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TMI Blog2022 (4) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation from the gross receipts for computing accumulation of 15%, when the claim of depreciation has already been held to be allowed by him. Accordingly, appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed depreciation of ₹ 56,35,408/- on such assets. While completing the impugned assessment, Ld. AO has not allowed the said claim of deprecation and made the addition to the total income of the assessee without giving any reason for the same in the assessment order. Aggrieved, the assessee went in appeal before the Ld. CIT(A). 5. Ld. CIT(A) while dealing with the issue and allowing the claim of depreciation towards application of income, relied on the settled position of law by referring to the judgment of the Hon'ble Supreme Court in the case of Rajasthan & Gujarati Charitable Foundation Poona [2018] 89 taxmann.com 127 (SC). The finding given by the Ld. CIT(A) is reproduced as under:- "In view of above, the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: 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 was treated as application of income for charitable purposes under Section 11(1)(a) of the Act. The view taken by the Assessing Officer in disallowing the depreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 @ 2½% 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 computation of income of the Trust from the property held for charitable or religious purposes and it also provides for application and accumulation of income. On the other hand, section 28 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess 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 aforestated judgment of the Bombay High Court, 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 Income-tax (Exemption) v. Framjee Cawasjee Institute [1993] 109 CTR 463. In that case, the facts were as follows: The assessee was the Trust. It derived its income from depreciable assets. The assessee took i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue, the basis which led the Ld. CIT(A) to arrive at such an inference of giving the direction to the Ld. AO, could not be deciphered. On the contrary, we note from the said decision of the Rajasthan & Gujarati Charitable Foundation Poona (supra) that normal depreciation can be considered as a legitimate deduction for computing the real income of the assessee on general principle or under section 11(1)(a) of the Act. It was further held that income of a charitable trust derived from building, plant & machinery and furniture was liable to be computed in normal commercial manner although the assessee trust/society may not be carrying on any business and depreciation claimed in respect of assets may not be business assets. Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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