DCIT, Hubli V. M/s North Western Karnataka Road Transport Corporation, Hubli

ITA 251/BANG/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63751 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 22-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SUNDAR RAJAN
• Assessee Lawyers: BALARAM R RAO
• Keywords: Business income; Depreciation; Charitable institution; Question of law; Capital expenditure
• Section: 143(3); 12A; 32; 11

Judgement Text

PAGE 1 OF 12 ITA NO.13 17/BANG/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.251/BANG/2012 (ASST. YEAR 2007-08) THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-3(1), HUBLI. VS M/S NORTH WESTERN KARNATAKA ROAD TRANSPORT CORPORATION, CENTRAL OFFICE, GOKUL ROAD, HUBLI. PA NO.AAATN5043Q (APPELLANT) (RESPONDENT) DATE OF HEARING : 16.10.2012 DATE OF PRONOUNCEMENT : 19.10.2012 APPELLANT BY : SHRI A SUNDAR RAJAN, JCIT RESPONDENT BY : SHRI BALARAM R RAO, ADVOCATE OR DER PER GEORGE GEORGE K : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), HUBLI DATED 30/10/2011. THE RELEVANT ASSES SMENT YEAR IS 2007- 2008. 2. THE GROUNDS OF APPEAL RAISED READ AS FOLLOWS:- 2) THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION 40% ON MOTOR VEHICLES. PAGE 2 OF 12 ITA NO.13 17/BANG/2011 2 3) THE CIT(A) HAS FAILED TO APPRECIATE THE RATIO OF TH E DECISION OF THE HONBLE APEX COURT IN THE CASE OF E SCORTS LTD. AND ANOTHER V UNION OF INDIA AND OTHERS IN 199 ITR 43. 4) THE CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESS EE IS A TRUST AND HAS ALREADY CLAIMED THE COST OF THE ASSE TS PURCHASED AS DEDUCTION AS CAPITAL EXPENDITURE FROM THE GROSS RECEIPTS. 5) THE CIT(A) FAILED TO APPRECIATE THAT FURTHER DEDUCT ION TOWARDS DEPRECIATION WILL AMOUNT TO DOUBLE DEDUCTIO N. 6) THE CIT(A) HAS FAILED TO DISTINGUISH THE FACTS OF T HE INSTANT CASE WITH THE FACTS IN THE DECISION OF KERA LA HIGH COURT IN THE CASE OF CIT V BALAKRISHNA TRANSPORTS I N 233 ITR 133 AS THE DECISION RENDERED WAS IN THE CASE OF A PARTNERSHIP FIRM. 3. THE FACTS IN BRIEF ARE AS UNDER:- THE ASSESSEE IS A CORPORATION. IT IS FORMED FOR PUBLIC UTILITY UNDER ROAD TRANSPORT CORPORATION ACT. IT OBTAINED REGISTRATION UNDER SECTION 12A OF THE I T ACT AND WAS ASSESSED IN THE STATUS OF TRUST. FOR THE CONCERNED YEAR UNDER CHALLENGE, THE ASSESSEE FILED T HE RETURN OF INCOME ON 31/10/2007 DECLARING LOSS OF RS.90,94,03,874/-. TH E ASSESSEE WAS TAKEN UP FOR SCRUTINY BY ISSUANCE OF NOTICE UNDER SECTION 143( 2) OF THE ACT AND THE ASSESSEE ORDER UNDER SECTION 143(3) WAS COMPLTED VI DE ORDER DATED 26/11/2009 QUANTIFYING THE TOTAL INCOME AT RS.9,14,6 2,600/-. IN ARRIVING AT THE TOTAL INCOME OF THE