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TMI Blog2016 (6) TMI 1457X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. Sr. DR, Shri B.S. Bist, advanced arguments which are identical to the ground raised by the assessee by asserting that Hon'ble Delhi High Court in Chiranjiv Charitable Trust and Hon'ble Kerala High Court in Lissie Medical Institution vs CIT (76 DTR 372)(Kerala) has decided the issue in favour of the Department. On the other hand, the ld. counsel for the assessee, Shri Hardik Thakkar, defended the conclusion arrived at in the impugned order. 2.1. We have considered the rival submissions and perused the material available on record. Before adverting further, it is noticed that the ITO has wrongly drafted the ground as he has mentioned that whether the Tribunal was right in upholding the order of the Ld. Commissioner of Income Tax (Appeal), wherein, the First Appellate Authority has allowed the claim of depreciation. However, on this technical aspect, ignoring the language used in the ground, we proceed to dispose of the appeal on the basis of material available on record. The sum and substance of the ground raised by the Revenue is with respect to allowing the claim of depreciation, relying upon the decision from Hon'ble jurisdictional High Court ignoring the decision from Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been referred to us for our opinion: "1 Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in directing the Assessing Officer to allow depreciation on the assets the cost of which has been fully allowed as application of income under section 11 in the past years? 2 Without prejudice to the ground No 1, whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in directing the Assessing Officer to allow depreciation of Rs 49,453 on assets received on transfer, when the assessee had not incurred the cost of acquiring the assets? 3 Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the assessee to carry forward the deficit of earlier year and set it off against the surplus of subsequent years when the same was not allowable in the case of the assesseetrust in whose case income exempted under section 11 of the Income-tax Act, 1961?" Facts: The assessee is a charitable trust For the accounting year ending December 31, 1984 (assessment year 1984-85) a return of income was filed on June 28, 1985, by the assessee declaring a deficit of Rs 7497 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter in favour of the assessee The decision of the appellate authority was confirmed by the Tribunal Hence, this reference has come before the court at the instance of the Department Findings: As stated above, the first question which requires consideration by this court is: whether depreciation was allowable on the assets, the cost of which has been fully allowed as application of income under section 11 in the past years? In the case of CIT v Munisuvrat Jain [1994] Tax LR 1084 (Bom), the facts were as follows: The assessee was a charitable trust It was registered as a public charitable trust It was also registered with the Commissioner of Income-tax, Pune The assessee derived income from temple property which was a trust property During the course of assessment proceedings for the assessment years 1977-78, 1978-79 and 1979-80, the assessee claimed depreciation on the value of the building at 2 1/2 per cent and they also claimed depreciation on furniture at 5 per cent 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 109 CTR 463 In that case, the facts were as follows: The assessee was the trust It derived its income from depreciable assets The assessee took into account depreciation on those assets in computing the income of the trust The Income-tax Officer 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 Appellate Assistant Commissioner The appeal was rejected The Tribunal, however, took the view that when the Income-tax Officer 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, qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, reference is disposed of with no order as to costs." In the light of the above decision the judicial discipline demands that the Tribunal is expected to follow the decision from Hon'ble Jurisdictional High Court. So far as, the contention of the ld. DR to the effect that the Ld. Commissioner of Income Tax (Appeal) ignored the decision from Hon'ble Delhi High Court in Chiranjiv Charitable Trust and from Hon'ble Kerala High Court in Lissie Medical Institution vs CIT (76 DTR 372) (Kerala), is concerned, we are of the view that if the Department is aggrieved by any decision from Hon'ble High Courts then the remedy lies somewhere else, as available under the law. However, in view of the decision from Hon'ble jurisdictional High Court, wherein, another decision from Hon'ble Gujarat High Court in (1995) 211 ITR 293(Guj.) was also considered holding that income derived from the trust property also has to be computed on commercial principle and if "commercial principles" are applied then adjustment of expenses incurred by the trust for charitable and religious purposes in earlier years against the income earned by the trust in subsequent years will have to be regarded as application of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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