New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (1) TMI 454 - ITAT HYDERABAD

2016 (1) TMI 454 - ITAT HYDERABAD - TMI - Depreciation claim by trust - Held that:- All the material facts relevant thereto are similar to the case of AP Olympic Association, Hyderabad for AY. 2008-09 (2014 (2) TMI 988 - ITAT HYDERABAD), we respectfully follow the decision rendered by the Co-ordinate Bench of this Tribunal in the said case, and direct the Assessing Officer to allow the claim of assessee for depreciation in respect of the assets, the cost of which was claimed by the assessee as a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e eligible for depreciation on the assets in whose respect cost of acquisition has already been claimed as application of income? 2. At the outset, both the parties agreed that the issue is covered against the Revenue by the orders of the Co-ordinate Bench in ITA No. 939/Hyd/2015 dt. 14-10-2015. 2.1. Ld. DR however, relied on the decision of Hon'ble Kerala High Court in the case of Lissie Medical Institutions Vs. CIT [348 ITR 344 (Kerala)] to support the Revenue s contentions. 3. Having cons .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y covered in favour of the assessee by the decision of the coordinate bench of this Tribunal in the case of AP Olympic Association, Hyderabad for assessment year 2008-09 rendered vide order dated 7 February, 2014 in ITA No.1272/Hyd/2013. A copy of the said order is placed on record before us and a perusal of the same shows that a similar issue has been decided by the Tribunal in favour of the assessee by discussing all the relevant aspects as well as the relevant case laws on the issue elaborate .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mputed with reference to the provisions of section 11 and 13. Therefore, the principles governing computation of income under the head Business may not apply to the computation of income under the above provisions, since the income of a charitable institution has to be computed under ordinary principles of commercial accounting, and depreciation has to be allowed on depreciable assets held by a charitable institution to arrive at the income of 75% (now 85%) which is required to be applied for ch .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e may not apply to the computation of income under section 11 of the Trust. 8. The Hon ble Kerala High Court in the case of Lissie Medical Institutions vs. CIT (2012) 348 ITR 344 (Kerala), taking into consideration of clarification issued by the CBDT ignoring its own Circular 5-P (LXX-6) of 1968 dated 19.06.1968, opined that there could be leakage of revenue and generation of black money, if depreciation was allowed. Thus, the Hon ble Kerala High Court gave decision in favour of Revenue and dire .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l Society in ITA.No. 1378/Hyd/2011 dated 28.06.2012 however, allowed the claim of depreciation and dismissed the Revenue s appeal. The Coordinate Bench relied on the decision of Hon ble Punjab and Haryana High Court in the case of CIT vs. Manav Mangal Society 328 ITR 421 (P&H) (HC) and CIT vs. Market Committee, Pipli (2011) 330 ITR 16, in arriving at that decision. Thus, there was a difference of opinion on the above issue at that point of time. 10. The Hon ble Punjab and Haryana High Court .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Tots Education Society (2011) 330 ITR 21 by the Hon ble Punjab & Haryana High Court. 12. This issue has elaborately been discussed by the Hon ble Delhi High Court in the case of DIT vs. Vishwa Jagriti Mission in ITA.No. 140/2012 dated 29.03.2012 and took a over view of the existing decisions on the issue while holding as under : 11. The revenue is in appeal against the aforesaid order of the Tribunal. We are not inclined to admit the appeal and frame any substantial question of law since non .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

judicial thinking 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 HiRr 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 o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ot 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 in the judgment in which the Board has taken the view that the income of the trust should 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 ot .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 Incom .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

gh Courts cited above, also came to the same conclusion and held that the amount of depreciation debited to the accounts of the charitable institution has to be deducted to arrive at the income available for application to charitable and religious purposes. 13. The judgment of the Supreme Court in Escorts Limited Vs. Union of India (supra) has been rightly held to be inapplicable to the present case. There are two reasons as to why the judgment cannot be applied to the present case. Firstly, the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e 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. T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ial 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 . 13. Similar view was also taken by the Coordinate Bench of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

om 276 (Bangalore-Trib.) wherein also similar opinion was expressed. 14. Thus, on this issue, there are decisions of Hon ble Gujarat High Court, Madhya Pradesh High Court, Kerala High Court, Bombay High Court, Punjab and Haryana High Court and Delhi High Court in favour of the assessee, whereas, there is only a lone judgment of Hon ble Kerala High Court against the above opinion confirming the Revenue s contention. In view of the majority opinion of various High Courts, we are of the opinion tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version