Dy.Commissioner of Income Tax(Exemptions)-Circle-1, Ahmedabad V. AMC Medical Education Trust, Ahmedabad

ITA 3089/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6185 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 03-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• Section: 32; 28; 11

Judgement Text

, LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO. 3089/AHD/2015 ( / ASSESSMENT YEAR : 2011-12) DEPUTY COMMISSIONER OF INCOME-TAX (EXEMPTION), CIRCLE - 1, AHMEDABAD. # VS. AMC MEDICAL EDUCATION TRUST, AHMEDABAD MUNICIPAL CORPORATION, RAMANLAL PATEL BHAVAN, USMANPURA, AHMEDABAD. $ # % & # PAN/GIR NO. : AACTA 3101 G ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$' ) # APPELLANT BY : SHRI PRASOON KABRA, SR. D.R. ($'*) / RESPONDENT BY : --NONE-- + ,*-. / DATE OF HEARING 31/01/2018 /012*-. / DATE OF PRONOUNCEMENT 02/02/2018 3# O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-9, AHMEDABAD, VIDE APPEAL NO.CIT(A)-9/349/DDIT(EXEM)/14-15 DTD. 13/08/2015 FO R THE ASSESSMENT YEAR (AY) 2011-12. 2. ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD.CIT(A) IS JUSTIFIED IN ALLOWING THE ASSESSEES APPEAL IN D ELETING THE ITA NO.3089/AHD /2015 DCIT VS. AMC MEDICAL EDUCATION TRUST ASST.YEAR 2011-12. - 2 - ADDITION OF DISALLOWANCE OF DEPRECIATION MADE BY TH E ASSESSING OFFICER OF RS.1,80,40,668/-. II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. III) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET ASIDE AND THAT OF T HE ASSESSING OFFICER BE RESTORED. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- THE ASSESSEE TRUST IS ENGAGED IN THE FIELD OF EDUCA TIONAL. THE TRUST IS REGISTERED U/S.12AA OF THE I.T. ACT AND GRANTED APPROVAL U/S.80G(5) OF THE I.T. ACT, 1961. 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SEEN THAT THE ASSESSEE IS CLAIMING DEPRECATION OF RS.1,80,40,668/ - AND ALSO CLAIMED THE CAPITAL EXPENDITURE OF RS.6,94,14,916/- AS APPLICAT ION TOWARDS THE OBJECTS OF THE TRUST. SINCE THE ASSESSEE HAD CLAIME D THE CAPITAL EXPENSES AS APPLICATION TOWARDS THE OBJECTS OF THE TRUST, TH E CLAIM OF DEPRECIATION WOULD AMOUNT TO DOUBLE DEDUCTION, SINCE THE BENEFIT OF 100% DEDUCTION OF THE EXPENSES HAD ALREADY BEEN ALLOWED TO THE ASS ESSEE TRUST. 3.2 IN THIS REGARDS, THE ASSESSEE VIDE ITS LETTER D ATED 07/03/2014 OBJECTED FOR THE DISALLOWANCE OF DEPRECIATION BY RE LYING ON THE VARIOUS HIGH COURTS INCLUDING BINDING JUDGMENTS OF THE HON' BLE HIGH COURT OF GUJARAT. ITA NO.3089/AHD /2015 DCIT VS. AMC MEDICAL EDUCATION TRUST ASST.YEAR 2011-12. - 3 - 3.3 THE SUBMISSION OF THE ASSESSEE WERE CONSIDERED. IN THE CASE OF THE TRUST THE WHOLE COST OF