ASSESSEE, THE ASSESSING OFF ICER HAD MADE CERTAIN ADDITIONS BY OBSERVING THE FOLLOWING :- (A) THE ANNUAL ACCOUNTS AND AUDIT REPORT FOR THE YEAR 20 06- 07 SHOWS THE ACTUAL UTILIZATION OF DEPRECIATION RES ERVE DURING THE FY 2006-07 RELEVANT TO THE ASSESSMENT YEA R 2007-08 TOWARDS CAPITAL LOANS AT RS.47,36,41,786/-. PAGE 3 OF 12 ITA NO.13 17/BANG/2011 3 (NOTE 20 TO THE BALANCE SHEET AND P&L A/C). THE ASSESSEE HAS FAILED TO INCLUDE THIS ALONG WITH GROS S RECEIPTS RESULTING IN UNDER ASSESSMENT OF THE GROSS RECEIPTS TO THE TUNE OF RS.47,36,41,786/-. (B) SIMILARLY, THE ASSESSEE HAS NOT INCLUDED THE AMOUNTS OF SALE OF ASSETS AMOUNTING TO RS.17,17,44,500/- WITH THAT OF THE GROSS RECEIPTS. (C) FINALLY ON GOING THROUGH THE DETAILS OF COMPUTATION OF INCOME AS WELL AS UTILIZATION OF GROSS RECEIPTS SUB MITTED BY THE ASSESSEE, IT IS SEEN THAT THE ASSESSEE HAS CL AIMED DEPRECIATION ALLOWABLE AT RS.37,16,20,647/- AGAINST CAPITAL INVESTMENT BEING VEHICLE PURCHASED AMOUNTIN G TO RS.1124,49,11,637/-. THE CLOSE OBSERVATION FOR THI S WILL REVEAL THAT THE ASSESSEE HAS CLAIMED DEPRECIATION O N THE ASSETS, FOR WHICH 100% DEPRECIATION HAS BEEN ALLOWE D IN THE FORM OF ALLOWING 100% OF THE CAPITAL EXPENDITUR E INCURRED BY THE ASSESSEE ON THE ASSETS HAS BEEN CONSIDERED AS APPLICATION FOR CHARITABLE PURPOSES A ND THEREFORE, IT AMOUNTS TO DOUBLE DEPRECIATION RESULT ING IN EXCESS CLAIM OF RS.37,16,20,647/-. 4. AGGRIEVED BY THE ASSESSMENT COMPLETED, THE ASSES SEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUT HORITY. 5. THE FIRST APPELLATE AUTHORITY DECIDED THE MATTE R IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE TRIBUNALS ORDER IN AS SESSEES OWN CASE FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 (ITA NOS.734 & 735/BANG/2010 DATED 16 TH MARCH, 2011). 6. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 7. THE LEARNED DR SUBMITTED THAT SINCE 100% OF THE CAPITAL EXPENDITURE INCURRED BY THE ASSESSEE ON FIXED ASSETS HAS ALREADY BEEN CONSIDERED AS APPLICATION FOR CHARITABLE PURPOSES, THE CLAIM OF DEPRECIATION PAGE 4 OF 12 ITA NO.13 17/BANG/2011 4 ON THE VERY SAME ASSETS WOULD AMOUNT TO DOUBLE DEDUC TION. THEREFORE, THE CLAIM OF DEPRECIATION AMOUNTING TO RS. 37,16,20,647 /- CANNOT BE ALLOWED AS AN EXPENDITURE AS CLAIMED BY THE ASSESSEE. FOR THE ABOVE PROPOSITION, THE LEARNED DR RELIED ON THE JUDGMENT OF THE HONBLE HI GH COURT OF KERALA IN THE CASE OF LISSIE MEDICAL INSTITUTION V CIT REPORTED I N (2012) 47 ITCL 82 (KER. HC). 