2012 (3) TMI 608 - AT - Income Tax

Summary

Issues involved:
The main issues in this judgment involve the eligibility of the assessee for exemption under section 11 of the Income Tax Act and the disallowance of depreciation claimed by the assessee.

Eligibility for Exemption under Section 11:
The appeal by the Revenue challenges the order of the Commissioner of Income-tax(Appeals) regarding the eligibility of the assessee for claim under section 11 without approval under sub-clause (vi) to section 10(23C). The Tribunal referred to previous cases and the Supreme Court's decisions to emphasize that if donations are received compulsorily for student admissions over and above prescribed fees, the assessee is not entitled to exemption under section 11. The matter was remitted back to the assessing officer for further examination in light of relevant judgments.

Disallowance of Depreciation:
The Assessing Officer disallowed depreciation claimed by the trust, arguing that since the purchase of capital assets is allowed as application of income, depreciation is not allowable. The CIT(A) allowed the claim, leading to the Revenue's appeal. The Tribunal cited precedents to establish that depreciation on fixed assets is an allowable deduction to determine income available for charitable purposes. The issue was remitted back to the Assessing Officer for fresh consideration based on the value of assets allowed under section 11.

Conclusion:
The Tribunal allowed the Revenue's appeal for statistical purposes, directing a fresh consideration of the issues related to exemption under section 11 and the disallowance of depreciation. The judgment highlights the importance of compliance with legal provisions and previous judicial interpretations in determining tax exemptions and deductions.