TMI Blog2015 (1) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction. - Held that the assessee is not claiming double deduction. - Following decision of M/s Great Lakes Institute of Management [2012 (9) TMI 179 - ITAT, CHENNAI] - No reason to interfere with decision of the CIT(A) - Decided against Revenue. - I.T.A. No. 1790/Mds/2012, I.T.A. No. 1791/Mds/2012 - - - Dated:- 14-2-2013 - Shri N. S. Saini And Shri Challa Nagendra Prasad,JJ. For the Appellant : Shri Shaji P. Jacob, Addl. CIT For the Respondent : Shri R. Vijayaraghavan, Advocate ORDER Per N. S. Saini, Accountant Member These are the appeals filed by different assessees against the orders of the CIT(A)-I, Coimbatore, dated 27.7.2012 and 19.7.2012, for assessment year 2009-10. As the facts and issue involved in both the cases are identical, they are being disposed of by this combined order. 2. In the case of M/s Kongunadu Arts and Science College Council, I.T.A.No.1791/Mds/2012, none appeared on behalf of the assessee nor any application for adjournment was filed. The Bench was of the view that the appeal can be disposed of without the presence of the assessee, therefore, the appeal was heard ex-parte qua the respondent- assessee and disposed of af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust and there is no double deduction of depreciation and capital expenditure on fixed assets in respect of trust, Similarly, the ITAT 'C' Bench, Chennai in the case of GKR Charities Vs DDlT (Exemptions)-1, Chennai in Appeal No.1812/Mds/2011 in the judgement dated April 30, 2012 has allowed the claim of depreciation for the assessee trust. The Tribunal followed the judgement of the Chennai Tribunal in the case of Rengalatchumi Educational Trust Vs ITO in IT Appeal NO.681 of 2010 dated 25.03.2011. The Tribunal held that while calculating application of 85% of Trust income for purpose of Section 11, assessee's trust claim for depreciation is to be allowed. Further, the jurisdictional Tribunal in the case of Coimbatore Stock Exchange for the assessment year 2005-06 and 2006-07 has decided the issue in favour of the appellant. In view of the judgements referred to above, the Assessing Officer is directed to allow the claim of depreciation. 6. The DR relied on the decision of the Hon'ble Kerala High Court in the case of Lissie Medical Institutions vs CIT, 348 ITR 344, and submitted that the Hon'ble High Court has held that allowing of depreciation to a Trust whose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure is to be treated as application of income of the Trust as per section 11 and any further allowance by way of depreciation or otherwise would amount to extra deduction or double deduction which is not permitted in the Income-tax Act. 5. The brief facts of the case are that the Assessing Officer excluded the assessee s claim of depreciation while computing the application of 85% of the Trust s income as entire capital expenditure itself was treated as application of income. According to the Assessing Officer, the allowance of depreciation u/s 11(1)(a) amounts to double deduction as held by the Hon'ble Supreme Court in the case of Escorts Ltd vs Union of India, 199 ITR 43(SC). 6. On appeal, the CIT(A) confirmed the action of the Assessing Officer. 7. The A.R of the assessee filed copy of the order of the Hon'ble P H High Court in the case of CIT vs Market Committee, Pipli, [2011] 330 ITR 16 (P H) and also copy of the order of the P H High Court in the case of CIT vs Tiny tots Education Society [2011] 330 ITR 21(P H) and submitted that it has been held by the High Court that allowing depreciation to the assessee Trust would not amount to double deduction as hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Institute of Banking Personal Selection (IBPS) (2003) 131 Taxman 386 (Bom.), CIT v. Rao Bahadur Calavala Cunnan Chetty Charities [1982] 135 ITR 485 (Mad.), CIT v. Society of the Sisters of St. Anne [1984] 146 ITR 28 (Kar) and CIT V. Raipur Pallottine Society [1989] 180 ITR 579 (M.P.), the judgment of the Hon ble Supreme Court in Escorts Ltd., (supra), was held not to be applicable to the situation where depreciation was claimed by a charitable institution in determining percentage of funds applied for the purposes of charitable objects. It was observed:- 9. In the present case, the assessee is not claiming double deduction on account of depreciation as has been suggested by Ld. Counsel for the Revenue. The income of the assessee being exempt, the assessee is only claiming that depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purposes of the trust. There is no double deduction claimed by the assessee as canvassed by the Revenue. Judgment of the Hon ble Supreme Court in Escorts Ltd and another (supra) is distinguishable for the above reasons. It can not be held that double benefit is given in allowing clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king as is seen from the authorities relied upon by the CIT(Appeals) as well as the Tribunal. In CIT vs. The Society of the Sisters of St. Anme (Supra), an identical question arose before the Karnataka High Court. There the society was running a school in Bangalore and was allowed exemption under Section 11. The question arose as to how the income available for application to charitable and religious purposes should be computed. Jagannatha Setty, J. speaking for the Division Bench of the Court held that income derived from property held under trust cannot be the total income as defined in Section 2(45) of the Act and that the word income is a wider term than the expression profits and gains of business or profession . Reference was made to the nature of depreciation and it was pointed out that depreciation was nothing but decrease in the value of property through wear, deterioration or obsolescence. It was observed that depreciation, if not allowed as a necessary deduction for computing the income of charitable institutions, then there is no way to preserve the corpus of the trust for deriving the income. The circular No.5-P (LXX-6) of 1968, dated July 19,1968 was reproduced i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial principles in order to determine the amount of income available for application to charitable purposes. It was a case where the assessee was carrying on business and the statutory computation provisions of Chapter IV-D of the Act were applicable. In the present case, we are not concerned with the applicability of these provisions. We are concerned only with the concept of commercial income as understood from the accounting point of view. Even under normal commercial accounting principles, there is authority for the proposition that depreciation is a necessary charge in computing the net income. Secondly, the Supreme Court was concerned with the case where the assessee had claimed deduction of the cost of the asset under Section 35(1) of the Act, which allowed deduction for capital expenditure incurred on scientific research. The question was whether after claiming deduction in respect of the cost of the asset under Section 35(1), can the assessee again claim deduction on account of depreciation in respect of the same asset. The Supreme Court ruled that, under general principles of taxation, double deduction in regard to the same business outgoing is not intended unless cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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