8. THE LEARNED AR ON THE OTHER HAND SUBMITTED THAT THE ISSUE AS TO WHETHER THE ASSESSEE IS ENTITLED TO DEPRECIATION WHEN THE INVESTMENT ON THE FIXED ASSETS BE TREATED AS APPLICATION, IS SQUA RELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE (ITA NOS.734 & 735/BANG/2011 DT.16.3.2011) AS WELL AS BY THE RECENT ORDER OF THE TRIBUNAL IN THE CASE OF KARNATAKA REDDY JANASANGHA (ITA NO.220/BANG/2011 DAT ED 7/9/2012). IT WAS SUBMITTED THAT IN THE RECENT ORDER OF THE TRIBU NAL IN THE CASE OF KARNATAKA REDDY JANASANGHA, THE TRIBUNAL HAD ELABORA TELY CONSIDERED THE PRECEDENTS ON THE SUBJECT AND FOLLOWED THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF (I) CIT V SOCIETY OF THE SISTERS OF ST. ANNE 146 ITR 28; (II) CIT V INSTITUTE OF BANKIN G 264 ITR 110 (BOM.) AND (III) THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) V FRA MJEE CAWASJEE INSTITUTE 109 CTR (BOM) 463 INSTEAD OF FOLLOWING THE JUDGMENT OF HONBLE HIGH COURT OF KERALA IN THE CASE OF DDIT(E) V LISSIE MEDICAL I NSTITUTION. 8.1 WITH REFERENCE TO THE RATE OF DEPRECIATION AS TO WHETHER IT SHOULD BE ALLOWED AT THE RATE OF 40%, THE ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR TH E ASSESSMENT YEARS 2005- 06 AND 2006-07 REFERRED SUPRA. PAGE 5 OF 12 ITA NO.13 17/BANG/2011 5 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. IN GROUND NOS.2 AND 6, THE REVENUE QUES TIONS THE CIT(A)S ORDER IN GRANTING THE ASSESSEE THE DEPRECIATION AT THE RA TE OF 40% ON MOTOR VEHICLES. 9.1 THIS ISSUE WAS CONSIDERED BY THE TRIBUNAL IN AS SESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 (ITA NO.734/BAN G/2010) IN FAVOUR OF THE ASSESSEE. THE RELEVANT FINDING OF THE TRIBUN AL IS REPRODUCED BELOW FOR READY REFERENCE:- GROUND NO.3 - ALLOWABILITY OF DEPRECIATION ON MOTO R BUSES: 16. (I) THE ASSESSEE HAS BEEN TRYING TO TAKE SANC TUARY IN BOARDS CIRCULAR NO.609 DATED 29.7.1997 (SIC) 29.7.1991 TO CLAIM DEPRECIATION AT 40%. ON A GLIMP SE OF CIRCULAR CITED, WE FIND THAT THE CIRCULAR HAD IN FA CT DEALT WITH THE ALLOWANCE OF DEPRECIATION ON MOTOR VEHICLE S OWNED AND USED BY TOUR OPERATORS AND TRAVEL AGENTS I N THE BUSINESS OF RUNNING THESE VEHICLES ON HIRE FOR TOURISTS. IT HAD ALSO BEEN FURTHER CLARIFIED THAT 3. FURTHER, UNDER SUB-ITEM (2)(II) OF ITEM III OF APPENDIX I TO THE INCOMETAX RULES, 1962, A HIGHER RATE OF DEPRECIATION, NAMELY 50%, IS ALLOWED ON MOTOR BUSES, MOTOR LORRIES AND MOTOR TAXIS USED IN A BUSINESS OF RUNNING THEM ON HIRE. THEREFORE, WHERE A TOUR OPERATOR OR TRAVEL AGENT USES SUCH VEHICLES, OWNED BY HIM, IN PROVIDING TRANSPORTATION SERVICES TO THE TOURISTS, HIGHER RATE OF DEPRECIATION SHOULD BE ALLOWED ON SUCH VEHICLES. IT IS CLARIFIED THAT 'MOTOR VANS' ARE AKIN TO 'MOTOR LORRIES' OR PAGE 6 OF 12 ITA NO.13 17/BANG/2011 6 'MOTOR BUSES' AND, THEREFORE, HIGHER RATE OF DEPRECIATION WILL BE ALLOWED ON MOTOR VANS