THE ASSETS IS TREATED AS AP PLICATION OF FUNDS FOR THE PURPOSE OF OBJECTS OF THE TRUST. AS PER THE AO THIS BASICALLY AMOUNTS TO 100% DEDUCTION. THEREFORE, ANY FURTHER ALLOWANCE BY WAY OF DEPRECIATION WILL AMOUNTING TO DOUBLE DEDUCTION IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF ESCORTS LTD (199 ITR 43), WHEREIN THE SUPREME COURT WAS HELD THAT WHEN DEDUCTION U/S. 35(2)(IV) WAS ALLOWED IN RESPECT OF CAPITAL EXPENDITURE ON SCIENT IFIC RESEARCH NO DEPRECIATION WAS TO BE ALLOWED U/S.32 ON THE SAME A SSETS. THE APEX COURT FURTHER OBSERVED THAT DOUBLE DEDUCTION IS INTENDED UNLESS THERE IS CLEAR STATUTORY INDICATION TO THE CONTRARY. 'IT IS IMPOSSIBLE TO CONCEIVE OF THE LEGISLATURE HA VING ENVISAGED A DOUBLE DEDUCTION IN RESPECT OF THE SAME EXPENDITU RE, EVEN THOUGH IT IS TRUE THAT THE TWO HEADS OF THE DEDUCTION (I.E., DEP RECIATION AND SCIENTIFIC RESEARCH EXPENDITURE) DO NOT COMPLETELY OVERLAP AND THERE IS SOME DIFFERENCE IN THE RATIONALE OF THE TWO DEDUCTIONS. NO LEGISLATURE COULD HAVE AT ALL INTENDED A DOUBLE DEDUCTION IN REGARD T O THE SAME BUSINESS OUTGOING, AND IF IT WAS INTENDED IT WOULD BE CLEARL Y EXPRESSED. THEREFORE, EVEN IN THE ABSENCE OF CLEAR STATUTORY I NDICATION TO THE CONTRARY, THE STATUTE SHOULD NOT BE READ SO AS TO P ERMIT AN ASSESSEE TWO DEDUCTIONS - BOTH UNDER SECTIONS 10( 2)(VI) AND SEC TION 70(2)(XIV) UNDER THE 1922 ACT OR UNDER SECTIONS 32( 7)(II) AND 35(2) (IV) OF THE 1961 ACT - QUA THE SAME EXPENDITURE. THUS, EVEN BEFORE THE 198 0 AMENDMENT, THE ACT DID NOT PERMIT A DEDUCTION FOR DEPRECIATION IN RESPECT OF THE COST OF A CAPITAL ASSET ACQUIRED FOR PURPOSES OF SCIENTIFIC RESEARCH TO THE EXTENT SUCH COST HAD BEEN WRITTEN OFF UNDER SECTION 10(2)( XIV)/35(1)AND (2). THE MERE FACT THAT A BASELESS CLAIM WAS RAISED BY S AME OVER- ENTHUSIASTIC ASSESSEES WHO SOUGHT A DOUBLE ALLOWANC E OR THAT SUCH CLAIMS MAY PERHAPS HAVE BEEN ACCEPTED BY SOME AUTHO RITIES, WAS NOT SUFFICIENT TO ATTRIBUTE ANY AMBIGUITY OR DOUBT AS T O THE TRUE SCOPE OF THE PROVISIONS AS THEY STOOD EARLIER.' * ITA NO.3089/AHD /2015 DCIT VS. AMC MEDICAL EDUCATION TRUST ASST.YEAR 2011-12. - 4 - 3.4 FINALLY, AO DISALLOWED THE CLAIM OF DEPRECIATIO N OF RS.1,80,40,668/- AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3.5 THEREAFTER, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO ALLOWED THE APPEAL OF THE APPELLANT WITH FOLLOWING OBSERVATION: THE ISSUE OF ALLOWABILITY OF DEPRECIATION IN THE C ASE OF CHARITABLE TRUST HAS BEEN DECIDED BY THE HON'BLE GUJARAT HIGHT COURT IN THE CASE OF CIT VS. SHETH MANILAL RANCHHODDAS VISHRAM BHAVAN TRUST 198 ITR 598 (GUJ). HEAD NOTE AND THE MAIN FACTS ARE