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Issues involved: Appeal against orders of Income Tax Appellate Tribunal regarding eligibility for depreciation and exemption under section 12 of the Income Tax Act for a charitable institution.
Eligibility for Depreciation: The Revenue contended that as a Trust enjoying exemption under section 11, the assessee is not entitled to claim depreciation under section 32. However, the court held that educational institutions, even if not for profit, are entitled to exemption and can claim deductions like depreciation. Charitable institutions can carry over surplus and claim benefits under the Act, including depreciation. The court cited precedent to support the eligibility of charitable institutions for depreciation benefits. Addition of Fees Receivable: The Revenue's addition of fees due from KSRTC was deleted by the first appellate authority and confirmed by the Tribunal. The Tribunal found that the amount had been written off by the assessee in earlier years and was not shown as receivable in the balance sheet. The court upheld the Tribunal's decision, stating there was no justification for treating this as income of the assessee. Income Carried Forward: For the assessment year 2003-04, the Revenue disallowed the claim as the income carried forward exceeded the limit reduced from 25% to 15%. However, the Tribunal found that the amount carried forward was for the sole purpose of running the educational institution, which is a charitable object. The court agreed with the Tribunal's decision, noting that the revenue had no evidence to suggest the fund would be used for any other purpose. In conclusion, both appeals filed by the Revenue were dismissed by the High Court of Kerala.
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