ALSO, IF THEY ARE USED FOR PROVIDING TRANSPORT SERVICES TO TOURISTS. SINCE THE ASSESSEE HAS NOT BEEN USING IN A BUSINESS OF RUNNING MOTOR BUSES ON HIRE, WE ARE OF THE FIRM VIE W THAT THE ABOVE MENTIONED CIRCULAR CANNOT COME TO ITS RES CUE. (II) THE LD. A R, HOWEVER, ARMED WITH THE RULI NG OF THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT V. BALAKRISHNA TRANSPORTS REPORTED IN 233 ITR 133 [KER ] CAME UP WITH A STRONG PLEA THAT THE ASSESSEE IS ENT ITLED TO CLAIM DEPRECIATION AT 40%. ON A PERUSAL OF THE SAID RULING, WE FIND THAT THE D IVISION BENCH OF HONBLE KERALA HIGH COURT HAD OBSERVED THU S THE QUESTION IS, AS TO WHETHER THE VEHICLES SUCH AS MOTOR BUSES, MOTOR LORRIES AND MOTOR TAXIES ARE USED IN A BUSINESS OF RUNNING THEM ON HIRE OR NOT. REALLY, THE QUESTION REQUIRES CONSIDERATION FROM THE POINT OF VIEW OF THE ASSESSEE IN THE CONTEXT. WHETHER THE PAYMENT IS MADE BY ONE PERSON OR A GROUP OF PERSONS OR BY INDIVIDUAL PASSENGERS WOULD BE OF TOTAL IRRELEVANCE IN THE CONTEXT. THE REAL QUESTION IS, AS TO WHETHER THE ASSESSEE ENGAGED IN THE BUSINESS OF PLYING VEHICLES AS AN ACTIVITY USES THE CONCERNED VEHICLES FOR HIRE OR NOT. IT WOULD BE WHOLLY IRRELEVANT WHETHER THE ASSESSEE RECEIVES PAYMENTS IN REGARD TO THE ACTIVITY OF HIRE FROM A PASSENGER, A GROUP OF PASSENGERS OR AN INSTITUTION ENGAGING THE VEHICLE FOR ITS TRANSPORT ACTIVITY. IN A GIVEN SITUATION, AN INSTITUTION MAY ENGAGE ITSELF IN PAGE 7 OF 12 ITA NO.13 17/BANG/2011 7 A TRANSPORT ACTIVITY TAKING THE VEHICLES OWNED BY SOMEONE ELSE FOR PLYING. THE MODE OF PAYMENT AND AS TO WHETHER A PERSON MAKES PAYMENT OR OTHERWISE WOULD NOT BE A SITUATION OF RELEVANCE IN THE CONTEXT OF CONSIDERATION OF THE POSITION OF THE ASSESSEE. THE QUESTION WOULD BE THE MANNER IN WHICH VEHICLES ARE PLIED. THE SITUATION OF RELEVANCE WOULD BE AS TO WHETHER THE VEHICLES ARE RUNNING ON HIRE OR NOT. IF THERE IS NO DISPUTE THAT THE VEHICLES ARE RUN FOR HIRE IN ANY CAPACITY, WHETHER AS A PASSENGER SERVICE OR AS A TOURIST SERVICE OR AS A TAXI SERVICE, THE RELEVANT SITUATION IS THE MANNER IN WHICH THE VEHICLES ARE RUN WHICH BELONGED TO THE ASSESSEE IN REGARD TO WHICH THERE IS A CLAIM FOR DEPRECIATION. UNDISPUTEDLY, THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TRANSPORT ACTIVITY. THE TRANSPORT ACTIVITY IS AS REGARDS PLYING OF TRANSPORT BUSES CARRYING PASSENGERS ON DIFFERENT ROUTES DETERMINED BY THE TRANSPORT AUTHORITIES. THE PASSENGERS WHO TRAVEL IN SUCH BUSES TRAVEL ON HIRE. THIS WOULD OBVIOUSLY MEAN THAT THE BUSES IN REGARD TO WHICH DEPRECIATION IS CLAIMED WOULD HAVE TO BE UNDERSTOOD IN THE NECESSARY CONTEXT OF THE SITUATION WITH REGARD TO THE CLAIM FOR DEPRECIATION