REPRODU CED BELOW FOR REFERENCE: SECTION 11 OF THE INCOME-TAX ACT, 1961 - CHARITABL E OR RELIGIOUS TRUST - EXEMPTION OF INCOME FROM PROPERTY HELD UNDE R - ASSESSMENT YEARS 1971-72 AND 1972-73 - WHETHER WHIL E COMPUTING INCOME UNDER SECTION 11(1)(A), DEPRECIATI ON HAS TO BE ALLOWED - HELD, YES HEADNOTES OF THE JUDGEMENT IS: THE INCOME OF THE ASSESSEE-TRUST WAS MAINLY FROM IM MOVABLE PROPERTY. FOR THE ASSESSMENT YEARS 1971-72 AND 1972 -73, THE ASSESSEE CLAIMED DEPRECIATION. THE ITO REJECTED THE ASSESSEE'S CLAIM ON THE GROUND THAT THE INCOME FROM HOUSE PROP ERTY WAS TO BE CALCULATED ACCORDING TO SECTIONS 22 TO 27. HOWEV ER, ON APPEAL, THE AAC ALLOWED THE ASSESSEE'S CLAIM. ON AP PEAL BY THE REVENUE, THE TRIBUNAL UPHELD THE ORDER OF THE AAC. ON REFERENCE: IN THE CASE OF CIT V. RAO BAHADUR CALAVALA CUNNAN C HETTY CHARITIES 1982] 135 ITR 485, THE MADRAS HIGH COURT HELD THAT THE INCOME FROM THE PROPERTIES HELD UNDER TRUST WOU LD HAVE TO BE ARRIVED AT IN THE NORMAL COMMERCIAL MANNER WITHOUT CLASSIFICATION UNDER THE VARIOUS HEADS SET OUT IN S ECTION 14. IT HELD THAT THE EXPRESSION 'INCOME' HAS TO BE UNDERST OOD IN THE POPULAR OR GENERAL SENSE AND NOT IN THE SENSE IN WH ICH THE INCOME IS ARRIVED AT FOR THE PURPOSE OF ASSESSMENT TO TAX BY ITA NO.3089/AHD /2015 DCIT VS. AMC MEDICAL EDUCATION TRUST ASST.YEAR 2011-12. - 5 - APPLICATION OF SOME ARTIFICIAL PROVISIONS EITHER GI VING OR DENYING DEDUCTION. IT OBSERVED THAT THE COMPUTATION UNDER T HE DIFFERENT CATEGORIES OR HEADS ARISES ONLY FOR THE PURPOSE OF ASCERTAINING THE TOTAL INCOME FOR THE PURPOSES OF CHARGE. THOSE PROVISIONS CANNOT BE INTRODUCED TO FIND OUT WHAT THE INCOME DE RIVED FROM THE PROPERTY HELD UNDER TRUST TO BE EXCLUDED FROM T HE TOTAL INCOME IS, FOR THE PURPOSE OF THE EXEMPTIONS UNDER CHAPTER III. FOLLOWING THE AFORESAID DECISION IN THE INSTANT CAS E THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT HAVING REGARD TO THE SCHEME OF THE ACT, 'INCOME' REFERRED TO IN SECTION 11(1)(A) WAS N OT TO BE COMPUTED NOT IN ACCORDANCE WITH THE PROVISIONS OF T HE ACT BUT IN ACCORDANCE WITH THE NORMAL RULES OF THE ACCOUNTANCY UNDER WHICH THE DEPRECIATION HAS TO BE ALLOWED WHILE COMP UTING SUCH INCOME UNDER SECTION 11(1)(A). 4.1 FURTHER, THE A.O HAS RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. VS. UNION OF INDI A [1993] 199 ITR 43 (SC) WHILE DISALLOWING THE DEPRECIATION OF CAPITAL ASSETS HELD BY CHARITABLE TRUST. THIS ASPECT WAS ALSO ELABORATED B Y HON'BLE ITAT 'C' BENCH, AHMEDABAD IN APPEAL NO. 1322/AHD/2011 IN THE CASE OF SARDAR PATEL INSTITUTE OF PUBLIC ADMINISTRATION FOR ASST Y EAR 2008-09. THE HON'BLE ITAT VIDE PARA-4 HAS