TMI Blog2022 (5) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-2015, consequently we direct the Ld. AO to delete the disallowance of depreciation. - Decided in favour of assessee. - ITA No. 14/RPR/2018 - - - Dated:- 29-4-2022 - Shri Ravish Sood, Judicial Member And Shri Jamlappa D Battull, Accountant Member For the Assessee : Shri Praveen Jain For the Revenue : Shri P. K Sharma ORDER PER JAMLAPPA D BATTULL, AM; The present appeal filed by the appellant assessee is assailed against the order of the Commissioner of Income Tax- Appeal-I, Raipur [for short CIT(A) ] dt. 15/12/2017 passed u/s 250 of the Income-tax Act, 1961 [for short the Act ], which in turn arose out of order of assessment passed by Asstt. Commissioner of Income Tax (Exemption), Raipur [for short AO ] dt. 23/03/2016 u/s 143(3) of the Act, for assessment year [for short AY ] 2013-2014. 2. The solitary controversy under the present appeal encircles around the allowability of depreciation on the value of assets, where the full acquisition cost such assets claimed as application u/s 11 of the Act. 3. Before pulling the facts from the records, it is necessary to replicate the grounds assailed by the appellant assessee before Income Tax Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Trust in engaged not in commercial activities but in the charitable activities, and for the purpose of computation of income/surplus in giving effect to the provisions of section 11 of the Act, the income/surplus is required to be computed applying the normal commercial principle, hence while doing so, the claim of depreciation on assets deployed in earning income is must, consequently the society s claim for depreciation deserves to be allowed. The Ld. AO however rebutting the contention of the Trust, and placing strong reliance on the decision of Hon ble Kerala High Court in the case of Lessie Medical Institution Vs CIT reported at 348 ITR 344 (Kel) dislodging the claim of depreciation for the reason of leading to or amounting to double deduction, as the entire acquisition cost / value of assets on a previous occasion claimed allowed as application of income in the hands of the assessee and same can be witnessed form the relevant part of the para 4 of the assessment order, which is reproduced as under; It would be worthwhile to mention here that, in the case of Lessie Medical Institution Vs Commissioner of Income Tax reported in 348 ITR 344 Kerala (2012), the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rive at taxable profit. Ld. CIT(A) further was of the view that, depreciation being a charge against the profit is only allowed in computing the income under the provisions of chapter IV-D and such allowance cannot be permitted in computing income u/s 11 to 13 of the Act. Consequently the Ld. CIT(A) echoed with the view of his subordinate in holding that, when the full and entire cost of asset is allowed as application of income while computing the income u/s 11 of the Act, further allowance of depreciation on the value of such assets, would amount to double deduction which is contra legem, and therefore confirmed the disallowance concurrently placing reliance on equi judicial precedents including the decision of Hon ble Karnataka High Court in the case of Lissie Medical Institution Vs CIT (Supra). 5.4 Aggrieved by the order of tax authorities below, the appellant Society is in appeal before us with the grounds of appeal laid in foregoing para 3. 6. After hearing the rival contentions of both the parties; perused material placed on records and duly considered the facts of the case in the lights of settled legal position and case laws relied upon both the parties to the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust. The ITO held that depreciation could not be taken into account because, full capital expenditure had been allowed in the year of acquisition of the assets. The assessee went in appeal before the Assistant Appellate Commissioner. The Appeal was rejected. The Tribunal, however, took the view that when the ITO stated that full expenditure had been allowed in the year of acquisition of the assets, what he really meant was that the amount spent on acquiring those assets had been treated as 'application of income' of the Trust in the year in which the income was spent in acquiring those assets. This did not mean that in computing income from those assets in subsequent years, depreciation in respect of those assets cannot be taken into account. This view of the Tribunal has been confirmed by the Bombay High Court in the above judgment. Hence, Question No. 2 is covered by the decision of the Bombay High Court in the above Judgment. Consequently, Question No. 2 is answered in the Affirmative i.e., in favour of the assessee and against the Department. 10. Ad litem, The Ld. AO while carrying out the disallowance of depreciation found to have also relied on decision of Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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