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Issues involved: The judgment involves issues related to denial of exemption on the ground of mutuality, disallowance of expenses incurred by the assessee outside India, and disallowance of depreciation vis-à-vis double deduction.
Denial of Exemption on Ground of Mutuality and Disallowance of Expenses: The assessee trust, established by the Government of India, Ministry of Textiles, claimed exemption u/s 11 of the Income Tax Act, 1961. The Assessing Officer (A.O.) disallowed the claim of exemption on the ground that the surplus was not distributable amongst members after dissolution. Additionally, the A.O. noted that expenses incurred outside India could not be considered as application in charitable objects. However, the ld. CIT(A) followed the Tribunal's decision in the assessee's own case for earlier assessment years and deleted the disallowance. The Tribunal upheld the ld. CIT(A)'s decision, citing previous rulings and lack of distinguishing features brought by the Revenue. Disallowance of Depreciation vis-à-vis Double Deduction: The A.O. disallowed the claim of depreciation, citing double deduction, based on certain Supreme Court decisions. However, the ld. CIT(A) deleted this disallowance, relying on the decision of the Hon'ble jurisdictional High Court. The Tribunal, following the recent decision of the Hon'ble Punjab & Haryana High Court, upheld the ld. CIT(A)'s finding, emphasizing that there was no double deduction claimed by the assessee. The Tribunal concluded that the interpretation should be construed in a manner beneficial to the assessee, in line with legal principles. Conclusion: The Tribunal dismissed the Revenue's appeals for the assessment years 2007-08 and 2008-09, upholding the decisions of the ld. CIT(A) on both issues. The Tribunal's order was pronounced on 12-09-2012.
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