OBSERVED AS UNDER: 'BEFORE US LD. CIT-DR HAS SUPPORTED THE ASSESSMENT ORDER AND MADE SUBMISSION THAT THE VIEW OF THE ASSESSING OFFI CER WAS CORRECT. ON THE CONTRARY, THAT THE VIEW OF THE ASSE SSEE ARGUED THAT THE JUDGMENT OF HON'BLE SUPREME COURT IN THE C ASE OF ESCORTS LTD. (SUPRA) IS NOT APPLICABLE IN THE PRESE NT CASE. THE AR FURTHER ARGUED THAT IN THE IDENTICAL FACTS AND CIRC UMSTANCES OF HON'BLE PUNJAB AND HARYANA HIGH COURT HAS DISTINGUI SHED THE JUDGMENT OF THE HON'BLE SUPREME COURT IN FAVOUR OF THE ASSESSEE. WE HAVE CONSIDERED FACTS AND CIRCUMSTANCES OF THE C ASE AND SUBMISSIONS MADE BY THE RESPECTIVE REPRESENTATIVES OF THE PARTIES. THE ASSESSING OFFICER HAS DISALLOWED THE C LAIM FOLLOWING THE JUDGMENT PASSED BY THE HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA). WE FIND THE HON'BLE HIGH COUR T PUNJAB AND HARYANA HAS DISTINGUISHED THE JUDGMENT OF THE HON'B LE SUPREME COURT IN THE CASE OF C1T VS. TINY TOTS EDUCATION SO CIETY 330 ITR 21 (P&H). IN VIEW OF THE FACT THAT THE ISSUE HA S ALREADY BEEN SETTLED BY THE HON'BLE HIGH COURT OF PUNJAB & HARYA NA RESPECTFULLY FOLLOWING THE RATIO LAID THEREIN WE HA D NO INFIRMITY ITA NO.3089/AHD /2015 DCIT VS. AMC MEDICAL EDUCATION TRUST ASST.YEAR 2011-12. - 6 - INTO THE IMPUGNED ORDER OF THE ID. C1T(A). THEREFOR E, THE PRESENT APPEAL STANDS DISMISSED. WE FIND NO INFIRMITY IN TH E ORDER OF THE ID. CIT (A). IN VIEW OF THE ABOVE, THE APPEAL OF TH E REVENUE IS DISMISSED.' 4.2 IN VIEW ABOVE AND RESPECTFULLY FOLLOWING THE JU DGMENTS BY HON'BLE GUJARAT HIGH COURT AS ABOVE, I AM OF THE VI EW THAT ADDITION OF RS.1,80,40,668/- ON ACCOUNT OF DISALLOWANCE OF DEPR ECIATION BE DELETED. GROUND NO.2 IS ACCORDINGLY ALLOWED. 6 AS A RESULT THE APPEAL IS ALLOWED. 4. NOW APPEAL IS BEFORE US. 5. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. THE ASSESSEE HAS BEEN ESTABLISHED ON 05/07/2008 AND DULY REGISTERED WITH THE DEPUTY CHARITY COMMISSIONER, AHMEDABAD AND ALSO REGISTERED WITH THE ASSISTANT REGISTRAR OF SOCIETIES AND OBTAI NED REGISTRATION U/S.12AA OF THE I.T. ACT. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE LD. AO REQUIRED FROM THE ASSESSEES EXPLANATION IN RESPECT OF ALLOWABILITY OF DEPRECIATION ON ASSETS AND TO WHY D EPRECIATION OF RS.1,80,40,668/- CLAIMED SHOULD NOT BE DISALLOWED O N THE GROUND THAT THE APPLICATION OF FUND INCLUDES CAPITAL EXPENDITURE IN CURRED FOR THE OBJECTS OF THE TRUST AND THE DEDUCTION BY WAY OF DEPRECIATI ON AND CAPITAL EXPENDITURE CLAIMED AS DEDUCTION TANTAMOUNT TO DOUB LE DEDUCTION. 