IN INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA Nos. 600 & 601/Ahd/2014 Assessment Year : 2005-06 & 2010-11 respectively ACIT, Udhna Academy Education Circle-2 Vs Trust, Central Road No.14, Surat Udhna Udyog Nagar, Surat PAN : AAATU 0431 F (Appellant) (Respondent) CO No.155/Ahd/2014 (in ITA No.600/Ahd/2014) Assessment Year : 2005-06 Udhna Academy ACIT, Education Trust, Surat Vs Circle-2 PAN : AAATU 0431 F Surat Cross-objector Original appellant Revenue by : Shri Prasoon Kabra, Sr DR Assessee by : Shri M.K. Patel, AR Date of Hearing : 20/09/2016 Date of Pronouncement: 20/09/2016 O R D E R PER R.P. TOLANI, JUDICIAL MEMBER:- These two appeals by Revenue are directed against orders of Commissioner of Income-Tax (Appeals)-II, Surat dated 20.12.2013 and 19.12.2013 for AYs 2005-06 and 2010-11 respectively. Cross-objection filed by assessee is directed against order of ld. CIT(A)-II, Surat dated 20.12.2013 for AY 2005-06. 2. Before us, at outset, ld. Counsel for assessee submitted that he is not pressing cross-objection; hence cross-objection filed by assessee is dismissed as not pressed. ITA No. 600&601 and CO No.155/Ahd/2014 ACIT vs. Udhna Academy Edn Trust AY : 2005-06 & 2010-11 2 3. common issue raised in both Revenue s appeals is as under:- On facts and circumstances of case, whether ld. CIT(A) was justified in allowing claim of depreciation of Rs.39,67,198/- for AY 2005- 06 and Rs.48,76,882 for AY 2010-11 on assets acquired by Trust from application of income, which was already exempted and consequently giving double benefit of deduction to Trust. 4. Ld. Departmental Representative is heard. 5. ld. Counsel for assessee contended that issue in question is covered in favour of assessee by decision of Tribunal in case of ACIT vs. Institute of Plasma Research in ITA No.1506/Ahd/2009 dated 21.02.2011, holding as under:- 5.1 In context of issue before us, Hon'ble jurisdictional High Court in CIT v. Sheth Manilal Ran Chhoddas Vishram Bhavan Trust, 198 ITR 598(Guj) held as under: Whether depreciation has to be allowed as necessary deduction for computing income of charitable institution was question which came up before Karnataka High Court in CIT v. Society of Sisters of St. Annie (1984] 146 ITR 28. Noticing difference between word " income " and expression " total income " and necessity for providing depreciation in order to maintain correct accounts, High Court held that amount of depreciation debited to accounts of charitable institution has to be deducted to arrive at income available for application to charitable and religious purposes. Same view has been taken by Madhya Pradesh High Court in CIT v. Raipur Pallottine Society [1989] 180 ITR 579. In CIT .v Rao Bahadur Calavala Cunnan Chetty Charities [1982] 135 ITR 485, Madras High Court was required to consider whether, for purpose of computing accumulation in excess of 25 per cent as laid down in section 11(1)(a) of Act, " income " has to be computed under various heads enumerated in Income-tax Act. It held that income from properties held under trust would have to be arrived at in normal commercial manner without ITA No. 600&601 and CO No.155/Ahd/2014 ACIT vs. Udhna Academy Edn Trust AY : 2005-06 & 2010-11 3 classification under various heads set out in section 14. It held that expression " income has to be understood in popular or general sense and not in sense in which income is arrived at for purpose of assessment to tax by application of some artificial provisions either giving or denying deduction. It observed that computation under different categories or heads arises only for purposes of ascertaining total income for purposes of charge. Those provisions cannot be introduced to find out what income derived from property held under trust to be excluded from total income is, for purpose of exemptions under Chapter III. We are in respectful agreement with view taken by Karnataka, Madhya Pradesh and Madras High Courts. We, therefore, answer both questions referred to us in affirmative and against Revenue. No order as to costs 5.2 Similar view has been taken by Hon'ble Punjab and Haryana High Court in CIT vs. Market Committee, Pipli [2010] 45 DTR (P&H) 381 when it was held that depreciation is allowable on capital assets from income of charitable trust for determining quantum of fund which have to be applied for purposes of trust in terms of section 11. 5.3 In light of view taken in aforecited decisions, especially when Revenue have not placed before us either any contrary decision nor any other material so as to enable us to take different view in matter, we are not inclined to interfere. Therefore, ground no.1 in appeal is dismissed. 5.1. It is further contended that this position has been accepted by legislature and with effect from 01.04.2015 by amendment u/s 11(6) by Finance Act, 2015, double claim of depreciation has been barred with effect from 01.04.2015. Thus, up to 31.03.2014, assets of trust, acquired by application of income, are eligible for claim of depreciation. \ 6. We have heard both parties, perused material placed before us and gone through orders of authorities below. Respectfully following ITAT judgment in case of Institute of Plasma Research (supra), relying on judgment of Hon ble jurisdictional High Court in ITA No. 600&601 and CO No.155/Ahd/2014 ACIT vs. Udhna Academy Edn Trust AY : 2005-06 & 2010-11 4 case of Sheth Manilal Ran Chhoddas Vishram Bhavan Trust (supra) and amendment u/s 11(6) by Finance Act, 2015 with effect from 01.04.2015, we uphold order of ld. CIT(A). Thus, both Revenue s appeals are dismissed. 7. In result, Revenue s appeals and assessee s Cross-objection are dismissed. Order pronounced in Court on 20th September, 2016 at Ahmedabad. Sd/- Sd/- (MANISH BORAD) R.P. TOLANI ACCOUNTANT MEMBER (JUDICIAL MEMBER) Ahmedabad; Dated 20/09/2016 *Biju T. Copy of Order forwarded to 1. Appellant 2. Respondent. 3. Concerned CIT 4. CIT(A) 5. DR, ITAT, Ahmedabad 6. Guard file. BY ORDER, TRUE COPY (Dy./Asstt.Registrar) ITAT, Ahmedabad ACIT, Circle-2, Surat v. Udhna Academy Education Trust