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TMI Blog2021 (7) TMI 783X X X X Extracts X X X X X X X X Extracts X X X X ..... in both TCAs) : Mr. J. Narayanasamy, Senior Standing Counsel COMMON JUDGMENT M. DURAISWAMY, J. Challenging the common order passed in ITA.No.1652/Mds/2015 in respect of the Assessment Year 2008-2009 and ITA.No.1653/ Mds/2015 in respect of the Assessment Year 2009-2010 on the file of the Income Tax Appellate Tribunal, Chennai, B Bench (for brevity, the Tribunal), the assessee has filed the above appeals. 2.1 The appellant-Trust has been registered under section 12A of the Income Tax Act, 1961 vide order dated 29.07.1988 for running an Engineering College in the name of Anjalaiammal Mahalingam Engineering College at Koilvenni, Tiruvarur District. 2.2 The appellant filed its return of income on 30.10.2008 for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enging the common order passed by the CIT (Appeals), the Revenue preferred appeals before the Income Tax Appellate Tribunal and the Tribunal by its common order allowed the appeals and set aside the common order of the CIT (Appeals). Challenging the common order passed by the Income Tax Appellate Tribunal, the assessee has filed the above appeals. 3. In the above appeals, the assessee has raised the following Substantial Questions of Law for consideration: (i) Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was right in law in holding that the Appellant-Trust will not be entitled to claim depreciation while computing the income of the appellant u/s. 11 of the Income Tax Act, 1961? (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income Tax-III, Pune v. Rajasthan Gujarati Charitable Foundation, Ponna] reported in ( 2018 ) 402 ITR 441 wherein the Hon'ble Supreme Court held as follows:- 1. These are the petitions and appeals filed by the Income Tax Department against the orders passed by various High Courts granting benefit of depreciation on the assets acquired by the respondents-assessees. It is a matter of record that all the assessees are charitable institutions registered under Section 12A of the Income Tax Act (hereinafter referred to as Act ). For this reason, in the previous year to the year with which we are concerned and in which year the depreciation was claimed, the entire expenditure incurred for acquisition of capital assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered as a Public Charitable Trust. It was also registered with the Commissioner of Income Tax, Pune. The assessee derived income from the temple property which was a Trust property. During the course of assessment proceedings for assessment years 1977-78, 1978-79 and 1979- 80, the assessee claimed depreciation on the value of the building @2 % and they also claimed depreciation on furniture @ 5%. The question which arose before the Court for determination was : whether depreciation could be denied to the assessee, as expenditure on acquisition of the assets had been treated as application of income in the year of acquisition? It was held by the Bombay High Court that section 11 of the Income Tax Act makes provision in respect of computa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect whereof depreciation is claimed may not be business assets. In all such cases, section 32 of the Income Tax Act providing for depreciation for computation of income derived from business or profession is not applicable. However, the income of the Trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the Trust. In view of the aforesatated judgment of the Bombay High Curt, we answer question No. 1 in the affirmative i.e., in favour of the assessee and against the Department. 4. Question No. 2 herein is identical to the question which was raised before the Bombay High Court in the case of Director of Incometax (Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iples of law and there is no need to interfere with the same. 3. It may be mentioned that most of the High Courts have taken the aforesaid view with only exception thereto by the High Court of Kerala which has taken a contrary view in Lissie Medical Institutions v. Commissioner of Income Tax . 4. It may also be mentioned at this stage that the legislature, realising that there was no specific provision in this behalf in the Income Tax Act, has made amendment in Section 11(6) of the Act vide Finance Act No. 2/2014 which became effective from the Assessment Year 2015-2016. The Delhi High Court has taken the view and rightly so, that the said amendment is prospective in nature. 5. It also follows that once assessee is allowed d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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