5.1 HONBLE BOMBAY HIGH COURT, IN THE CASE OF CIT V S. INSTITUTE OF BANKING PERSONNEL SELECTION [264 ITR 110 (BOM)] HAS CATEGORICALLY HELD THAT SECTION 11 OF THE INCOME TAX ACT MAKES A PROVI SIONS IN RESPECT OF COMPUTATION OF INCOME OF THE TRUST FROM PROPERTY HE LD FOR CHARITABLE OR ITA NO.3089/AHD /2015 DCIT VS. AMC MEDICAL EDUCATION TRUST ASST.YEAR 2011-12. - 7 - RELIGIOUS PURPOSES AND IT ALSO PROVIDES FOR APPLICA TION AND ACCUMULATION OF INCOME. SECTION 32(1) OF THE ACT PROVIDES FOR DE PRECIATION IN RESPECT OF BUILDING, PLANT AND MACHINERY OWNED BY THE ASSES SEE AND USED FOR BUSINESS PURPOSES. IT FURTHER PROVIDES FOR DEDUCTIO N SUBJECT TO SECTION 34 REGARDING CONDITIONS FOR ALLOWING DEPRECIATION AND DEVELOPMENT REBATE. IT WAS HELD THAT INCOME OF A CHARITABLE TRUST DERIVED FROM BUILDING, PLANT AND MACHINERY AND FURNITURE WAS LIABLE TO BE COMPUT ED IN A NORMAL COMMERCIAL MANNER ALTHOUGH THE TRUST MAY NOT BE CAR RYING ON ANY BUSINESS AND THE ASSETS IN RESPECT WHERE OF DEPRECI ATION IS CLAIMED MAY NOT BE BUSINESS ASSETS. 5.2 IN THE CASE OF CIT VS. SHETH MANILAL RANCHHODDA S VISHRAM BHAVAN TRUST 198 ITR 598 (GUJ). IN THIS CASE, IT IS HELD BY THE JURISDICTIONAL HIGH COURT THAT: SECTION 11 OF THE INCOME-TAX ACT, 1961 - CHARITABL E OR RELIGIOUS TRUST - EXEMPTION OF INCOME FROM PROPERTY HELD UNDER - ASSE SSMENT YEARS 1971-72 AND 1972-73 - WHETHER WHILE COMPUTING INCOM E UNDER SECTION 11(1)(A), DEPRECIATION HAS TO BE ALLOWED - HELD, YE S HEADNOTES OF THE JUDGEMENT IS: THE INCOME OF THE ASSESSEE-TRUST WAS MAINLY FROM IM MOVABLE PROPERTY. FOR THE ASSESSMENT YEARS 1971-72 AND 1972-73, THE A SSESSEE CLAIMED DEPRECIATION. THE ITO REJECTED THE ASSESSEE'S CLAIM ON THE GROUND THAT THE INCOME FROM HOUSE PROPERTY WAS TO BE CALCULATED ACCORDING TO SECTIONS 22 TO 27. HOWEVER, ON APPEAL, THE AAC ALLO WED THE ASSESSEE'S CLAIM. ON APPEAL BY THE REVENUE, THE TRIBUNAL UPHEL D THE ORDER OF THE AAC. 5.3 RESPECTFULLY HONBLE SUPREME COURT OF INDIA DEL IVERED ITS DECISION IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RAJASTHAN AND ITA NO.3089/AHD /2015 DCIT VS. AMC MEDICAL EDUCATION TRUST ASST.YEAR 2011-12. - 8 - GUJARAT CHARITABLE FOUNDATION POONA. IT IS HELD BY THE HONBLE SUPREME COURT THAT AS UNDER: 3. AS STATED ABOVE, THE FIRST QUESTION WHICH REQUIR ES CONSIDERATION BY THIS COURT IS: WHETHER DEPRECIATION WAS ALLOWABLE O N THE ASSETS, THE COST OF WHICH HAS BEEN FULLY ALLOWED AS APPLICATION OF I NCOME UNDER SECTION 11 IN THE PAST YEARS? IN THE CASE OF CIT V. MUNISUV RAT JAIN 1994 TAX LAW REPORTER, 1084 THE FACTS WERE AS FOLLOWS. THE A SSESSEE WAS A CHARITABLE TRUST. IT WAS REGISTERED AS A PUBLIC CHA RITABLE TRUST. IT WAS ALSO REGISTERED WITH THE COMMISSIONER OF INCOME TAX , PUNE. THE ASSESSEE DERIVED INCOME FROM THE TEMPLE PROPERTY WH ICH WAS A TRUST PROPERTY. