SWAMI SATCHIDANANDA FOUNDATION,CHENNAI vs. ITO, COIMBATORE

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ITA 1768/CHNY/2016Status: DisposedITAT Chennai25 January 2018AY 2011-124 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that, following the Apex Court's decision, a charitable institution is eligible for depreciation even if the asset's cost was allowed as application of income. Income under Section 11 should be computed commercially, allowing depreciation.

What were the facts?

The assessee, a charitable trust, claimed depreciation on an asset whose cost was already allowed as an application of income under Section 11. Both lower authorities rejected this claim.

What were the issues?

Whether depreciation is allowable on an asset when its cost has already been treated as application of income for a charitable trust.

Which sections of the Income-tax Act were involved?

Section 11,Section 32,Section 12AA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY

For Respondent: Shri AR.V. Sreenivasan, JCIT
Hearing: 11.01.2018Pronounced: 25.01.2018

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

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.

2.

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').

3.

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.

4.

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.

5.

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.

6.

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

Order pronounced on 25th January, 2018 at Chennai.

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