9911796707
TMI Blog2015 (10) TMI 2472X X X X Extracts X X X X X X X X Extracts X X X X ..... of which is claimed as application. 2. We have heard the arguments of both the sides and also perused the relevant material on record. Learned representatives of both the sides have agreed that the issue involved in this appeal of the assessee is squarely covered in favour of the assessee by the decision of the coordinate bench of this Tribunal in the case of AP Olympic Association, Hyderabad for assessment year 2008-09 rendered vide order dated 7th February, 2014 in ITA No.1272/Hyd/2013. A copy of the said order is placed on record before us and a perusal of the same shows that a similar issue has been decided by the Tribunal in favour of the assessee by discussing all the relevant aspects as well as the relevant case laws on the issue el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame principle may not apply to the computation of income under section 11 of the Trust. 8. The Hon'ble Kerala High Court in the case of Lissie Medical Institutions vs. CIT (2012) 348 ITR 344 (Kerala), taking into consideration of clarification issued by the CBDT ignoring its own Circular 5-P (LXX-6) of 1968 dated 19.06.1968, opined that there could be leakage of revenue and generation of black money, if depreciation was allowed. Thus, the Hon'ble Kerala High Court gave decision in favour of Revenue and directed the assessee to redraw the accounts. 9. The decision of the Coordinate 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2012 and took a over view of the existing decisions on the issue while holding as under : "11. The revenue is in appeal against the aforesaid order of the Tribunal. We are not inclined to admit the appeal and frame any substantial question of law since none arises from the order of the Tribunal. There is no dispute that the assessee has been granted registration under Section 12AA vide order dated 11th September, 2009 and, therefore, it was entitled to exemption of its income under Section 11. The only question is whether the income of the assessee should be computed on commercial principles and in doing so whether depreciation on fixed assets utilised for the charitable purposes should be allowed. On this issue, there seems to be a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... '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)." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case where the assessee was carrying on business and the statutory computation provisions of Chapter IV-D of the Act were applicable. In the present case, we are not concerned with the applicability of these provisions. We are concerned only with the concept of commercial income as understood from the accounting point of view. Even under normal commercial accounting principles, there is authority for the proposition that depreciation is a necessary charge in computing the net income. Secondly, the Supreme Court was concerned with the case where the assessee had claimed deduction of the cost of the asset under Section 35(1) of the Act, which allowed deduction for capital expenditure incurred on scientific research. The question was whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ib.) wherein also similar opinion was expressed. 14. Thus, on this issue, there are decisions of Hon'ble Gujarat High Court, Madhya Pradesh High Court, Kerala High Court, Bombay High Court, Punjab and Haryana High Court and Delhi High Court in favour of the assessee, whereas, there is only a lone judgment of Hon'ble Kerala High Court against the above opinion confirming the Revenue's contention. In view of the majority opinion of various High Courts, we are of the opinion that amount of depreciation debited to the account of charitable institution has to be allowed in order to arrive at the income available for application to the charitable purpose. 15. Since the Hon'ble Delhi High Court in the case of DIT vs. Vishwa Jagruti Mission (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
