Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (11) TMI 590 - AT - Income TaxDisallowance of depreciation - as per AO the assessee had already claimed exemption in respect of expenditure on the fixed assets being application of income u/s 11 - Held that:- The assessee is entitled for depreciation u/s 32 of the IT Act on the assets cost of which has already been claimed as application of income. See case of Institute of Banking Personnel Selection [2003 (7) TMI 52 - BOMBAY High Court ] - Decided in favour of assessee. Treating advance fee received from the students for the future academic year as income for the accounting year under consideration - Held that:- The assessee is following mercantile system of accounting which is based on accrual. The AO has not disputed the accounting policy and method of accounting adopted by the assessee consistently. The assessee has been showing the advance fee received for the next academic session which is outside the previous year in which such advance fee is received. Similarly, the assessee is also not claiming any expenditure which has been paid by the assessee during the year but pertains to next academic session which is outside the previous year in which such expenditure is paid. Therefore, the assessee is following a uniform accounting policy based on accrual and arising of income and expenditure. There is no dispute that even in the case of trust the income has to be understood in its commercial sense and there can be no computation of such income until the expenditure which is necessary for the purpose of earning the receipt is deducted there-from. This concept of accounting is well recognised by the accounting standard. Accordingly, on merits also, we do not subscribe the view taken by the CIT(A) on this issue when the assessee is consistently following mercantile/accrual basis of accounting both for the income as well as for expenditure recorded in the books of account. - Decided in favour of assessee.
|