TMI Blog2015 (7) TMI 1206X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to be considered as part of application of income in the respective years. It may further be verified that such excess expenditure of earlier years claimed is out of income of the respective years. - ITA no.3387/Mum/2015, ITA no.3388/Mum/2015 ITA no.3389/Mum/2015 - - - Dated:- 31-7-2015 - SHRI R.C. SHARMA, ACCOUNTANT MEMBER Revenue by : Shri Javed Akhtar, (DR) Respondent by : Smt. Arati Vassanji ORDER PER R.C. SHARMA, A.M. These appeals have been filed by the Revenue against common order dated 19.03.2015, passed by the learned Commissioner (Appeals) 1, Mumbai, for the assessment passed under section 143(3), for the assessment years 2008-09, 2009-10 2010-11 respectively. It is seen that the issues raised in all these appeals are common. For the sake of ready reference, grounds raised by the revenue in the appeal memo in ITA No.3387/M/2015 for the A.Y. 2008-09 are reproduced hereunder:- 1. Whether on the facts of the case and in law the Id.CIT(A) erred in allowing the appeal of the assessee on account of disallowing depreciation on fixed assets of ₹ 1,76,73,379/- in contravention of the decision of Escorts Ltd. Vs. UOl 199 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he grounds no. 1 2 of all these three appeals address the issue of disallowance of the depreciation on fixed assets made by the AO on the ground that the assessee had already claimed deduction of the capital expenditure incurred on assets as application. This claim was allowed by the CIT(A) and therefore now revenue is in appeal before the Tribunal. Grounds No. 3, 4 5 of all these three appeals deal with the issue of allowing the carry forward of deficit and allowing the set off against the income of the subsequent years. Grounds no. 6 7 of all these three appeals are general and do not need any specific adjudication. 3. I shall first take up grounds no. 1 and 2, dealing with the disallowance of depreciation. The Brief facts as culled out from orders of the authorities below are that the assessee is a trust claiming the benefit of exemption u/s. 11(1) of the I.T. Act, 1961. In the assessment order, the AO disallowed depreciation on the ground that the assessee has already claimed benefit of capital expenditure incurred on the acquisition of impugned capital asset as part of application and therefore, claiming the depreciation on the same very asset would be amounting to do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The relevant para as relied upon by the Ld DR is reproduced hereunder for the sake of ready reference: 30. So far as the claim of depreciation is concerned the decision of the Tribunal cannot be countenanced. The Tribunal has overlooked that the cost of the assets has already been allowed as a deduction as application of income, as held by the CIT (Appeals) as well as the assessing officer. It was their view that allowing depreciation in respect of assets, the cost of which was earlier allowed as deduction as application of income the trust, would actually amount to double deduction on the basis of the ruling of the Supreme Court in Escorts Ltd. vs. UOl (supra). In respect of the additions to the fixed assets made during the previous year relevant to the assessment year 2006-07, the CIT (Appeals) held that since the cost of the, assets was not allowed as a deduction by way of application of income, depreciation should be allow. The CIT (Appeals) has thus made a distinction between assets the cost of which was allowed as, deduction as application of income and assets, the cost of which was not so allowed. The Tribunal has not kept this distinction in view, but has proceeded to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us sub-section (6) inserted to section 11 w.e.f. 01.04.2015. The same is reproduced hereunder for the sake of ready reference: [(6) In this section where any income is required to be applied or accumulated or set apart for application, then, for such purposes the 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. 6. The Ld. DR requested for confirmation the order of AO and for allowing the appeal of the department. On the other hand, Ld. Counsel of the assessee trust made her submissions in detail and submitted that the order of CIT(A)is very much in accordance with law and the facts and the same needs to be upheld. Her arguments are in two parts. One, the assesseee has been getting the benefit of claim of depreciation in the similar manner on these very assets since last many years. He has placed before us the copies of assessment orders passed u/s 143(3) for A.Y. 2003-04 to A.Y. 2007-08 at paper book pages 1 to 13. Second part of her argument is that the judgment of Hon ble Jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. It is further seen by me that the Hon ble Delhi High Court in the case of DIT vs. Indraprastha Cancer Society in ITA NO.240/2014 dated 18th November 2014 has discussed at length the entire law available as on that date on this issue, including the judgments relied upon by the Ld. DR in the case of Escorts Ltd. (supra), Charanjiv Charitable Trust, (supra) and Lissie Medical Institutions, (supra) and after analyzing all these judgments, it was held that the assessee was entitled for the claim of depreciation and view taken by the jurisdictional High Court of Bombay was followed by Hon ble Delhi High Court in the case of Indraprastha Cancer Society, (supra). It is further seen by me that Hon ble Delhi High Court has also considered amendment made by the Finance Act 2014 and it was held by Hon ble Delhi High Court that the amendment is prospective and cannot be applied retrospectively. Para 11 of the said judgment is reproduced hereunder for the sake of ready reference:- By Finance (no.2) Act of 2014, sub-section (6) of section 11 stands inserted with effect from 1st April, 2005 to the effect that where any income is required to be applied, accumulated or set apart for appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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