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS FOR ASSESSMENT YEARS 1977-78, 1978-79 AND 1979-80, THE ASSESSEE CL AIMED DEPRECIATION ON THE VALUE OF THE BUILDING @2% AND THEY ALSO CLA IMED DEPRECIATION ON FURNITURE @ 5%. THE QUESTION WHICH AROSE BEFORE THE COURT FOR DETERMINATION WAS : WHETHER DEPRECIATION COULD BE D ENIED TO THE ASSESSEE, AS EXPENDITURE ON ACQUISITION OF THE ASSE TS HAD BEEN TREATED AS APPLICATION OF INCOME IN THE YEAR OF ACQUISITION? I T WAS HELD BY THE BOMBAY HIGH COURT THAT SECTION 11 OF THE INCOME TAX ACT MAKES PROVISION IN RESPECT OF COMPUTATION OF INCOME OF TH E TRUST FROM THE PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES AND IT ALSO PROVIDES FOR APPLICATION AND ACCUMULATION OF INCOME. ON THE OTHER HAND, SECTION 28 OF THE INCOME TAX ACT DEALS WITH CHARGEABILITY O F INCOME FROM PROFITS AND GAINS OF BUSINESS AND SECTION 29 PROVID ES THAT INCOME FROM PROFITS AND GAINS OF BUSINESS AHLL BE COMPUTED IN A CCORDANCE WITH SECTION 30 TO SECTION 43C. THAT, SECTION 32(1) OF T HE ACT PROVIDES FOR DEPRECIATION IN RESPECT OF BUILDING, PLANT AND MACH INERY OWNED BY THE ASSESSEE AND USED FOR BUSINESS PURPOSES. IT FURTHER PROVIDES FOR DEDUCTION SUBJECT TO SECTION 34. IN THAT MATTER ALS O, A SIMILAR ARGUMENT, AS IN THE PRESENT CASE, WAS ADVANCED ON BEHALF OF T HE REVENUE, NAMELY, THAT DEPRECIATION CAN BE ALLOWED AS DEDUCTION ONLY UNDER SECTION 32 OF THE INCOME TAX ACT AND NOT UNDER GENERAL PRINCIPLES . THE COURT REJECTED THIS ARGUMENT. IT WAS HELD THAT NORMAL DEP RECIATION CAN BE CONSIDERED AS A LEGITIMATE DEDUCTION IN COMPUTING T HE REAL INCOME OF THE ASSESSEE ON GENERAL PRINCIPLES OR UNDER SECTION 11(1)(A) OF THE INCOME TAX ACT THE COURT REJECTED THE ARGUMENT ON B EHALF OF THE REVENUE THAT SECTION 32 OF THE INCOME TAX ACT WAS T HE ONLY SECTION GRANTING BENEFIT OF DEDUCTION ON ACCOUNT OF DEPRECI ATION. IT WAS HELD THAT INCOME OF A CHARITABLE TRUST DERIVED FORM BUIL DING, PLANT AND MACHINERY AND FURNITURE WAS LIABLE TO BE COMPUTED I N NORMAL COMMERCIAL MANNER ALTHOUGH THE TRUST MAY NOT BE CAR RYING ON ANY ITA NO.3089/AHD /2015 DCIT VS. AMC MEDICAL EDUCATION TRUST ASST.YEAR 2011-12. - 9 - BUSINESS AND THE ASSETS IN RESPECT WHEREOF DEPRECIA TION IS CLAIMED MAY NOT BE BUSINESS ASSETS. IN ALL SUCH CASES, SECTION 32 OF THE INCOME TAX ACT PROVIDING FOR DEPRECIATION FOR COMPUTATION OF I NCOME DERIVED FROM BUSINESS OR PROFESSION IS NOT APPLICABLE. HOWEVER, THE INCOME OF THE TRUST IS REQUIRED TO BE COMPUTED UNDER SECTION 11 O N COMMERCIAL PRINCIPLES AFTER PROVIDING FOR ALLOWANCE FOR NORMAL DEPRECIATION AND DEDUCTION THEREOF FROM GROSS INCOME OF THE TRUST. I N VIEW OF THE AFORESATATED JUDGMENT OF THE BOMBAY HIGH CURT, WE A NSWER QUESTION NO. 1 IN THE AFFIRMATIVE I.E., IN FAVOUR OF THE ASS ESSEE AND AGAINST THE DEPARTMENT. 