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2022 (3) TMI 1192 - AT - Income TaxExemption u/s 11 - Claim denied Government grants holding that it is corpus fund received towards specific projects to achieve objects of the trust without appreciating the fact that the case of the assessee is clearly falling under the proviso (1) & (2) of section 2(15) - assessee, in the present case, is a trust which is established with the main object to provide facilities for testing, calibration and consultancy for achieving quality of electronic products and equipments including computers, communication equipment instrumentation, process, control instruments and electrical equipments - HELD THAT:- CIT(A) allowing the claim of the assessee for the grants received from the Government of Gujarat as its Corpus Fund is upheld by the Tribunal while deciding Ground No.1 of the Revenue’s appeal, the direction given by the learned CIT(A) to the Assessing Officer on this issue of his impugned order is fully justified as a necessary corollary. Assessee has also agreed with this proposition. As contended that the Revenue, as a matter of fact, cannot be said to have any grievance by the direction given by the learned CIT(A) on this issue to the Assessing Officer as the CIT(A) has not given any material relief to the assessee by giving this direction. In any case, since the impugned order of the learned CIT(A) on the main issue in allowing the claim of the assessee that the grants issued by the Government of Gujarat represented its Corpus Fund is upheld by us, we are of the view that the direction given by him on this consequential issue is fully justified and there is no infirmity in the same calling for any interference. We accordingly uphold the impugned order of the learned CIT(A) on this issue and dismiss Ground No.2 of the Revenue’s appeal Depreciation on assets whose cost had been allowed as application of income for charitable purposes under Section 11(1)(a) of the Act - HELD THAT:- As agreed by the learned representatives of both the sides, this issue is squarely covered in favour of the assessee by the decision in the case of CIT Vs. Rajasthan & Gujarati Charitable Foundation Poona [2017 (12) TMI 1067 - SUPREME COURT] wherein it is held that the assessee is entitled to depreciation under Section 32 of the Act on assets whose cost has been allowed as application of income for charitable purpose under Section 11(1)(a) of the Act. As further held by the Hon’ble Supreme Court, the amendment in Section 11(6) of the Act brought by Finance (No.2) Act, 2014, which became effective from the Assessment Year 2015-16, prohibiting the allowance of depreciation in such case is prospective in nature. Since the Assessment Year involved in the present year is AY 2014-15, we respectfully follow the decision of the Hon’ble Supreme Court in the case of CIT Vs. Rajasthan & Gujarati Charitable Foundation Poona.[2017 (12) TMI 1067 - SUPREME COURT] and direct the Assessing Officer to allow the claim of the assessee for deduction on depreciation. - Decided in favour of assessee.
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