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TMI Blog2011 (2) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... ), Tiruchirapalli dated 24.12.2009, 24.12.2009 and 31.12.2009 read with three different corrigendum all dated 12.01.2010 for the assessment years 2005-06, 06-07 and 07-08 respectively. 2. These appeals involve identical facts and common issues, therefore, being heard together and disposed of by this single order for the sake of convenience. 3. In all the three appeals of the assessee, following common effective grounds No. II to V have been raised: II. The CIT(A) failed to appreciate the difference between the revenue deduction in the computation of income and a special exemption granted by the Act based on application of such income for charitable purposes and that various High Courts held that depreciation is a proper deduction in computing income of a charitable institution. III. The CIT(A) ought to have appreciated that the Parliament gave effect to the decisions of the Supreme Court in Escorts Ltd. v. Union of India [1992] 199 ITR 43(SC) and CIT v. Hico Products P Ltd. [1999] 247 ITR 797 (SC), by inserting sub-clause (iv) in section 35(2). The said section as well as the said decisions has no application to a charitable institution assessed under the special p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar issue arose in the appeals of the Department, which has been discussed, considered and decided by the B Bench of the Tribunal (in which one of us is party) and vide order dated 18.10.2010 in the case of DDIT (Exemptions) v. M/s. St. John s Educational Trust (supra), the same has been considered and discussed to determine from para 3 onwards to take decision in favour of the assessee and relevant portion of the order is reproduced as under: 3. Briefly, the facts are that the assessee is a trust running educational trust and registered u/s. 12A(a) of the Income Tax Act, 1961. 4. The gross receipts, amounts of depreciation claimed and reasons for disallowance for respective years are given as under: (a) The return of income filed for (i) Assessment Year 2004-05 declares NIL income and gross receipts of Rs. .18,95,45,440/- in which the claim of depreciation made at Rs. .2,72,85,356/- which was completed as No Demand while disallowing the depreciation claim of the assessee, the Assessing Officer has stated that when the assessee had claimed the cost of addition to assets as application of funds, claim of depreciation on the same assets could not be allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Year 2004-05 and CIT(A) has concluded to decide the appeal in favour of the assessee as per paras 9 to 11 of his order for the year 2004-05 as under:- 9. It could be seen from the judgement of the Hon ble High Court of Bombay, reported in 264 ITR 110, wherein the assessee was the trust and it derived its income from depreciable assets. The assessee took into account depreciation on those assets in computing the income of the trust. The ITO held that depreciation could not be taken into account because full capital expenditure had been allowed in the year of acquisition of the assets. The assessee went in appeal before the Appellate Assistant Commissioner. The appeal was rejected. The Tribunal, however, took the view that when the ITO stated that full expenditure had been allowed in the year of acquisition of the assets, what he really meant was that the amount spent on acquiring those assets had been treated as application of income of the trust in the year in which the income was spent in acquiring those assets. This did not mean that in computing income from those assets in subsequent years, depreciation in respect of those assets can not be taken into account. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) for all the four years should be reversed and that of Assessing Officer may be restored. 9. Ld. Counsel for the assessee while relying upon the basis and reasoning as given by the Ld.CIT(A) in allowing the first appeals of the assessee, has pleaded that the solitary issue in these appeals is fully covered by Bombay High Court decision and Ld. CIT(A) while considering all the aspects of the case as well as case laws cited, has rightly followed the view of the Hon ble Bombay High Court, which was the only view available at the time of deciding the appeals and now also Hon ble Punjab Haryana High Court in the case of CIT Vs. M/s.Tiny Tots Education Society as reported in 2010-TIOL-550-High Court-P H-IT vide order dt.28th July, 2010, under similar facts, has decided the identical issue in favour of the assessee and while enclosing the copy of the judgement of Hon ble Bombay High Court as well as Hon ble Punjab Haryana High Court, Ld. Counsel for the assessee has strongly pleaded that since the issue is squarely covered in favour of the assessee, not by one High Court but by second High Court also in which Supreme Court decision s case of Escort Ltd. Vs. UOI and others ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is given in allowing claim for depreciation for computing income for purposes of Sec.11. The questions proposed have, thus, to be answered against the revenue and in favour of the assessee. 7. In view of above, we are unable to hold that the questions proposed by the Revenue are substantial questions of law. Since the issue is squarely covered in favour of the assessee and Department has not brought any contrary material or any higher Courts order in its favour, therefore, we do not find any infirmity or flaw in the orders of the CIT(A) in this regard as such while concurring with the conclusion as drawn by the CIT(A), we uphold his orders and dismiss the appeals of the Revenue being devoid of any merits. 6. Since the issue is squarely covered in favour of the assessee and Department has not brought any contrary material or any higher Courts order in its favour, therefore, while following the said decision, we accept all the appeals of the assessee an direct the Assessing Officer to allow the claim of the assessee in this regard. 7. In the result, all the three appeals of the assessee are allowed. Order pronounced soon after the conclusion of hearing on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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