M/S. COIMBATORE WELFARE ASSOCIATION,CHENNAI vs. ACIT, COIMBATORE

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -2, Coimbatore, dated 27.06.2016 and pertains to assessment year 2012-13.

The only issue arises for consideration is with regard to depreciation claimed by the assessee.

Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the assessee-trust is registered under Section 12AA of the Income-tax Act, 1961 (in short 'the Act'). According to the Ld. counsel, the assessee-trust is running various educational institutions in the State. The assessee claimed depreciation in respect of the asset which was utilised in carrying out the charitable activity. According to the Ld. counsel, the Assessing Officer as well as the CIT(Appeals) disallowed the claim of the assessee on the ground that the cost of the asset was allowed as application of income under Section 11 of the Act in the year in which the asset was originally acquired, therefore, the assessee is not eligible for depreciation. In fact, the CIT(Appeals) placed reliance on the decision of this Tribunal in various cases. Placing reliance on the unreported judgment of Apex Court in CIT v. Rajasthan And Gujarati Charitable Foundation Poona in Civil Appeal No.7186 of 2014, a copy of which is filed by the assessee, the Ld.counsel submitted that the Apex Court found that while computing income of the charitable institution under Section 11 of the Act, it has to be computed commercially and depreciation as provided under Section 32 of the Act has to be allowed. In view of this judgment of Apex Court, according to the Ld. counsel, the CIT(Appeals) is not justified in confirming the disallowance made by the Assessing Officer.

We heard Shri AR.V. Sreenivasan, the Ld. Departmental Representative also. Admittedly, the Apex Court in the case of Rajasthan And Gujarati Charitable Foundation Poona (supra), examined this issue and found that while computing income under Section 11 of the Act, it has to be computed commercially and depreciation has to be allowed as provided under Section 32 of the Act. In view of this judgment of Apex Court, this Tribunal is of the considered opinion that the assessee is eligible for depreciation in respect of the asset in which the cost of acquisition was already allowed as application of income.

In view of the above, we are unable to uphold the orders of the lower authority. Accordingly, orders of both the authorities below are set aside and the Assessing Officer is directed to allow depreciation.

In the result, the appeal filed by the assessee is allowed.