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Income Tax Appellate Tribunal, ‘B’ 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 assessee is directed against the order of the Commissioner of Income Tax (Appeals) – 2, Coimbatore, dated 28.03.2016 and pertains to assessment year 2011-12.
2. Shri S. Sridhar, the Ld. counsel for the assessee, submitted that the only issue arises for consideration is with regard to depreciation on the asset, the investment on which was already allowed as application of income under Section 11 of the Income- tax Act, 1961 (in short "the Act"). According to the Ld. counsel, the CIT(Appeals) by placing reliance on the order of this Tribunal, disallowed the claim of the assessee. Now the Apex Court in CIT v.
Rajasthan And Gujarati Charitable Foundation Poona in Civil Appeal No.7186 of 2014, found that even though the investment on the asset was allowed as application of income under Section 11 of the Act, the assessee is eligible for depreciation under Section 32 of the Act. In view of this judgement of the Apex Court, according to the Ld. counsel, the CIT(Appeals) is not justified in disallowing the claim of the assessee.
On the contrary, Ms. S. Vijayaprabha, the Ld. Departmental Representative, submitted that the expenditure for acquiring the asset was already allowed by the Assessing Officer under Section 11 of the Act as application of income, therefore, the same expenditure cannot be once again allowed as depreciation. The Ld. D.R. further submitted that the Apex Court has simply reproduced the judgement of Bombay High Court and confirmed the High Court judgement. The Apex Court observed that the depreciation has to be computed commercially. Therefore, according to the Ld. D.R., it is obvious that the assessee is eligible for depreciation on the asset provided the same was put to use for the business of the assessee.
In this case, according to the Ld. D.R., there is no evidence on record to suggest that the asset on which depreciation was claimed was put to use for the business of the assessee. Therefore, according to the Ld. D.R., the assessee is not eligible for depreciation.
We have considered the rival submissions on either side and perused the relevant material available on record. The assessee is not doing any business. The assessee is carrying on charitable activities. The Apex Court in Rajasthan And Gujarati Charitable Foundation Poona (supra) examined a similar issue and found that when the income of the assessee was computed under Section 11 of the Act, the same has to be computed commercially by allowing depreciation as provided under Section 32 of the Act. In view of the judgement of Apex Court in Rajasthan And Gujarati Charitable Foundation Poona (supra), this Tribunal is unable to uphold the order of the lower authority. Accordingly, the orders of both the authorities below are set aside and the Assessing Officer is directed to allow depreciation as per rule in view of the judgement of Apex Court in Rajasthan And Gujarati Charitable Foundation Poona (supra).
In the result, the appeal filed by the assessee is allowed.
Order pronounced on 18th January, 2018 at Chennai.