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TMI Blog2012 (5) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer did not allow deduction for depreciation on assets of ₹ 57,09,195/- for the reason that the assessee has claimed full cost of addition to movable assets as application of income. The assessee has also claimed depreciation on the same assets. When the cost of additions to assets is claimed fully as application of income towards objects of the Trust for charitable purposes, depreciation on the same assets amounts to double deduction. 4. On appeal, the CIT(A) confirmed the action of the Assessing Officer by observing that u/s 11 of the Act, even capital expenditure amounts to application of income of the Trust and accordingly, such capital expenditure will be treated as application in its entirety and any further allowance of depreciation will amount to extra deduction or double deduction which was not permitted under the Income-tax Act. He also relied on the decision of Hon'ble Supreme Court in the case of Escorts Ltd vs UOI, 199 ITR 43, and stated that it was held by the Hon'ble Supreme Court that assessee should not be allowed to claim two deductions on the capital expenditure on scientific research i.e both u/s 10(2)(vi) and section 10(2)(xiv) under 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. (b) The return of income filed for (i) Assessment Year 2005-06 declares NIL income and gross receipts of Rs. . 22,17,53,309/- in which the claim of depreciation made at Rs. .2,82,17,782/- 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 depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome 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 view of the Tribunal has been confirmed by the Bombay High Court in the above judgement i.e. Director of Income-tax(Exemption) v. Framjee Cawasjee Institute [1993] 109 CTR 463. Hence, this issue was covered by the decision of the Bombay High Court in the above judgement. Consequently, this issue was answered in the affirmative i.e. in favour of the assessee and against the Department. 10. The ratio of the above mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 has been discussed, has concluded to hold the question proposed in favour of the assessee, therefore being covered the matter, order of the CIT(A) for all the years are liable to be upheld. It was thus urged for upholding the impugned orders and for dismissing all the appeals of the Revenue. 10. After hearing both the sides, considering the material as well as case laws cited by the rival side, we find that in the recent judgement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 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. The issue thus stands fully covered in favour of assessee. No other orders of any higher authorities were brought before us by the Revenue to take a different view. Hence, we set aside the orders of the authorities below and direct that assessee s claim with regard to depreciation while computing its exemption under Section 11 of the Act, be allowed. 9. The facts being identical, respectfully following the precedent, we set aside the order of the lower authorities and direct the Assessing Officer to allow the claim of depreciation of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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