TMI Blog2015 (6) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... or determining the quantum of funds which have to be applied for the purpose of trusts in terms of section 11 of the Act. A trust claiming depreciation cannot be equated with a claim for double deduction. The Hon’ble Punjab & Haryana High Court has also made a reference to the decision of CIT v. Society of Sisters of Anne, (1983 (8) TMI 44 - KARNATAKA High Court), wherein it was held that u/s. 11(1) of the Act, income has to be computed in normal commercial manner and the amount of depreciation debited in the books is deductible while computing such income. Thus jurisdiction u/s. 263 of the Act ought not to have been exercised by the DIT(E). - Decided in favour of assessee. - ITA No.495/Bang/2014 - - - Dated:- 20-2-2015 - Shri N.V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in the case of Escorts Limited another Vs. Union of India 199 ITR 43 is squarely applicable, wherein it has been categorically held that when deduction u/s 35(2)(iv) is allowed in respect of capital expenditure on scientific research, no depreciation is allowable u/s 32 on the same asset. 3. Accordingly, a show cause notice u/s. 263 of the Act was issued by the DIT(E). The assessee pointed out that Hon'ble High Court of Karnataka in the case of All Saints Church, 148 ITR 786 (Kar) and Society of Sisters of St. Ann, 146 ITR 28 (Kar) has taken the view that where capital expenditure on acquisition of depreciable asset is considered as application of income for charitable purpose, allowing depreciation on the very same capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available for the assessee to invest in the new asset / machinery once the value of the old asset / machinery has fully been reduced to Nil. Therefore, by claiming depreciation, the assessee will have physical cash in his hand which has to be used by him for purchase of a new asset in place of the old. Hence, it cannot be claimed by the assessee as an expenditure during the tenure of the asset as well as application of income of the trust while purchasing the new machinery in place of the existing, which otherwise amounts to double deduction / exemption. 5. The DIT(E) also placed reliance on the decision of Hon'ble High Court of Kerala in the case of DDIT(E) v. Lissie Medical Institutions, 348 ITR 344 (Ker) wherein it was held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation should be allowed on such assets. 7. Aggrieved by the order of DIT(E), the assessee has preferred the present appeal before the Tribunal. 8. We have heard the submissions of the ld. DR, who relied on the order of CIT. The ld. counsel for the assessee relied on the decision of ITAT Bangalore Bench in the case of DDIT(E) v. Cutchi Memon Union (2013) 60 SOT 260 Bangalore ITAT, wherein similar issue has been dealt with by this Tribunal. 9. We have given a very careful consideration to the rival submissions. Identical issue was considered by this Tribunal in the case of Cutchi Memon Union (supra). In the aforesaid case, the assessee claimed depreciation and the AO denied depreciation on the ground that at the time of acquiring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. 199 ITR 43 (SC) have been referred to and distinguished by the Hon ble Court in the aforesaid decisions. 21. The issue raised by the revenue in the ground of appeal is thus no longer res integra and has been decided by the Hon ble Punjab Haryana High Court in the case of CIT v. Market Committee, Pipli, 330 ITR 16 (P H). The Hon ble Punjab Haryana High Court after considering several decisions on that issue and also the decision of the Hon ble Supreme Court in the case of Escorts Ltd. (supra), came to the conclusion that depreciation is allowable on capital assets on the income of the charitable trust for determining the quantum of funds which have to be applied for the purpose of trusts in terms of section 11 of the Act. The Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an application of income under this section in the same or any other previous year. 11. As already stated, the aforesaid amendment is prospective and will apply only from A.Y. 2015-16. In view of the above legal position, we are of the view that jurisdiction u/s. 263 of the Act ought not to have been exercised by the DIT(E). We may also add that two views are possible on the issue and even on this basis, invoking jurisdiction u/s. 263 of the Act is not permissible. We therefore quash the order u/s. 263 and allow the appeal of the assessee. 12. In the result, the appeal by ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
