2014 (3) TMI 1142 - AT - Income Tax

Depreciation claim of assessee trust - double deduction - Held that - Substantial question of law as it stands concluded by the decision of this Court in M/s. Gem & Jewellery Exports Promotion Council 2011 (2) TMI 1511 - BOMBAY HIGH COURT as well as CIT v/s. Institute of Banking Personnel Services 2003 (7) TMI 52 - BOMBAY HIGH COURT ignoring the stand of the revenue that allowance of depreciation on the assets, the cost of which has already been allowed as a deduction on account of application of income, would amount to double deduction - Decided in favour of assessee.

Summary

Issues:
- Allowance of depreciation to a charitable trust
- Claim of carry forward deficit by a charitable trust

Issue 1: Allowance of Depreciation to a Charitable Trust
The appeal was filed by the revenue against the order passed by the CIT(A) for A.Y. 2008-09, challenging the direction to allow the claim of depreciation amounting to a specific sum. The revenue contended that granting depreciation to the assessee, a charitable trust, would result in double deduction. The CIT(A) reversed the AO's decision, citing a Bombay High Court judgment. The ITAT Mumbai noted that the issue was covered in favor of the assessee by subsequent decisions of the Bombay High Court and the ITAT Mumbai Benches. The ITAT Mumbai upheld the relief granted by the CIT(A) based on the precedents and dismissed the revenue's appeal.

Issue 2: Claim of Carry Forward Deficit by a Charitable Trust
The revenue also contested the direction of the CIT(A) regarding the allowance of a carry forward deficit and the treatment of capital expenditure. The CIT(A) had directed to consider the deficit in each year without considering certain accumulations. The revenue challenged this direction, but the ITAT Mumbai found that the issue was covered by the Bombay High Court's decision and declined to interfere with the relief granted by the CIT(A). Consequently, the ITAT Mumbai dismissed the revenue's appeal, affirming the decision of the CIT(A) in this regard.

In conclusion, the ITAT Mumbai dismissed the revenue's appeal, upholding the CIT(A)'s decision to allow depreciation to the charitable trust and the treatment of the carry forward deficit. The judgments of the Bombay High Court and the ITAT Mumbai Benches played a crucial role in determining the outcome of the case.