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Issues involved: Appeal against the order of the learned CIT(A)- XXI, Ahmedabad u/s 250 read with section 143(3) of the IT Act for the assessment year 2009-10, focusing on the deletion of depreciation disallowance amounting to Rs. 13,74,010/- claimed on assets purchased.
Issue 1 - Disallowance of Depreciation: The appeal challenged the disallowance of depreciation by the learned CIT(A) amounting to Rs. 13,74,010/- on assets purchased, claimed as application of funds u/s 11(1)(a) of the Act. The Tribunal cited previous cases where it was held that income of the assessee trust must be computed on commercial principles, allowing for depreciation. The Tribunal emphasized that granting exemption u/s 11 and depreciation u/s 32 does not result in double deduction, as exemption u/s 11 is not a deduction but an exemption from tax liability. The Tribunal also noted that claiming depreciation does not affect cash position but is essential for asset replacement. The judgment of the Hon'ble Gujarat High Court was followed, and the appeal of the revenue was dismissed. Issue 2 - Precedent and Judicial Decisions: The Tribunal referred to previous decisions, including one where it was held that income from property held under a Trust should be computed based on normal accountancy rules, allowing for depreciation. The Tribunal highlighted that while depreciation is necessary for computing income in a commercial sense, it does not result in double application of funds. The Tribunal upheld the decision of the learned CIT(A) and dismissed the grounds raised by the Revenue. It was emphasized that Section 11(1)(a) and Section 32 of the Act apply independently under different circumstances, and both sections are applicable when their respective conditions are met. Separate Judgment by Judges: No separate judgment was delivered by the judges in this case.
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