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2018 (2) TMI 1904 - AT - Income TaxExemption u/s 11 & 12 - depreciation on assets, cost of which were allowed as application of income - HELD THAT:- Depreciation could be allowed on assets, cost of which were allowed as application of income, it stands settled by the judgment in the case of Rajasthan and Gujarati Charitable Foundation India [2017 (12) TMI 1067 - SUPREME COURT] clearly held that an assessee enjoying exemption under section 11 & 12 of the Act was entitled to claim depreciation on assets, cost of which was claimed as application of income. Viz-a-viz second question which is on calculation of WDV, Explanation 6 to Sec.43(6). This explanation was introduced by Finance Act, 2008 with retrospective effect from 01.04.2003. It is clear from the above that for working out WDV, depreciation provided in the books of accounts has to be deemed as depreciation actually allowed under the Act, where an assessee was not required to compute his total income. Assessee had considered itself either as an exempt entity under Section 10(22) of the Act or alternatively u/s 11 & 12. It may be true that for some of the years it would have been denied such exemption. But as far as assessee was concerned it considered itself as a person not required to compute its total income. Assessee could take advantage of the above explanation and the claim of WDV had to be reckoned by considering book depreciation for the years it claimed exemption under Section 10(22) or Sections 11 & 12 and not depreciation as per Section 32(1). We thus do not find any reason to interfere with the order of CIT (Appeals). A perusal of the assessment orders for the impugned assessment year we find that computation of depreciation has not been clearly done by AO. There is no clarity as to how it was computed. In the circumstances, we are of the opinion that the quantum of depreciation allowable to the assessee for the impugned assessment years requires a revisit by the AO. We therefore set aside the orders of the lower authorities on the aspect of the quantum of depreciation allowable to the assessee for the impugned assessment years and remit it back to AO for consideration afresh in accordance with law. Disallowance for payments made by the assessee to its retired employees - HELD THAT:- Assessee had paid pension to retired employees over and above the contribution it made to employees pension and gratuity fund. Assessee had produced evidence to show that such pension payments were directly credited to the bank account of the employees. Assessee had actually paid the amount and genuineness of the payment was never doubted. CIT(Appeals) was justified in allowing such claim u/s.37(1) of the Act as a business outgo. We do not find any reason to interfere with the order of CIT (Appeals). There is no rule which stops an assessee who make payments to an approved pension fund, from making direct pension payments also, if it finds it necessary to do so in business interest. We do not find any reason to interfere with the order of CIT (Appeals) on this aspect also.
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