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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SHRI R.S. SYAL & SHRI K.NARASIMHA CHARY
This is an appeal by the revenue against the order dated 16.04.2015 in Appeal No. 23/2014-15 passed by the Ld. Commissioner of Income- tax (Appeals)-40 (Exemption), New Delhi (for short hereinafter called as “Ld. CITA”).
Brief facts of the case are that the assessee is a charitable society registered under the Societies Registration Act, 1860 on 30.7.1974 and is also u/s 12AA(1) of the Income-tax Act, 1961 (“the Act”) on 20.02.2004. The assessee is involved in educational activity and is running 3 schools in Calcutta, one in Odisha and one in Churu District of Rajasthan and the assessee enjoys
2 exemption u/s 10(23C)(vi) vide order dated 29.11.2004. The assessee had claimed the depreciation in the Asstt. Year 2011-12 of Rs.69,93,807/- which has been apparently disallowed by the AO mainly on the ground that this is a double deduction as the entire capital expenditure on the purchase of capital asset is treated as application of income u/s 11 (1) and the full deduction of the entire amount is allowed vide order of the AO.
In the appeal preferred by the assessee, learned CIT(A) held that it is not only illegal but also immoral and unethical to claim depreciation on the capital assets as the entire capital expenditure has been claimed as a deduction and as application of income u/s 11(1) and as such there is no merit in the submissions of the assessee but the appeal of the assessee is allowed regarding the claim of depreciation in view of the latest order of the Hon’ble Delhi High Court. Hence, the revenue is before us challenging the same.
It is the submission of the learned DR that in CIT vs Rajasthan and Gujarati Charitable Foundation Poona, (Supreme Court) in Civil Appeal No. 7186 of 2014 & batch, the Hon’ble Supreme Court held that the income of the trust is required to be computed u/s 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the trust. But in this case instead of claiming the depreciation on the commercial principle, the assessee claimed the same as application of income u/s 11, as such, learned AO has rightly disallowed the same but without proper understanding of the scope of this matter, learned CIT(A) followed the decision in the case of DIT(E) vs Indraprastha Cancer Society, of 2014 and batch .
It is the submission of the learned AR that assessee claimed the depreciation on the commercial principle and as a matter of fact all through
3 the years they have been claiming the same. He brought to our notice that by order dated 30.8.2016 in assessee’s own case in in respect of Asstt. Year 2006-07, a bench of this Tribunal held that inasmuch as the CIT(A) allowed the claim of the assessee by following the decision of the jurisdictional High Court in the case of Indraprastha Cancer Society (supra), such a finding cannot be interfere with.
As could be seen from the assessment order, the AO disallowed the claim of the assessee for depreciation by distinguishing the facts of this case from the facts of DIT(E) vs Vishwa Jagriti Mission, and nowhere it is mentioned either by the AO or by the learned CIT(A) that the assessee has not followed commercial principles while computing the income of the trust u/s 11 of the Act. In these circumstances, while respectfully following the decision of the Hon’ble jurisdictional High Court in DCIT(E) vs Indraprastha Cancer Society (supra), we direct the AO to allow the claim of the assessee.