THAT THE BUSES ARE RUNNING ON HIRE. AS ALREADY STATED, IT MAY BE THAT IN A GIVEN SITUATION IT MUST BE AN INDIVIDUAL, IN ANOTHER SITUATION A GROUP OR AT DIFFERENT SITUATIONS IT MAY BE A MARRIAGE PARTY. IN OUR JUDGMENT, THE SITUATION WOULD NOT MAKE ANY DIFFERENCE. WHEN VEHICLES IN REGARD TO WHICH DEPRECIATION IS CLAIMED DO NOT RUN OTHERWISE PAGE 8 OF 12 ITA NO.13 17/BANG/2011 8 THAN FOR HIRE, OBVIOUSLY, THE SITUATION WOULD BE GOVERNED BY ITEM E(1A) REPRODUCED ABOVE. . WE HAVE ALSO DULY PERUSED THE RULING OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SOCIETY OF THE SISTERS OF ST. ANNE REPORTED IN 146 ITR 28 (KAR), O N THE STRENGTH OF WHICH THE AO HAD ALLOWED THE DEPRECIATI ON AS CLAIMED BY THE ASSESSEE AT 40%. SINCE THE RULIN G OF THE HONBLE HIGH COURT OF KERALA CITED SUPRA IS DIR ECTLY ON THE POINT, WE ARE OF THE CONSIDERED VIEW THAT TH E ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION AT 40% O N MOTOR BUSES. IT IS ORDERED ACCORDINGLY. 9.2 SINCE THE FACTS CONSIDERED BY THE TRIBUNAL ARE IDENTICAL TO THE FACTS FOR THE ASSESSMENT YEAR 2007-08 AND FOLLOWING THE ORDER OF THE TRIBUNAL CITED SUPRA, WE REJECT GROUND NOS.2 AND 6 RAISED BY THE REVENUE. 9.3 THE OTHER ISSUE, NAMELY, WHEN 100% CAPITAL EXPE NDITURE INCURRED BY THE ASSESSEE ON FIXED ASSET HAS ALREADY B EEN CONSIDERED AS APPLICATION FOR CHARITABLE PURPOSES, WHETHER THE AS SESSEE IS ENTITLED TO DEPRECIATION ON THE SAME ASSET, IS ALSO COVERED BY T HE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE CITED SUPRA AND THE RECENT O RDER OF THE TRIBUNAL IN THE CASE OF KARNATAKA REDDY JANASANGHA (SUPRA). TH E RELEVANT FINDING OF THE TRIBUNAL IN THE CASE OF KARNATAKA REDDY JANASANG HA READ AS FOLLOWS:- 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. THE INCO ME OF THE TRUST IS REQUIRED TO BE COMPUTED UNDER SECTION 11 ON COMMERCIAL PRINCIPLES, WITHOUT REFERENCE TO THE HEA DS OF THE INCOME SPECIFIED UNDER SECTION 14 OF THE ACT. IN OTHER WORDS, IT IS TO BE COMPUTED AS PER THE BOOK I NCOME AND NOT TOTAL INCOME AS DEFINED IN SECTION 2(45) OF THE PAGE 9 OF 12 ITA NO.13 17/BANG/2011 9 ACT. THIS PROPOSITION IS LAID DOWN BY VARIOUS JUDGE MENTS OF HONBLE HIGH COURTS, NAMELY, (I) CIT V TRUSTEE OF H.E.H. NIZAMS SUPPLEMENTAL RELIGIOUS ENDOWMENT TRU ST 127 ITR 378 (AP); (II) CIT V RAO BAHADUR CALAVALA C UNNAN CHETTY CHARITIES 135 ITR 485 (MAD.) & (III) CIT V ES TATE OF V.L.ETHIRAJ 136 ITR 12 (MAD.). THIS POSITION I S ALSO CONFIRMED BY THE CBDT VIDE ITS CIRCULAR NO.5-P (LXX- 6) DATED 19 TH JUNE, 1968. THE INCOME OF THE TRUST IS TO BE COMPUTED ON THE COMMERCIAL BASIS I.E. AS PER NORMAL ACCOUNTING. THE NORMAL ACCOUNTING PRINCIPLES CLEARL