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TMI Blog2016 (10) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-2014 of the CIT(A), Aurangabad relating to Assessment Year 2010-11. 2. Grounds raised by the Revenue are as under : 1. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) erred in allowing depreciation on the asset, acquisition of which has already been allowed as 'application of income'. 2. On the facts and in the circumstance of the case and in law, whether the Ld. CIT(A) erred in not appreciating the fact that allowing depreciation on the asset again, would result in double deduction, which cannot be allowed, as held in the case of Escorts Ltd., Ors. Vs. Union of India (1993) 199 ITR 43 (SC). 3. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) erred in not relying upon the decision of Hon'ble Kerala High Court in the case of Lissie Medical Institution Vs ACIT (76 DTR 372), whether it has been held that depreciation of the capital asset, is not allowable again. 4. The appellant craves leave to add, alter, modify, delete, and amend any of the grounds, as per the circumstances of the case. 5. The appellant prays leave to adduce such further evidence to substantiated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered the facts of the case and rival contentions. On perusal of the same, it has been noticed that in order to decide the issue, the various decisions relied on by the appellant and by the A.O. are to be carefully perused and hence the ratio laid down in the said decisions in brief is noted as under (i) CIT Vs. Framjee Cawasjee Institute (1993) 109 CTR 463 (Bombay) In this case, it has been laid down that depreciation on depreciable assets had to be taken into account in computing income of Trust although the amount spent on acquiring such assets had been treated as application of income of the trust in the year in which assets were acquired. (ii) CIT Vs. Institute of Banking Personnel Selection (IBPS) 264 ITR 110 (Bombay) In this case, it has been laid down that depreciation is allowable on the assets the cost of which has been fully allowed as application of income u/s 11 in past years. (iii) CIT Vs. Society of the Sisters of St. Anne (1984) 146 ITR 28 (Karnataka) In this case, it has been laid down that for computing income for the purposes of section 11, depreciation on building has to be allowed. (iv) CIT Vs. Raipur Pallottine Soc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) to sub section (2) of section 35 made by Finance (No.2) Act, 1980 was merely clarificatory in nature; once deduction u/s 35(2)(iv) was allowed, depreciation u/s 32 was not available qua same expenditure either in the same or any other previous year even under pre-amended provisions; the allowance of depreciation will amount to double deduction. 7.2 Now I proceed to deal with the contention raised by the A.O. mentioned in earlier paragraph. The first contentions raised by the AO. is that the allowance of depreciation in addition to the allowance of deduction of cost of asset as application of income in earlier year shall amount to double deduction which is not permissible under the Act as laid down by Hon'ble Supreme Court in the case of Escorts Ltd. Ors. Vs. Union of India (1993) 199 ITR 43 (SC). In this regard, it has been noticed that the decision relied on by the AO. is in respect of deduction of cost of an asset u/s 35 allowed as deduction for capital expenditure incurred on scientific research and further allowance of depreciation on the same asset whereas in the case under appeal, the appellant is a trust and has claimed cost of the asset as applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Escorts Limited s case [1993J 199 ITR 43 (SC), on which reliance has been placed by the learned counsel for the Revenue. The hon'ble Supreme Court in that case was dealing with a case relating to two deductions both under sections 10(2)(vi) and 10(2)(xiv) of the 1922 Act or both under sections 32(1)(ii) and 35(1)(iv) of the Act. The assessee therein had incurred expenditure of a capital nature on scientific research relating to the business which resulted into acquisition of an asset. The assessee had sought to claim a specified percentage of the written down value of the asset as depreciation and at the same time claimed deduction, in five consecutive years of the expenditure incurred on the acquisition of the asset. The apex court observed (headnote) : Where a capital asset used for scientific research related to the business of the assessee is also ipso - facto an asset used for the purpose of the business, it is impossible to conceive of the Legislature having envisaged a double deduction in respect of the same expenditure, one by way of depreciation under section 32 of the Income-tax Act, 1961 and other by way of allowance under section 35(1)(iv) of a part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption provided in respect of voluntary contribution received by the Trust with the specific direction that it shall form part of the corpus of the trust and hence not includible in the total income. Whereas the allowability of deduction in respect of depreciation is as per provisions of section 11(1)(a) of the Act. Therefore, I am of the considered view that the insertion of section 11(1)(d) has not changed the legal position on the issue under appeal. Further, the assessment years involved in the above mentioned decisions relied on by the appellant in the cases of CIT Vs. Vishwa Jagriti Mission (AY.2006- 07) 73 DTR 195 (P H) and CIT Vs. Market Committee, Pipli (AY.2005-06) 330 ITR 16 (Delhi) are AY.2006-07 2005-06 which are after the insertion of section 11(1)(d) w.e.f. 01/04/1989. In view of the above facts, the third contention raised by the A.O. is also rejected. It has also been noticed that recently the Hon'ble Kerala High Court in the case of Lissie Medical Institution Vs. CIT (2013) 76 DTR 372 has held that depreciation on the assets of a charitable trust is not allowable as the cost of asset is allowable as application of income. In support of the above proposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st (Supra). 10. After hearing both the sides, we find the AO in the instant case disallowed the claim of depreciation on the ground that the cost of asset has already been allowed as application of income in past assessment years and allowance of depreciation on the same will amount to double deduction. For the above proposition, the AO relied on the decision of Hon ble Supreme Court in the case of Escorts Ltd. and Others (Supra). We find the Ld.CIT(A) relying on various decisions allowed the claim of depreciation and his observation has already been reproduced in the preceding paragraphs. 11. We find an identical issue had come up before the Tribunal in the case of DCIT Vs. Sanjeevan Vidyalaya Trust (Supra) wherein the Tribunal after considering the decision of Hon ble Supreme Court in the case of Escorts Ltd. and Others (Supra) and following the decision of the Hon ble Bombay High Court in the case of DCIT Framjee Cawasjee Institute (Supra) has allowed the claim of depreciation in case of relevant asset which has already been allowed as application of income for charitable purposes. The relevant observation of the Tribunal from Para 4 onwards read as under : 4. In brie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble jurisdictional High Court in the case of Framjee Cawasjee Institute (supra) which has been subsequently followed by the Hon'ble High Court in the case of Institute of Banking (supra). As per the Hon'ble High Court, merely because the cost of acquisition of an asset has been claimed as an application of income for charitable purposes in the past years, the assessee could not be denied depreciation in respect of such assets in a subsequent year. 8. In so far as the reliance placed by the learned Departmental Representative in the case of Escorts Ltd. (supra) is concerned, the same, in our view, does not help the case of the Revenue. The Honble High Court of Punjab Haryana in its decision in the case of CIT, Karnal v. Market Committee, vide ITA No 535/09 dated 5.7.2010 considered an identical issue and also dealt with the plea of the Revenue based on the judgment of the Hon'ble Supreme Court in the case of Escorts Ltd. (supra). As per the Hon'ble Punjab Haryana High Court, the judgment of the Hon'ble Supreme Court in the case of Escorts Ltd. (supra) was distinguishable, inasmuch as there was no case of the assessee claiming double deduction on acco ..... 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