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Issues involved: Whether depreciation is allowable for a church while computing income under the head "Profits and gains of business or profession."
Summary: The High Court of Karnataka addressed the issue of whether a church is entitled to claim depreciation for its building while computing income. The Income Tax Appellate Tribunal initially disallowed the depreciation claim, stating that the church did not carry on any business or activity for profit. However, the Appellate Authority reversed this decision, noting that the church engaged in various activities and received donations and offerings, thus qualifying as a vocation. The Department appealed to the Tribunal, which held that a church itself is not running a business and therefore denied the depreciation claim. In the High Court, the counsel for the assessee argued that the church, through its activities like delivering sermons and preaching Bible, is engaged in a vocation. The court agreed with this argument, citing the definition of "profession" to include vocation and referring to a Supreme Court decision where teaching Vedanta was considered a vocation. The court concluded that the activities of the church should be considered a vocation, entitling the assessee to claim depreciation for the church building while computing taxable income. Therefore, the High Court ruled in favor of the assessee, allowing the depreciation claim for the church building and answering the question in the negative. No costs were awarded in this case.
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