2014 (12) TMI 1263 - AT - Income Tax

Disallowance of depreciation claimed by assessee trust - Held that - In case of trusts registered u/s.12A the claim of depreciation does not amount to double deduction. - Decided in favour of assessee

Summary

Issues:
Claim of depreciation by a trust for Assessment Year 2010-11.

Analysis:
The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) regarding the claim of depreciation by the assessee trust for the Assessment Year 2010-11. The Assessing Officer disallowed the claim of depreciation, stating that it amounts to double deduction as the trust had already claimed capital expenditure as a deduction. The Revenue argued that depreciation is not a cash expenditure and remains with the trust, thus not utilized for charitable purposes. The CIT(Appeals) allowed the claim of depreciation based on precedents set by the Tribunal in similar cases. The Revenue contended that depreciation should not be considered as an application/expenditure in the case of trusts, citing a Supreme Court decision. Despite notice, no one appeared on behalf of the assessee during the proceedings.

The Tribunal noted that the issue of depreciation for trusts had been previously adjudicated in favor of the assessee by a co-ordinate bench in various cases. The Tribunal relied on judgments from different High Courts and previous Tribunal decisions to conclude that in the case of trusts registered under section 12A, the claim of depreciation does not amount to double deduction. The High Court held that since the income of the assessee is exempt, claiming depreciation does not lead to double deduction as argued by the Revenue. The Tribunal found no infirmity in the order of the CIT(Appeals) based on the settled legal position and precedents.

The Revenue relied on a Supreme Court decision regarding double deduction in a different context, but the Tribunal distinguished the facts of that case from the present situation. Various High Courts have consistently ruled that the claim of depreciation by trusts does not constitute double deduction. The Tribunal dismissed the Revenue's appeal based on these reasons, upholding the order of the CIT(Appeals) in favor of the assessee trust.

This detailed analysis of the judgment highlights the key legal arguments, precedents, and decisions that led to the dismissal of the Revenue's appeal regarding the claim of depreciation by the trust for the Assessment Year 2010-11.