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TMI Blog2022 (5) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... en Charitable Fund Trust [ 2016 (3) TMI 462 - KARNATAKA HIGH COURT ]. Ergo, in the light of judicial precedents stated herein above hold that, the appellant trust is eligible for depreciation up to the AY 2014-2015, consequently we direct the Ld. AO to delete the disallowance of depreciation. - Decided in favour of assessee. - ITA No. 240 And 267/RPR/2017 - - - Dated:- 29-4-2022 - Shri Ravish Sood, Judicial Member And Shri Jamlappa D Battull, Accountant Member For the Assessee : Shri Praveen Jain For the Revenue : Shri Sanjay Kumar ORDER PER JAMLAPPA D BATTULL, AM; The present appeal filed by the appellant assessee is assailed against the orders of the Commissioner of Income Tax- Appeal-I, Raipur [for short CIT(A) ] dt. 30/06/2017 07/09/2017 passed u/s 250 of the Income-tax Act, 1961 [for short the Act ], which in turn ascended from the orders of Asstt. Commissioner of Income Tax Circle-Raipur [for short AO ] dt 23/03/2016 23/12/2016 passed u/s 143(3) of the Act, for assessment year [for short AY ] 2013-2014 2014-2015 respectively. 2. The controversy under the present appeal lies in a narrow compass as to whether a claim of depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Eye Hospital and Research Centre in the name style of MCM Eye Institute. The assessee trust filed its return of income [for short ROI/ITR ] for AY 2013-2014 electronically on 27/09/2013 declaring total income of ₹NIL. The case of the assessee trust was selected for scrutiny under Computer Assisted Scrutiny Scheme [for short CASS ] by service of statutory notice dt. 27/09/2014 u/s 143(2). On a change of incumbent, an intimation u/s 129 of the Act alongwith questionnaire was served on the assessee trust, in response to which, the authorised representative of the assessee [for short AR ] filed written submissions accompanying evidential documents inter alia Copy of Bye-laws, note on activities, certificate of no change in object vis- -vis constitution of the trust etc. After examining the submissions and causing test check of books of account produced by the assessee trust, the Ld. AO called upon the assessee to justify the claim of depreciation, in response thereto, the assessee trust in reliance of judicial precedents submitted before Ld. AO that, the Trust albeit not engaged in any commercial activities but claim of depreciation is made in computing the surplus applyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings and challenged the impugned disallowance. The Ld. CIT(A) acknowledging the submission of the assessee trust, prima facie opined that, charitable trust being a non-commercial establishment should resort to prepare only Receipt and Payment Account to avoid any claim for notional expenditure like depreciation, which is otherwise available for commercial entity to arrive at taxable profit. Ld. CIT(A) further was of the view that, depreciation being a charge against the profit is only allowed in computing the income under the provisions of chapter IV-D and such allowance cannot be permitted in computing income u/s 11 to 13 of the Act. Consequently the Ld. CIT(A) echoed with the view of his subordinate in holding that, when the full and entire cost of asset is allowed as application of income while computing the income u/s 11 of the Act, further allowance of depreciation on the value of such assets, would amount to double deduction which is contra legem, and therefore confirmed the disallowance concurrently placing reliance on equi judicial precedents including the decision of Hon ble Karnataka High Court in the case of Lissie Medical Institution Vs CIT reported in 348 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 into account depreciation on those assets in computing the income 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 Assistant Appellate 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 cannot be taken into account. This view of the Tribunal has been co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. 11. Before we depart, insofar as the allowability of depreciation on assets where the full value of assets was on the previous occasion claimed as application of income , we are mindful to elucidate that, even in the present case, the assessee had claimed the cost of asset as application of income u/s 11 of the Act in any of the previous year or years up to AY 2014-15 and is allowed in the light of judicial precedents, the claim of depreciation thereagainst for the year under consideration is not hit by the amended provision of section 11(6) of the Act, as the amended provision of section 11(6) de future prospective in nature and effective from AY 2015-2016 as held by Hon ble Karnataka High Court in the case of DIT V/s Al-Ameen Charitable Fund Trust reported at 383 ITR 517 (Kar). Ergo, in the light of judicial precedents stated herein above hold that, the appellant trust is eligible for depreciation up to the AY 2014-2015, consequently we direct the Ld. AO to delete the disallowance of depreciation. 12. Resultantly, the both the appeals of the assessee is allowed in above terms. Order pronounced in the open court on this Friday 29th day of April, 2022. - - TaxTM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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