TMI Blog2019 (1) TMI 1997X X X X Extracts X X X X X X X X Extracts X X X X ..... come for the purpose of reckoning the limits of 85% application of income - HELD THAT:- As we find that the issue is now settled by the recent decision of CIT vs Rajasthan and Gujarati Charitable Foundation [ 2017 (12) TMI 1067 - SUPREME COURT] held 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. - Decided against revenue. - ITA No. 6440/Mum/2017 - - - Dated:- 31-1-2019 - SHRI M. BALAGANESH, AM AND SHRI AMARJIT SINGH, JM For the Revenue : Ms. Riddhi Mishra For the Assessee : Shri Rajesh P Shah Ms. Ruchita Jain ORDER PER M. BALAGANESH (A.M): This is an appeal filed by the Revenue directed against the order of CIT(A)-1, Mumbai dated 28/08/2017 for A.Y.2011-12 in the matter of order passed u/s.143(3) of the Income Tax Act, 1961. 2. The first iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of income and determined the income of the assessee trust at Rs 1,13,47,030/- for the Asst Year 2011-12 and completed the assessment. 4. The ld CITA by placing reliance on the decision of Hon ble Jurisdictional High Court in the case of DIT(E) vs Jasubhai Foundation reported in 374 ITR 215 (Bom) granted relief to the assessee by observing that the dividend income of Rs 1,69,47,000/- which is exempt u/s 10 of the Act need not be considered for reckoning the limits of 85% application of income. With regard to allowability of depreciation on assets as an application of income, the ld CITA by placing reliance on the decision of Hon ble Jurisdictional High Court in the case of CIT vs Institute of Banking Personnel reported in 264 ITR 110 (Bom) granted relief to the assessee by holding that the allowability of depreciation as an application of income would not tantamount to double deduction. 5. Aggrieved, the revenue is in appeal before us. 6. We have heard the rival submissions. We find that the Ground No. 1 raised by the revenue with regard to inclusion of dividend income (exempt) of Rs 1,69,47,000/- for the purpose of reckoning the 85% application of income is already s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11. If we accept the argument of Mr. Malhotra and the Revenue, the same would amount to reading into the provisions something which is expressly not there. In such circumstances, the Tribunal was right in its conclusion that the income which in this case SRP 11/13ITXA1310.13.doc the assessee trust has not included by virtue of section 10, then, that cannot be considered under section 11. 9. In the circumstances and when the income from property held for charitable or religious purpose is not a matter covered or dealt with by section 10 that the Tribunal's view cannot be termed as perverse or vitiated by any error or law apparent on the face of the record. The clear language of these provisions enables us to uphold the order of the Tribunal. It is, accordingly, upheld. The Revenue's appeal does not raise any substantial question of law. Respectfully following the aforesaid decision, we do not find any infirmity in the order of the ld CITA granting relief to the assessee in this regard. Accordingly, the Ground No. 1 raised by the revenue is dismissed. 6.1. With regard to allowability of depreciation on assets as an application of income, we find that the issue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 religious purposes and it also provides for application and accumulation of income. On the other hand, section 28 of the Income Tax Act deals with chargeability of income from profits and gains of business and section 29 provides that income from profits and gains of business shall be computed in accordance with section 30 to section 43C. That, section 32(1) of the Act provides for depreciation in respect of building, plant and machinery owned by the assessee and used for business purposes. It further provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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. After hearing learned counsel for the parties, we are of the opinion that the aforesaid view taken by the Bombay High Court correctly states the principles of law and there is no need to interfere with the same. It may be mentioned that 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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