Y PROVIDE FOR DEDUCTING DEPRECIATION TO ARRIVE AT INC OME. THE INCOME SO ARRIVED AT (AFTER DEDUCTING THE DEPRECIATION) IS TO BE APPLIED FOR CHARITABLE PURPO SE. CAPITAL EXPENSE IS APPLICATION OF THE INCOME SO DETERMINED. THE APPLICATION OF THE INCOME SO DETER MINED CANNOT BE STATED TO BE A DEDUCTION TO ARRIVE AT THE INCOME. THE DEPRECIATION IS TO BE DEDUCTED TO DETE RMINE THE INCOME UNDER SECTION 11 OF THE ACT AND IT IS NO T AN APPLICATION OF INCOME. THEREFORE, THERE IS NO DOUB LE DEDUCTION AS CLAIMED BY THE DIT(E) IN HIS ORDER. 9.1 THE CONTROVERSY, ACCORDING TO US, IS SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V INSTITUTE OF BANKING 264 ITR 110. THE HONBLE BOMBAY HIGH COURT WAS CONSIDERING THE FOLLOWING QUESTION OF LAW:- WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE TRIBUNAL WAS RIGHT IN LAW IN DIRECTING TH E ASSESSING OFFICER TO ALLOW DEPRECIATION ON THE ASSE TS THE COST OF WHICH HAS BEEN FULLY ALLOWED AS APPLICATION OF INCOME U/S 11 IN THE PAST YEARS? 9.2 FOLLOWING ARE THE FACTS OF THE CASE CONSIDERED BY THE HONBLE BOMBAY HIGH COURT:- THE ASSESSEE WAS A TRUST REGISTERED UNDER THE BOMBA Y PUBLIC TRUST ACT AND SECTION 12A OF THE I T ACT. T HE PAGE 10 OF 12 ITA NO.1 317/BANG/2011 10 OBJECT OF THE ASSESSEE WAS CHARITABLE IN NATURE. T HE INCOME OF THE ASSESSEE WAS EXEMPT U/S 11 OF THE I T ACT. THE ASSESSEE HAD CLAIMED DEPRECIATION WHICH WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT CAPITAL EXPENDITURE INCURRED DURING THE ACCOUNTING YEAR WAS ALLOWED AS A DEDUCTION FROM THE INCOME OF THE ASSESSEE. FURTHER, THE ASSESSEE HAD CLAIMED DEPRECIATION ON FURNITURE AND FIXTURES TO THE TUNE OF RS.49,453/- AT 10% OF THE WRITTEN DOWN VALUE WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND TH AT THE SAID ASSETS HAD BEEN RECEIVED BY THE ASSESSEE ON TRANSFER FROM NATIONAL INSTITUTE OF BANK MANAGEMENT . THAT INSTITUTE WAS A CHARITABLE TRUST. ITS INCOME WAS ALSO EXEMPT U/S 11 OF THE I T ACT. THE ASSESSING OFFICER DID NOT ALLOW DEPRECIATION ON FIXTURES AND FURNITURE ON THE GROUND THAT FULL DEDUCTION HAD BEE N ALLOWED IN RESPECT OF CAPITAL COST OF FURNITURE AND FIXTURES AND IF THE DEPRECIATION WAS ALLOWED, AS CL AIMED BY THE ASSESSEE, IT WOULD RESULT IN DOUBLE DEDUCTION . THE ASSESSEE CARRIED THE MATTER IN APPEAL AND THE APPEL LATE AUTHORITY DECIDED THE MATTER IN FAVOUR OF ASSESSEE. THE DECISION OF THE APPELLATE AUTHORITY WAS CONFIRMED BY THE TRIBUNAL. 9.3 ON REFERENCE, THE BOMBAY HIGH COURT HELD THAT THE TRIBUNAL WAS RIGHT IN LAW IN DIRECTING TH E ASSESSING OFFICER TO ALLOW DEPRECIATION ON THE ASSE TS, THE COST OF WHICH HAD BEEN FULLY ALLOWED AS APPLICAT ION OF INCOME UNDER SECTION 11 IN THE PAST YEARS. 