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The Director Of Income Tax, New Delhi v. All India Managment Association, New Delhi - INCOME TAX REFERENCE No. 36 of 1994  RD-AH 1819 (3 August 2005)
INCOME TAX REFERENCE No. 36 Of 1994.
The Director of Income-tax, New Delhi. Applicant
All India Management Association, New Delhi. Respondent.
Hon'ble R. K. Agrawal, J.
Hon'ble Rajes Kumar, J.
At the instance of the Revenue, the Income Tax Appellate Tribunal, New Delhi has referred the following question of law under section 256 (1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") relating to the Assessment Year 1984-85 for opinion to this Court.
" Whether on the facts and in the circumstances of the case, the Ld. ITAT is correct in law in upholding the Dy. CIT (A)'s order in allowing depreciation on fixed assets as applicable under section 11 of the Act?"
Briefly stated the facts giving rise of the present Reference are as follows.
The assessee-opposite party (hereinafter referred to as "the assessee") is an association of person and claimed to be a charitable institution. The Income-tax Officer has disallowed depreciation amounting to Rs.2, 41,904/- on capital assets. When the matter was brought in first appeal, the first appellate authority has allowed provision for depreciation on capital asset on the basis of various decisions of the High Courts. The revenue brought the matter to the Income Tax Appellate Tribunal. The Tribunal after hearing the parties observed as under:
" We find no fault with that order. Learned D.R. has not been able to advance any argument, on the basis of which the depreciation on capital assets could be disallowed. From the copy of the balance sheet filed by the assessee, we find that the assessee holds fixed assets amounting to Rs.28, 10,840/-. It would be, therefore, not appropriate to disallow the provision for depreciation. The A.O. has not given any reason for disallowing depreciation amount to Rs. 2,41,904/-. We find that the CIT (A) has rightly cancelled the disallowance regarding the depreciation."
We have heard Sri Shambhu Chopra, learned Standing Counsel appearing on behalf of the Revenue.
The issue involved in the present case is squarely covered by the decision of the Calcutta High Court in the case of Commissioner of Income Tax Versus Bhoruka Public Welfare Trust reported in (1999) 240 ITR 513, the Calcutta High Court following the decision of Karnataka High Court in the case of CIT Versus Society of the Sisters of St. Anne reported in 146 ITR 28 held that in the case of a charitable trust the income should be computed on commercial basis as shown in the books of account of the assessee and the amount of depreciation debited to the accounts of the charitable institution is to be deducted to arrive at the income available for application to charitable purposes.
Respectfully following the aforesaid decision, we answer the question referred to us in the affirmative i.e. in favour of the assessee and against the assessee. However, there shall be no order as to costs.
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