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TMI Blog2018 (2) TMI 1593X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8,14,18,262/- in the absence of documentary evidence in support of application of income towards the purchase of capital assets. Similarly, the Assessing Officer disallowed an amount of Rs. 63,45,086/- being the amount allowed as concession against fee of students as the Assessing Officer held that no details of such students, to whom the concession was provided, had been filed. The Assessing Officer further disallowed a claim of depreciation of Rs. 2,65,36,922/- which the assessee had claimed as depreciation by holding that the claim of application of income towards capital assets has already been allowed in earlier years therefore, he held that the further claim of depreciation will amount to double deduction of claim. 2.1 Aggrieved by the order of the Assessing Officer, the assessee filed appeal before learned CIT(A) and made various submissions. The assessee also filed additional evidence which the CIT(A) sent to Assessing Officer for his remand report. The learned CIT(A), after going through the remand report and further comments of the assessee, allowed relief to the assessee by holding as under: Addition of ad hoc disallowance out of administrative expenses 6.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and no adverse inference has been drawn in the remand report. In view of these facts, the basis of disallowance of administrative expenses cannot be sustained and the same is hereby deleted. The addition of Rs. 2,71,20,688/- out of administrative expenses is deleted." Addition on account of concession given to students 7.4 The submissions of the appellant were forwarded to the Assessing Officer for necessary inquiry and report. The AO has since submitted a remand report vide letter F.No. ITO(E)/Lko/Remand Report/2015-16 dated 20.01.2016 which is on record. The observations of the Assessing Officer in the remand report are as under:- The AO had made the addition at Rs. 63,45,086/- on account of Fee Concession as the assessee trust had not produced details and documents during the assessment proceedings. In this regard, during the remand proceedings, the assessee has produced ledger accounts of the Fee Concession under following heads. S. No. Account Name Amount 1 Fee Rebate 4565600 2 Fee Exemption 976386 3 Discount on fee fix 773100 4 Discount A/c 30000 Total 6345086 A copy of remand report was provided to the appellant for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, the claim of application of income towards capital assets has already been allowed in earlier years, therefore, double deduction of claim of depreciation is not allowable in view of the settled principles of law and instructions of CBDT. On this issue, I am of the opinion that the Assessing Officer had rightly construed that the Assessee trust was not eligible for its claim of depreciation as the same would amount to double deduction. Hence, the claim of application of income to the tune of Rs. 2,65,36,922/- towards Depreciation is not allowable and may be sustained. 8.5 A copy of remand report was provided to the appellant for comments. The appellant has filed the written submissions claiming that- We would like to submit that income of trust/society registered u/s 12A 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 section 11 in the same or any other previous year w.e.f. 01.04.2015 as section 11(6) of Income-tax Act has been inserted by the Finance (No. 2) Act, 2014. Thus, depreciation claim was not disallowable as per Income-tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was held: Section 11 of the Income-tax Act, 1961, Charitable or religious trust Exemption of income from property held under-Assessment year 1984-85- Whether assessee trust could claim depreciation on assets, cost of which had been fully allowed as application of income under section 11 in past years-Held, yes -Whether assessee could claim depreciation on asserts which it received on account of transfer and cost of acquiring of which was not incurred by assessee -Held, yes -Whether assessee could carry forward deficit of earlier years and set it off against surplus of subsequent years-Held, yes, d. In CIT vs. Seth Manilal Ranchod Das Vishram Bhawan Trust [198 ITR 598 (Guj)] it was held: The amount of depreciation debited to the accounts of the charitable institutions has to be deducted to arrive at the income available for application to charitable and religious purposes. e. In CIT vs. Society of Sister St. Anne 146 ITR 28 depreciation was allowed in addition to capital expenditure. f. In Pooran Mal Phoola Devi Memorial Trust vs. ITO (JP ITAT) it was held that depreciation is allowable as application of income. g. Latest judgment in GKR Charities vs. Dy. DIT (Exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about eligibility of depreciation qua assets acquired by meeting the cost from application of exempt income of the charitable institution is effective with prospective effective, specifically from 01.04.2015. Thu the legislative amendment also supports the ration of judicial precedents cited above, allowing such depreciation. In view thereof, we find no infirmity in the order of the Ld. CIT(A) on this issue allowing depreciation. Hence, the appeals of the Revenue are dismissed." 8.6 The undersigned has gone through the judgment of Hon'ble ITAT, Jaipur judgment relied upon by the appellant in the case of M/s Santokbha Duriabhji Trust vs. ITO ward-1(1), Jaipur in ITA No. 241 & 242/JP/2014 for A.Y. 2004-05 and 2009-10 dated 13.03.2015. The undersigned has also gone through section 11(6) of the IT. Act, 1961 inserted by the Finance (No.2) Act, 2014. This provision is applicable w.e.f. 01.04.2015. Briefly stated as per the existing scheme of section 11 and section 10(23C) provides exemption in respect of income when it is applied to acquire a capital asset. Subsequently when computing the income, notional deduction by way of depreciation etc. is claimed and suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition in fixed assets along with copies of its ledger accounts with Ld. Assessing Officer during the remand proceeding. Further, the appellant Trust had produced all its books of accounts along with bills and vouchers before the Ld. Assessing Officer for verification with reply dated 06.01.2016 during remand proceeding. The activities of the appellant are similar to the activities undertaken in the earlier AY's . Appellant has always been granted exemption u/s 11 in earlier AY's as it was registered u/s 12A. During the remand proceedings the ledger accounts and details of addition to fixed assets were produced before AO along with supporting documentary evidence. The same were examined by AO and no adverse inference has been drawn in the remand report after verification of the books of accounts and bill/vouchers. The ledger accounts of addition of fixed assets along with copies of bills/vouchers were produced before the undersigned also and were examined head wise. The activities of the charitable trust for the year under consideration are similar to activities of earlier A.Y.'s wherein exemption u/s 11 was granted as it was held that these capital assets were used f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further find that CIT(A) has categorically held that the books of account of the assessee were audited and necessary audit report in the prescribed form was filed with the return of income. He has also held that the Assessing Officer during the remand proceedings had not commended adversely on the written submissions filed by the assessee. As regards the adverse comments by the Assessing Officer regarding depreciation claimed by the assessee, we find that Hon'ble Allahabad High Court in the case of CIT vs. Krishi Utpadan Mandi Samiti, under similar facts and circumstances, has held that depreciation was allowable even if the entire capital expenditure was allowed as deduction. The relevant findings of Hon'ble court as reproduced below: "On perusal of the impugned judgment and order passed by the Tribunal, it reflects that after taking into consideration the undisputed facts that the issue of depreciation on the assets of the assesses was examined by the Tribunal in the assessee's own case for the earlier assessment year 2007-2008 rendered in the case of Income Tax Officer Vs. Krishi Utpadan Mandi Samiti Jalaun and others in I.T.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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