9.4 THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V SOCIETY OF THE SISTERS OF ST. ANNE 14 6 ITR 26 HAD CATEGORICALLY HELD THAT THE AMOUNT OF DEPRECIATION DEBITED TO THE ACCOUNTS OF A CHARITABL E INSTITUTION IS TO BE DEDUCTED TO ARRIVE AT THE AVAI LABLE INCOME FOR THE PURPOSE OF APPLICATION TO CHARITABLE AND RELIGIOUS PURPOSES. THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT HAS BEEN FOLLOWED BY THE PAGE 11 OF 12 ITA NO.1 317/BANG/2011 11 HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT V RAIPUR PALLOTTINE SOCIETY 180 ITR 579 AND BY THE HON BLE MADRAS HIGH COURT IN THE CASE OF GONVINDU NAICKER ESTATE V ASSISTANT DIRECTOR OF INCOME TAX AND ANOTH ER 248 ITR 368. FURTHER, IN THE CASE OF CIT V SHETH MANILAL RANCHHODDAS VISHRAM BHAVAN TRUST 198 IITR 598, IT WAS HELD BY THE HONBLE GUJARAT HIGH COURT T HAT DEPRECIATION SHOULD BE ALLOWED WHILE COMPUTING THE INCOME UNDER SECTION 11(I)(A) OF THE ACT. 9.5 THE JUDGEMENT OF THE HONBLE APEX COURT RELIED ON BY THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) IS DISTINGUISHABLE. THE ISSUE BEFORE THE HONBLE SUPR EME COURT WAS THAT WHETHER BOTH DEPRECIATION UNDER SECT ION 32 AND CAPITAL EXPENDITURE ON SCIENTIFIC RESEARCH U NDER SECTION 35(1)(IV) CAN BE CLAIMED AS DEDUCTION. IN THE CASE BEFORE THE HONBLE SUPREME COURT, BOTH DEDUCTIONS W ERE UNDER THE HEAD BUSINESS INCOME WHEREAS IN THE CAS E OF A CHARITABLE TRUST, DEPRECIATION IS A DEDUCTION TO AR RIVE AT INCOME AND CAPITAL EXPENDITURE IS APPLICATION OF SU CH INCOME. THE AFORESAID JUDGEMENT OF THE HONBLE APE X COURT IN THE CASE OF ESCORTS LIMITED (SUPRA) CANNOT BE APPLIED TO DETERMINE TAXABLE INCOME FOR A TRUST, AS THE PROVISIONS TO DETERMINE TAXABLE INCOME OF THE TRUST ARE TOTALLY DIFFERENT AND NORMAL PROVISIONS FOR COMPUTIN G INCOME UNDER THE FIVE HEADS CANNOT BE APPLIED. THO UGH THE COCHIN BENCH OF THE TRIBUNAL IS RENDERED ON IDE NTICAL ISSUE, WE WOULD PREFER TO FOLLOW THE JUDGEMENTS OF VARIOUS HIGH COURTS, (CITED SUPRA) IN PREFERENCE TO THE ORDER OF THE COCHIN BENCH TRIBUNAL. THEREFORE, WE HOLD THE ASSESSEE IS ELIGIBLE FOR CLAIMING DEPRECIATION AND IT IS TO BE ALLOWED AS DEDUCTION IN ORDER TO ARRIVE AT TH E INCOME OF THE ASSESSEE-TRUST. IT IS ORDERED ACCORD INGLY. 10. IN THE LIGHT OF THE ABOVE ORDER OF THE TRIBUNA L, WE REJECT THE OTHER GROUNDS, NAMELY, GROUND NOS.3 TO 5. PAGE 12 OF 12 ITA NO.1 317/BANG/2011 12 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF OCTOBER, 2012 SD/- SD/- (JASON P BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNE D. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER SENIOR PRIVATE SECRETARY, ITAT, BANGALORE.