2012 (12) TMI 1068 - AT - Income Tax

Summary

Issues involved: Whether depreciation amount can be treated as application of income u/s 11(1)(a) of the Income Tax Act.

The judgment pertains to an appeal against the order of the Ld. CIT(A)-II, Kozhikode for the assessment year 2007-08. The only issue raised in the appeal is the treatment of depreciation amount of Rs. 54.38 lakhs as application of income under sec. 11(1)(a) of the Act. The assessee, a charitable institution, claimed depreciation as application of funds, but the Assessing Officer considered it as double deduction since the cost of assets was already claimed as application of funds. The Ld. CIT(A) upheld the AO's decision, leading to the appeal before the ITAT.

During the proceedings, the assessee relied on a decision of the Hon'ble Kerala High Court and various other High Court judgments to support the claim that charitable societies are entitled to claim depreciation. However, both parties agreed that a subsequent decision by the Hon'ble Jurisdictional Kerala High Court in another case had ruled against the assessee's claim. The High Court held that claiming depreciation on assets whose cost was already claimed as application of income would result in double deduction, citing a Supreme Court decision. The ITAT, bound by the later High Court decision, upheld the Ld. CIT(A)'s order.

The High Court in the referenced case allowed the write back of depreciation for the assessee. The assessee requested similar relief from the ITAT, but the ITAT expressed doubts about its authority to grant such relief. The ITAT noted that the power to modify provisions lies with the High Court, not the Tribunal. Therefore, the ITAT declined to provide the requested relief and dismissed the appeal filed by the assessee.

In conclusion, the ITAT dismissed the appeal, citing the binding nature of the later High Court decision and the limitations of the Tribunal's authority under the provisions of the Act. The decision was pronounced on 07-12-2012.