TMI Blog2021 (8) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... 18-8-2021 - Honourable Mr.Justice T.S.Sivagnanam And Honourable Mr.Justice Sathi Kumar Sukumara Kurup For the Appellant : Mr.R.Venkat Narayanan, For M/s.Subbaraya Aiyar, Padmanaban Ramamani For the Respondent : Mr.J.Narayanaswamy, Senior Standing Counsel JUDGMENT T.S.SIVAGNANAM, J. This appeal, by the assessee, filed under Section 260A of the Income Tax Act, 1961 (for brevity the Act ), is directed against the order dated 22.04.2016 made in I.T.A.No.1098/Mds/2015 on the file of the Income Tax Appellate Tribunal 'A' Bench, Chennai for the assessment year 2010-11. 2.The appeal was admitted on 28.09.2016, on the following substantial questions of law:- a) Whether on the facts and circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 11(1)(a) of the Act. The operative portion of the judgment reads as follows:- 1. These are the petitions and appeals filed by the Income Tax Department against the orders passed by various High Courts granting benefit of depreciation on the assets acquired by the respondents-assessees. It is a matter of record that all the assessees are charitable institutions registered under Section 12A of the Income Tax Act (hereinafter referred to as 'Act'). For this reason, in the previous year to the year with which we are concerned and in which year the depreciation was claimed, the entire expenditure incurred for acquisition of capital assets was treated as application of income for charitable puruposes under Section 11(1)(a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Income Tax, Pune. The assessee derived income from the temple property which was a Trust property. During the course of assessment proceedings for assessment years 1977-78, 1978-79 and 1979-80, the assessee claimed depreciation on the value of the building @2 % and they also claimed depreciation on furniture @ 5%. The question which arose before the Court for determination was : whether depreciation could be denied to the assessee, as expenditure on acquisition of the assets had been treated as application of income in the year of acquisition? It was held by the Bombay High Court that section 11 of the Income Tax Act makes provision in respect of computation of income of the Trust from the property held for charitable or religiou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 32 of the Income Tax Act providing for depreciation for computation of income derived from business or profession is not applicable. However, the income of the Trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the Trust. In view of the aforesatated judgment of the Bombay High Curt, we answer question No. 1 in the affirmative i.e., in favour of the assessee and against the Department. 4. Question No. 2 herein is identical to the question which was raised before the Bombay High Court in the case of Director of Income-tax (Exemption) v. Framjee Cawasjee Institute [1993] 109 CTR 463. In that case, the facts wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... most of the High Courts have taken the aforesaid view with only exception thereto by the High Court of Kerala which has taken a contrary view in 'Lissie Medical Institutions v. Commissioner of Income Tax'. It may also be mentioned at this stage that the legislature, realising that there was no specific provision in this behalf in the Income Tax Act, has made amendment in Section 11(6) of the Act vide Finance Act No. 2/2014 which became effective from the Assessment Year 2015-2016. The Delhi High Court has taken the view and rightly so, that the said amendment is prospective in nature. It also follows that once assessee is allowed depreciation, he shall be entitled to carry forward the depreciation as well. For the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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