, i.e., as per normal accounting principles. Normal accounting principles clearly provide for deducting depreciation to arrive at income. Income so arrived at (after deducting depreciation) is to be applied for char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l while allowing the claim of the assessee has considered the decisions of the hon'ble Bombay High Court in the case of CIT v. Institute of Banking [2003] 264 ITR 110 (Bom), the hon'ble Karnataka High Court in the case of CIT v. Society of the Sisters of St. Anne [1984] 146 ITR 28 (Karn), the hon'ble Madhya Pradesh High Court in the case of CIT v. Raipur Pallottine Society [1989] 180 ITR 579 (MP) and the hon'ble Gujarat High Court in the case of CIT v. Sheth Manilal Ranchhoddas Vishram Bhavan Trust [1992] 198 ITR 598 (Guj). The co-ordinate Bench observed that the hon'ble Bombay High Court in the case of CIT v. Institute of Banking [2003] 264 ITR 110 (Bom) held that depreciation should be allowed even on assets, the cost ..... X X X X Extracts X X X X X X X X Extracts X X X X
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