2013 (4) TMI 798 - AT - Income Tax

Depreciation claim by assessee trust - Held that - Hon ble Supreme Court in the case of CIT v. Vegetable Products Ltd. (1973 (1) TMI 1 - SUPREME Court ) where the Apex Court has held that when different views are available on the subject, the views favourable to the assessee should be adopted. It is in the light of the above legal pronouncement that the Tribunal has held that the assessee can claim depreciation even though capital expenditure have been treated as application of funds for charitable purposes.

Summary

Issues:
Appeal by Revenue against CIT(A) order regarding treatment of capital expenditure as application of income leading to double deduction.

Analysis:
The appeal pertains to the assessment year 2009-10 where the Revenue challenges the order of the Commissioner of Income-tax(Appeals) at Chennai. The sole ground raised by the Revenue is related to the treatment of capital expenditure of `57,44,426 as application of income, resulting in alleged double deduction. The Revenue contends that allowing further depreciation on this amount leads to incorrect profit calculation and challenges the method adopted by the CIT(A).

The Income-tax Appellate Tribunal, 'B' Bench, Chennai, had previously considered a similar issue in the assessee's case for the assessment years 2006-07 and 2008-09. In a decision dated 14.12.2012, the Tribunal upheld the CIT(A)'s direction, treating depreciation as application of funds for charitable purposes. The Tribunal relied on various legal precedents to support its decision, including the judgments in DIT v. Vishwa Jagriti Mission, CIT v. Market Committee, Pipli, and CIT v. Society of Sisters of St. Anni. Additionally, the Tribunal cited the Supreme Court's ruling in CIT v. Vegetable Products Ltd., emphasizing the adoption of views favorable to the assessee when multiple interpretations exist.

Based on the legal pronouncements and precedents, the Tribunal affirmed the order of the CIT(A) and dismissed the Revenue's appeal. The judgment was pronounced in open court on April 22, 2013, in Chennai. The decision highlights the importance of interpreting tax laws in a manner that benefits the assessee when faced with differing views on a particular issue.