2012 (6) TMI 822 - AT - Income Tax

Whether CIT(A) is justified in confirming the action of the assessing officer in disallowing the claim of depreciation to the appellant society in respect of assets purchased and used for the purposes of the society? - Held NO - Allow depreciation on the written down value of the assets of assessee trust.

Summary

Issues:
1. Disallowance of depreciation claimed by the assessee.
2. Interpretation of provisions of section 11(1) of the Income Tax Act.
3. Consideration of previous tribunal and high court judgments on similar issues.

Analysis:
1. The appeal was filed against the order of the ld. CIT(A) regarding the disallowance of depreciation claimed by the assessee for assets purchased and used for the society. The appellant argued that depreciation should be allowed for working out the surplus under section 11(1) of the Act. The Tribunal noted that the issue primarily revolved around the disallowance of depreciation claimed by the assessee in relation to assets used for the society.

2. The counsel for the assessee contended that the matter was previously decided in favor of the assessee by the Tribunal for assessment years 2005-06 and 2006-07. The Tribunal had ruled that the assessee was entitled to depreciation and deduction thereof from the gross income even when income was computed under section 11 of the Act. The appellant also cited judgments from various High Courts supporting their position.

3. The Tribunal, after considering the submissions and reviewing the records, found that the issue was indeed covered by its previous orders and similar views expressed by various High Courts. Referring to the Tribunal's order for assessment year 2006-07, the Tribunal reiterated the principle that the assessee was entitled to depreciation and deduction thereof from gross income even under section 11 of the Act. Consequently, the Tribunal set aside the order of the ld. CIT(A) and directed the Assessing Officer to allow depreciation on the written down value of the assets, following the precedent set by previous judgments.

In conclusion, the Tribunal upheld the assessee's claim for depreciation, emphasizing that depreciation should be allowed even when income is computed under section 11 of the Act. The decision was based on previous tribunal rulings and High Court judgments supporting the allowance of depreciation for assets used for the society's purposes.