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Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
This appeal is preferred by the Revenue against the order of CIT (A) –XII, New Delhi dated 10.01.2011 raising only one ground :
On the facts & in the circumstances of the case, the Ld. CIT(A) has erred in allowing capital expenditure at appellate stage as it has not been claimed earlier in return of income.
The Revenue’s appeal is against the disallowance of addition of fixed assets of Rs. 11,01,919/- as an application of income. The AO has held that the purchase of fixed assets as well as depreciation thereon both cannot be application of income and therefore he also did not grant deduction from income purchase of fixed assets of Rs. 11,01,919/- as application of income. In our order while deciding ground no. 2 of the appeal of the assessee in dated 30.10.2015 in para no. 10 We have discussed that in a case of trust the purchase of Fashion Design Council of India A Y 2007-08 the fixed assets as well as depreciation thereon is allowable as application of income following decision of Honorable Delhi high court as under :- “10.We have carefully perused the orders of lower authorities and arguments advanced. We are of the view that this issue is squarely covered in favour of the assessee by the decision of Honourable Jurisdictional High court in case of Director of Income Tax V Vishwa Jagriti Mission 262 CTR 558 where in it is held that “12. A similar view was earlier expressed by the Andhra Pradesh High Court in CIT v. Trustees of H.E.H. Nizam's Suppl. Religious Endowment Trust [1981] 127 ITR 378 and by the Madras High Court in CIT v. Rao Bahadur Calavala Cunnan Chetty Charities [1982] 135 ITR 485. The Madhya Pradesh High Court in Raipur Pallottine Society (supra) has held, following the judgment of the Karnataka High court cited above, that in computing the income of a charitable institution/trust, depreciation of assets owned by the trust/institution is a necessary deduction on commercial principles. The Gujarat High Court, after referring to the judgments of the Karnataka, Maharashtra and Madhya Pradesh High Courts cited above, also came to the same conclusion and held that the amount of depreciation debited to the accounts of the charitable institution has to be deducted to arrive at the income available for application to charitable and religious purposes.
The judgment of the Supreme Court in Escorts Limited (supra) has been rightly held to be inapplicable to the present case. There are two reasons as to why the judgment cannot be applied to the present case. Firstly, the Supreme Court was not concerned with the case of a charitable trust/institution involving the question as to whether its income should be computed on commercial principles in order to determine the amount of income available for application to charitable purposes. It was a case where the assessee was carrying on business and the statutory computation provisions of Chapter IV-D of the Act were applicable. In the present case, we are not concerned with the applicability of these provisions. We are concerned only with the concept of commercial income as understood from the accounting point of view. Even under normal commercial accounting principles, there is authority for the proposition that depreciation is a necessary charge in computing the net income. Secondly, the Supreme Court was concerned with the case where the assessee had claimed deduction of the cost of the asset under Section 35(1) of the Act, which allowed deduction for capital expenditure incurred on scientific research. The question was whether after claiming deduction in respect of the cost of the asset under Section 35(1), can the assessee again claim deduction on account of depreciation in respect of the same asset. The Supreme Court ruled that, under general principles of taxation, double deduction in regard to the same business outgoing is not intended unless clearly expressed. The present case is not one of this type, as rightly distinguished by the CIT(Appeals).
Having regard to the consensus of judicial opinion on the precise question that has arisen in the present appeal, we are not inclined to admit the appeal and frame any substantial question of law. There does not appear to be any contrary view plausible on the question raised before us and at any rate no judgment taking a contrary view has