SWAMI SATCHIDANANDA FOUNDATION,CHENNAI vs. ITO, COIMBATORE

Both the appeals of the assessee are directed against the respective orders of the Commissioner of Income Tax (Appeals)-2, Coimbatore, dated 28.03.2016 and pertain to assessment years 2010-11 and 2011-12. Since common issue arises for consideration in both the appeals, we heard both the appeals together and disposing of the same by this common order.

The only issue arises for consideration is depreciation on the cost of the asset which was allowed as application of income under Section 11 of the Income-tax Act, 1961 (in short 'the Act').

Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the assessee is a charitable trust registered under Section 12AA of the Act. According to the Ld. counsel, the assessee claimed depreciation on the asset, the cost of which was allowed as application of income under Section 11 of the Act. Both the authorities below rejected the claim of the assessee by placing reliance on the order of this Tribunal. Now, the Apex Court in CIT v. Rajasthan And Gujarati Charitable Foundation Poona in Civil Appeal No.7186 of 2014 found that the assessee is eligible for depreciation even though the cost of asset was allowed as application of income, therefore, according to the Ld. counsel, both the authorities below are not justified in disallowing the claim of the assessee.

We heard Shri AR.V. Sreenivasan, the Ld. Departmental Representative also. It is not in dispute that the Apex Court in Rajasthan And Gujarati Charitable Foundation Poona (supra) found that a charitable institution is eligible for depreciation on the asset, even though the cost of which was already allowed as application of income under Section 11 of the Act. The Apex Court further found that while computing income under Section 11 of the Act, it has to be computed commercially after allowing depreciation under Section 32 of the Act.

In view of the above judgment of Apex Court in Rajasthan And Gujarati Charitable Foundation Poona (supra), this Tribunal is unable to uphold the order of the lower authority. Accordingly, orders of both the authorities below are set aside and the Assessing Officer is directed to allow depreciation as per rule.

In the result, both the appeals filed by the assessee stand allowed.