2011 (5) TMI 949 - AT - Income Tax

Summary

Issues Involved:
The judgment involves the issue of allowability of depreciation to the tune of Rs. 36,53,818/- under section 11 and 12 of the Income-tax Act.

Issue 1: Allowability of Depreciation
The appeal filed by the revenue challenges the order of CIT (Appeals) regarding the allowance of depreciation amounting to Rs. 36,53,818/-. The assessee, a society registered under the Society Registration Act, 1860, claimed exemption u/s 11 and 12 of the Income-tax Act. Initially denied registration u/s 12AA, the society was later granted registration. The CIT (A) allowed the depreciation, stating that it is a legitimate deduction for computing the income of the trust. The judgment of the Hon'ble Supreme Court in Escorts Ltd Vs. Union of India was cited to support the allowance of depreciation. It was emphasized that the provisions relating to compulsory application of income do not affect the computation of income for charitable institutions. Various judgments, including ITO Vs. Trustees of Marathi Mission and CIT Vs. Institute of Banking Personnel Selection, were referred to in support of allowing the depreciation. The ITAT upheld the CIT (A) order based on these precedents, dismissing the appeal of the revenue.

Conclusion:
The ITAT upheld the order of the CIT (A) allowing the depreciation of Rs. 36,53,818/- for the assessee society, emphasizing the legitimate deduction for computing the income of the trust based on relevant legal precedents.