1 P. M. JAGTAP (Accountant Member).-This appeal filed by the assessee is directed against the order of the learned Commissioner of Income-tax (Appeals)-9, Hyderabad dated May 28, 2015 for the assessment year 2010-11 and arises out of the assessment completed under section 143(3) of the Income-tax Act, 1961.
2 Briefly stated, the assessee is a trust and it is registered under section 12AA of the Income-tax Act, 1961 vide order of the Director of Income-tax (Exemptions), Hyderabad in F. No. DIT(E)/HydI12A1130 (02)/07-08, dated November 16,2009 with effect from April 1, 2007. The assessee-trust filed its return of income for the assessment year 2010-11 on September 28, 2010 declaring nil income. The return of income was initially processed under section 143(1) of the Income-tax Act on May 24, 2011. Later, this case was selected for scrutiny under CASS. Notice under section 143(2) was issued on September 28, 2011. During the scrutiny, the computation "vas reworked as under :
|
(Rs.) |
(Rs.) |
Gross receipts as per income and expenditure account |
|
78,87,453 |
85 per cent. of the above |
|
67,04,335. |
Less: Application of income |
|
|
| (i) Revenue expenditure |
12,41,230 |
|
(ii) Capital expenditure for acquisition of assets |
7,59,474 |
|
(ill) Repayment of loan balance |
40,85,000 |
60,85,704 |
Balance |
|
6,18,631 |
The Assessing Officer held that there was a short-fall of application of income and brought to tax the total income of the assessee at Rs. 6,18,631. Aggrieved by this assessment, the assessee preferred an appeal before the learned Commissioner of Income-tax (Appeals) on the following grounds:
"1. The order of the Assessing Officer is contrary to law and facts and circumstances of the case.
2. The Assessing Officer erred in not treating the depreciation on the building as application of income, on the facts and in the circumstances of the case.
3. The Assessing Officer similarly erred in not treating the repayment of loan in respect of car as application of income, on the facts and in the circumstances of the case.
4. The Assessing Officer erred in bringing to tax the alleged deficit of Rs. 6,18,631 on the facts and in the circumstances of the case.
5. The Assessing Officer erred in not appreciating the fact that there was a carried forward deficit of Rs. 1,46,73,291 for the assessment year 2008-09 and even assuming without admitting that there is a short-fall in application of income for this year, he ought to have set off the said short-fall against the deficit for the assessment year 2008-09. On the facts and in the circumstances of the case.
6. The Assessing Officer erred in restricting the credit for IDS to Rs. 12,08,494 against Rs. 12,45,700 claimed by the appellant, on the facts and in the circumstances of the case."
The learned Commissioner of Income-tax (Appeals) partly allowed the appeal of the assessee-trust and dismissed ground Nos. 2 and 5. Aggrieved by the order of the learned Commissioner of Income-tax (Appeals), the assessee has preferred this appeal before the Tribunal on the following grounds:
"1. The order of the Commissioner of Income-tax (Appeals) is contrary to law and facts and circumstances of the case.
2. The learned Commissioner of Income-tax (Appeals) erred in not directing the allowance of depreciation claimed by the appellant, on the facts and in the circumstances of the case.
3. The learned Commissioner of Income-tax (Appeals) erred in not following the decision of the jurisdictional Tribunal in the case of A. P. Olympic Association v. Asst. DlT (Exemption) [2014] 30 ITR (rrib) 314 (Hyd), on the facts and in the circumstances of the case.
4. The learned Commissioner of Income-tax (Appeals) erred in not appreciating the fact that there was a carried forward deficit of Rs. 1,46,73,291 for the assessment year 2008-09 and even assuming without admitting that there is a short-fall in application of income for this year, he ought to have directed the Income-tax Officer to set off the said short-fall against the deficit for the assessment year. 2008-09, on the facts and in the circumstances of the case.
5. The appellant craves leave to add, to alter or amend any of the aforesaid grounds as advised on or before the date of hearing."
5 I have heard arguments of both the sides and also perused the material available on record. Grounds Nos. 1 and 5 are general in nature and do not require any specific adjudication. The crux of the issue as involved in grounds Nos. 2 and 3 is, whether the assessee-trust is entitled for depreciation on building being an allowable deduction out of the income of the trust in spite of the fact that the entire cost of the asset was deducted while computing the amount applied towards the object of the trust. Learned counsel for the assessee submits that the co-ordinate Bench of the Tribunal in the case of A. P. Olympic Association v. Asst. DIT (Exemption) [2014] 30 ITR (rrib) 314 (Hyd) has categorically held that charitable or religious trust registered under section 12AA can claim benefit under section 11 in the form of application of funds as well as depreciatiop under section 32 in respect of the property held under the trust. Therefore, the learned Commissioner of Income-tax (Appeals) erred in disallowing the depreciation under section 32. On the other hand, the learned Departmental representative submits that it is nothing but a double deduction and therefore, the assessee is not entitled for deduction since the entire cost of the asset stands allowed by way of application of income under section 11(1) of the Act. Therefore, the depreciation claimed by the assessee under section 32(1) is not allowable. The learned Departmental representative also relied on the decision of the apex court in the case of Escorts Ltd. v. Union of India [1993] 199 ITR 43 (SC) and submitted that there is no error in the finding of the learned Commissioner of Income-tax (Appeals).
6 I have gone through the judgment of the hon'ble Supreme Court in the case of Escorts Ltd. (supra) relied upon by the learned Departmenfa1 representative. I find that this judgment is not applicable to the facts of the present case. There are two reasons as to why the said judgment cannot Association v. Asst. DIT (Exemption) [2014] 30 ITR (Trib) 314 (Hyd), I allow the ground Nos. 2 and 3 of the assessee's appeal.
S The issue involved in ground No.4 relating to the alternative claim of the assessee has become infructuous as a result of our decision on grounds Nos. 2 and 3. The same is accordingly dismissed.
9 In the result, the appeal of the assessee is partly allowed.
10 The order pronounced in the open court on August 5,2015.