Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) -17, Chennai, dated 11.09.2017 and pertains to assessment year 2011-12.
The only issue arises for consideration is depreciation on the asset, the cost of which was allowed as application of income under Section 11 of the Income-tax Act, 1961 (in short 'the Act').
Shri AR.V. Sreenivasan, the Ld. Departmental Representative, submitted that the assessee is claiming depreciation without disclosing the asset. According to the Ld. D.R., the assessee is eligible for depreciation only in respect of the capital asset which was used for business of the assessee. Admittedly, according to the Ld. D.R., the assessee is not doing any business.
The assessee is claiming itself as charitable institution. Therefore, according to the Ld. D.R., provisions of Section 32 of the Act is not applicable at all. In the absence of details of the asset on which the assessee was claiming depreciation, according to the Ld. D.R., the CIT(Appeals) is not justified in allowing the claim of the assessee.
Moreover, the cost of asset was already allowed as application of income under Section 11 of the Act, therefore, the cost of the asset becomes NIL. Hence, according to the Ld. D.R., there is no question of granting further deduction as depreciation.
On the contrary, Shri Arun Kurian Joseph, the Ld.counsel for the assessee, submitted that the cost of the asset was claimed as application of income under Section 11 of the Act and the same was allowed. The assessee, according to the Ld. counsel, is also eligible for depreciation in respect of the very same asset the cost of which was allowed as application of income. Placing reliance on the judgment of Madras High Court in DIT v. Medical Trust of the Seventh Day Adventists in T.C.A. Nos.949 of 2015 and 771 of 2016 dated 08.08.2017, the Ld.counsel submitted that on identical circumstances, the Madras High Court allowed depreciation. The Ld.counsel has also placed reliance on the judgment of Apex Court in CIT v. Rajasthan And Gujarati Charitable Foundation Poona in Civil Appeal No.7186 of 2014. On a query from the Bench whether the assessee is claiming depreciation only on the capital asset or whether the asset for which the depreciation is not applicable was included in the claim? The Ld.counsel submitted that the details are not readily available with him.
We have considered the rival submissions on either side and perused the relevant material available on record. The assessee is eligible for depreciation in respect of capital asset which is used for business. It is not in dispute that the assessee claimed the cost of the asset as application of income under Section 11 of the Act. On identical circumstances, in the case of Rajasthan And Gujarati Charitable Foundation Poona (supra), the Apex Court found that the assessee is eligible for depreciation in respect of the capital asset even though the cost of it was allowed as application of income.
However, the assessee is eligible for depreciation only in respect of the capital / depreciable asset. Since the details of the assets were not available before this Tribunal and the Ld.counsel for the assessee also could not produce the same before this Tribunal, the matter needs to be re-examined. Accordingly, orders of both the authorities below are set aside and the issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall re- examine the matter and bring on record the nature of capital assets on which the assessee is claiming depreciation and thereafter decide the issue afresh in the light of the judgment of Apex Court in Rajasthan And Gujarati Charitable Foundation Poona (supra), after giving a reasonable opportunity to the assessee.
In the result, the appeal filed by the Revenue is allowed for statistical purposes.
Order pronounced on 12th April, 2018 at Chennai.