DCIT, BANGALORE vs. M/S SUBRAMANYA EDUCATION SOCIETY, BANGALORE

Both these appeals were heard together and are being disposed of by way of this common order for the sake of convenience. None appeared on behalf of the assessee on the appointed date of hearing and the appeals were heard ex- parte qua the assessee because it was noticed that the issue involved in both these appeals is covered in favour of the assessee by the judgment of Hon’ble Karnataka High Court. The only issue involved in both these appeals is regarding allowability of deduction of depreciation. The ld. DR of revenue supported the assessment order. He also submitted that the provisions of sub section 6 to section 11 should be considered as clarificatory in nature and therefore, the same should be held to be retrospective. He submitted copy of a judgment of Hon’ble Apex Court rendered in the case of Director of Income-tax & 770/Bang/2016 Page 2 of 3 Vs. Al-Ameen Charitable Trust as reported in 242 Taxman 4 (SC) wherein it was held that SLP is granted against the judgment of Hon'ble Karnataka High Court wherein it was held that section 11(6) inserted vide Finance (No. 2) Act, 2014 denying depreciation while computing income of charitable trust is prospective in nature and operates with effect from 1-4-2015.This judgment of Hon'ble Karnataka High Court is reported in 383 ITR 517 (Karnataka).

We have considered the submissions of ld. DR of revenue and have gone through the orders of authorities below. We find that as per the judgment of Hon'ble Karnataka High Court rendered in the case of Director of Income-tax, Exemptions vs. Al-Ameen Charitable Fund Trust (supra), it was held that section 11(6) of IT Act is prospective in nature and operates w.e.f. 01.04.2015. as per the judgment of Hon’ble Apex Court in the same case, SLP filed by the revenue against this judgment of Hon'ble Karnataka High Court was granted. In our considered opinion, even now, the judgment of Hon'ble Karnataka High Court holds field because this judgment has not been reversed by Hon’ble Apex Court and only permission was granted to the revenue for filing appeal against this judgment of Hon'ble Karnataka High Court and operation of the judgment of Hon'ble Karnataka High Court has not been stayed by the Hon’ble Apex Court. Hence we are bound to follow the judgment of Hon'ble Karnataka High Court which is in favour of the assessee. Respectfully following this judgment of Hon'ble Karnataka High Court, we decline to interfere in the order of CIT (A) in both the years.

In the result, both the appeals filed by the revenue are dismissed.