4. QUESTION NO. 2 HEREIN IS IDENTICAL TO THE QUESTI ON WHICH WAS RAISED BEFORE THE BOMBAY HIGH COURT IN THE CASE OF DIRECTO R OF INCOME-TAX (EXEMPTION) V. FRAMJEE CAWASJEE INSTITUTE [1993] 10 9 CTR 463. IN THAT CASE, THE FACTS WERE AS FOLLOWS: THE ASSESSEE WAS T HE TRUST. IT DERIVED ITS INCOME FROM DEPRECIABLE ASSETS. THE ASSESSEE TOOK I NTO ACCOUNT DEPRECIATION ON THOSE ASSETS IN COMPUTING THE INCOM E OF THE TRUST. THE ITO HELD THAT DEPRECIATION COULD NOT BE TAKEN INTO ACCOUNT BECAUSE, FULL CAPITAL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISITION OF THE ASSETS. THE ASSESSEE WENT IN APPEAL BEFORE THE ASSI STANT APPELLATE COMMISSIONER. THE APPEAL WAS REJECTED. THE TRIBUNAL , HOWEVER, TOOK THE VIEW THAT WHEN THE ITO STATED THAT FULL EXPENDI TURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISITION OF THE ASSETS, W HAT HE REALLY MEANT WAS THAT THE AMOUNT SPENT ON ACQUIRING THOSE ASSETS HAD BEEN TREATED AS APPLICATION OF INCOME OF THE TRUST IN THE YEAR IN WHICH THE INCOME WAS SPENT IN ACQUIRING THOSE ASSETS. THIS DID NOT MEAN THAT IN COMPUTING INCOME FROM THOSE ASSETS IN SUBSEQUENT YEARS, DEPRE CIATION IN RESPECT OF THOSE ASSETS CANNOT BE TAKEN INTO ACCOUNT. THIS VIE W OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE BOMBAY HIGH COURT IN THE ABOV E JUDGMENT. HENCE, QUESTION NO. 2 IS COVERED BY THE DECISION OF THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. CONSEQUENTLY, QUESTION NO. 2 IS ANSWERED IN THE AFFIRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. 6. IN VIEW OF THE ABOVE TWO HIGH COURTS JUDGMENT A ND THE JUDGMENT OF HONBLE SUPREME COURT OF INDIA, WE DISMISS APPE AL OF THE DEPARTMENT AND IN OUR CONSIDERED OPINION, LD. CIT(A) HAS PASSE D DETAILED AND ITA NO.3089/AHD /2015 DCIT VS. AMC MEDICAL EDUCATION TRUST ASST.YEAR 2011-12. - 10 - REASONED ORDER AND SAME DOES NOT REQUIRE ANY KIND O F INTERFERENCE AT OUR END. 7. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 02 / 02 /201 8 SD/- SD/- ( ) 4 5 ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 02/02/2018 PRITI YADAV, SR.PS !'# $#! # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)-9, AHMEDABAD. 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. % & / BY ORDER, (9-- //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 31/01/2018 (DICTATION-PAD 4 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 01/02/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER