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TMI Blog2015 (1) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... he submissions of the DR. 3. In both the appeals of the Revenue, the issue involved is that the CIT(A) erred in allowing the claim of depreciation to the assessee in spite of the fact that the entire cost of depreciable assets had been allowed to the assessee as an application of income towards object of the Trust and therefore, again allowing of the depreciation in same assets holding it as application if for charitable purposes amounts to double deduction. 4. The brief facts of the case are that the assessees are AOP Trusts which are eligible for exemption of their income u/s 11(1) of the Act. In the return of income filed, the assessee, M/s Kongunadu Arts and Science College Council claimed depreciation of Rs. 1,76,82,258/- and the assessee, M/s Ramanandha Adigalar Foundation claimed depreciation of Rs. 8,21,52,114/-. This claim of depreciation was disallowed by the Assessing Officer on the ground that provisions of section 11 are distinct from that of section 14. The deduction or allowance provided in Chapter-IV i.e sections 14 to 59 of the Act, cannot be applied for determining the income for the purposes of section 11 of the Income-tax Act, 1961. The provision of depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct would amount to double deduction. 7. On the other hand, the A.R relied on the decision of the Hon'ble Delhi High Court in the case of Director of Income Tax vs Vishwa Jagriti Mission, 2012-TIOL-271-HC-DEL-IT, and submitted that the Hon'ble High Court held that the income of the assessee-trust should be computed on commercial principles and while doing so, depreciation on fixed assets utilized for the charitable purposes should be allowed. He further relied on the decision of P&H High Court in the case of CIT vs Market Committee, Pipli, 330 ITR 16, where it was held that income of the assessee trust being exempt, the assessee was only claiming for depreciation should be reduced from the income for determining the percentage of funds which had to be applied for the purposes of the trust and therefore, there was no double deduction claimed by the assessee and it cannot be held that double benefit was given in allowing the claim of depreciation while computing income for the purposes of section 11. Further, he relied on the decision of this Tribunal in the case of M/s Great Lakes Institute of Management, in I.T.A.Nos.931 & 932/Mds/2012, for assessment years 2006-07 and 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Chennai 'D' Bench of the Tribunal in the case of Dy. CIT vs M/s Coimbatore Stock Exchange in I.T.A.Nos.1086 and 1087/Mds/2010 wherein vide consolidated order dated 8.2.2011 the Tribunal dismissed the appeals of the Revenue on the similar issue following the decision of the Hon'ble P&H High Court in the case of Market Committee, Pipli (supra). 8. The DR supported the orders of the lower authorities. 9. After hearing the rival submissions and perusing the materials available on record, we find that in the instant case, the assessee claimed depreciation of Rs. 46,30,368/- in assessment year 2006-07 and Rs. 41,81,550/- in assessment year 2007-08 and the same was disallowed by the Assessing Officer on the ground that the entire investment in fixed assets was considered as application of income and allowing of depreciation to the assessee would amount to double deduction. On appeal, the CIT(A) confirmed the action of the Assessing Officer for the very same reason. We find that the Hon'ble P&H High Court in the case of Market Committee, Pipli(supra) has held as under: "10. In the present case, the assessee is not claiming double deduction on account of depreciation as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed have, thus, to be answered against the revenue and in favour of the assessee. 7. In view of above, we are unable to hold that the questions proposed by the Revenue are substantial questions of law." Since the issue is squarely covered in favour of the assessee and Department has not brought any contrary material or any higher Courts order in its favour, therefore, we do not find any infirmity or flaw in the orders of the CIT(A) in this regard as such while concurring with the conclusion as drawn by the CIT(A), we uphold his orders and dismiss the appeals of the Revenue being devoid of any merits." 5. Since the issue is squarely covered in favour of the assessee and Department has not brought any contrary material or any higher Courts order in its favour, therefore, we do not find any infirmity or flaw in the orders of the CIT(A) in this regard as such while concurring with the conclusion as drawn by the CIT(A), we uphold his orders and dismiss the appeals of the Revenue being devoid of any merits." 11. Thus, the facts being identical, respectfully following the above quoted decisions of the Hon'ble P&H High Court and the decision of this Tribunal, we set aside the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be understood in its commercial sense. The circular is as under:- "Where the trust derives income from house property, interest on securities, capital gains, or other sources, the word 'income' should be understood in its commercial sense, i.e., book income, after adding back any appropriations or applications thereof towards the purpose of the trust or otherwise, and also after adding back any debits made for capital expenditure incurred for the purposes of the trust or otherwise. It should be noted, in this connection, that the amounts so added back will become chargeable to tax u/s. 11(3) to the extent that they represent outgoings for purposes other than those of the trust. The amounts spent or applied for the purposes of the trust from out of the income computed in the aforesaid manner, should be not less than 75 per cent. Of the latter, if the trust is to get the full benefit of the exemption u/s. 11(1)." 12. A similar view was earlier expressed by the Andhra Pradesh High Court in Commissioner of Income-tax. v. Nizam's Suppl. Religious Endowment Trust (1981) 127 ITR 378 and by the Madras High Court in Commissioner Of Income-Tax vs Rao Bahadur Calavala Cunnan Chetty Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(Appeals). 14. Having regard to the consensus of judicial opinion on the precise question that has arisen in the present appeal, we are not inclined to admit the appeal and frame any substantial question of law. There does not appear to be any contrary view plausible on the question raised before us and at any rate no judgment taking a contrary view has been brought to our notice. In the circumstances, we decline to admit the present appeal and dismiss the same with no order as to costs." 11. Further, the Hon'ble P&H High Court in the case of Market Committee, Pipli, has held as under: "The assessee was registered under section 12AA of the Income-tax Act, 1961 as a charitable trust. The Assessing Officer disallowed the depreciation on the ground that since the income of the assessee was exempt from tax under sections 11 to 13, allowing depreciation to ascertain whether 85 per cent. of funds were applied for purposes of trust, would amount to conferring double benefit. This view was affirmed by the Commissioner (Appeals). The appeal of the assessee to the Tribunal was allowed on a statement that the matter was covered in favour of the assessee by another order of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X
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