SARANATHAN ACADEMY OF HIGHER EDUCATION,TRICHY vs. DCIT CIRCLE IV, TRICHY

Grievance raised by all the assessees in these appeals is on denial of depreciation on assets, cost of which was treated as application of income.

Learned counsel for the assessee submitted that assessees were all charitable trusts which were registered under section 12AA of the Act. As per the Learned AR, claim of depreciation on the assets made by the assessees were not allowed by the Assessing Officer. According to him, Assessing Officer considered such depreciation as not allowable since cost of such assets were claimed as application of income by the concerned assessees while computing its taxable income. As per Learned AR, this view taken by the Learned Assessing Officer was confirmed by Learned Commissioner of Income Tax(Appeals).

Learned DR fairly agreed that for the impugned assessment years, the issue stood covered by virtue of the judgement of the judgement of Hon’ble Supreme Court in CIT Vs. Rajasthan & Gujarati Charitable Foundation, Pune (supra). to 1978/Chny/2018 :- 3 -:

We have heard the contentions. The question regarding allowance of depreciation on assets, the cost of which was claimed as application of income, is no more res integra. No doubt, by virtue of amendment made under sub- section (6) to Section 11 inserted by Finance Act, 2014 with effect from 01.04.2015, depreciation on cost of assets claimed as application of income is not allowable. However, the said amendment has come into effect from 01.04.2015, therefore, is applicable only from assessment year 2015-16. Impugned assessment years are all prior to assessment year 2015-16. Accordingly, by virtue of the judgement of Hon’ble Supreme Court in CIT Vs. Rajasthan & Gujarati Charitable Foundation, Pune (supra), claim of the assessees are allowable. We, therefore, set aside the orders of the lower authorities and direct the Assessing Officer to allow the depreciation in all these appeals.