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2012 (9) TMI 180 - AT - Income TaxDisallowance of claim of depreciation - expenditure incurred on acquisition of capital asset has already been allowed - assessee is an AOP registered u/s 12AA - assessment was reopened u/s 147 - Held that - The income of the appellant being exempt the appellant is only claiming that the depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purpose of the Trust. There is no double deduction claimed by the appellant as stated by the Assessing Officer. It cannot be held that double benefit is given in allowing claim for depreciation for computing income for the purposes of Section 11 - against revenue. Decision in Escorts Ltd vs Union of India (1992 (10) TMI 1 - SUPREME COURT) distinguished.
Issues:
Appeals against CIT(A) orders for assessment years 2005-06 and 2006-07 regarding depreciation claim. Analysis: 1. Issue of Depreciation Claim: The main issue in the appeals was the allowance of depreciation claimed by the assessee for assessment years 2005-06 and 2006-07. The CIT/DR argued that the depreciation should not be allowed as the expenditure on the capital asset had already been allowed as application of income, leading to double deduction. The Assessing Officer disallowed the depreciation, relying on various decisions, and reopened the assessment. The CIT(A) held that allowing depreciation for computing income under section 11 does not amount to double benefit and directed the Assessing Officer to allow the claimed depreciation. 2. Trust's Status and Exemption: The assessee was an AOP Trust registered under section 12AA of the Income-tax Act, 1961. The Assessing Officer disallowed the depreciation on the ground of double deduction due to the exempt status of the income. However, the CIT(A) referred to several judgments, including the decision of the Hon'ble P&H High Court, to support the view that claiming depreciation for computing income under section 11 does not result in double benefit for the assessee. 3. Judicial Precedents and Interpretation: The CIT(A) based the decision on various case laws, including judgments by the Supreme Court and High Courts, to establish that allowing depreciation for charitable institutions like the appellant Trust does not lead to double deduction or benefit. The CIT(A) specifically mentioned the decision of the Hon'ble P&H High Court in the case of M/s Tiny Tots Educational Society, which supported the appellant's position regarding the treatment of depreciation in computing income for charitable purposes. 4. Appellate Tribunal's Decision: The Appellate Tribunal upheld the CIT(A)'s decision, noting that the order was supported by the decision of the Hon'ble P&H High Court and the Chennai Bench of the Tribunal. The Tribunal found no error in the CIT(A)'s order and dismissed the Revenue's appeals for both assessment years, confirming the allowance of depreciation claimed by the assessee Trust. In conclusion, the Appellate Tribunal upheld the CIT(A)'s decision to allow the depreciation claimed by the assessee Trust for assessment years 2005-06 and 2006-07, emphasizing that such allowance did not result in double deduction or benefit considering the Trust's exempt status. The Tribunal's decision was supported by judicial precedents and the interpretation of relevant provisions under the Income-tax Act, leading to the dismissal of the Revenue's appeals.
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