2016 (9) TMI 1584 - AT - Income Tax

Deprecation to assessee trust - as contented with effect from 01.04.2015 by amendment u/s 11(6) by Finance Act 2015 the double claim of depreciation has been barred with effect from 01.04.2015. Thus up to 31.03.2014 the assets of the trust acquired by application of income are eligible for claim of depreciation - whether the ld. CIT(A) was justified in allowing the claim of depreciation? - HELD THAT - Respectfully following the ITAT judgment in the case of Institute of Plasma Research 2011 (2) TMI 1587 - ITAT AHMEDABAD relying on judgment in the case of Sheth Manilal Ran Chhoddas Vishram Bhavan Trust 1992 (2) TMI 51 - GUJARAT HIGH COURT and the amendment u/s 11(6) by Finance Act 2015 with effect from 01.04.2015 we uphold the order of ld. CIT(A). Thus both the Revenue s appeals are dismissed.

Summary

Issues:
- Whether the claim of depreciation on assets acquired by the Trust from the application of income, which was already exempted, results in double benefit of deduction to the Trust.

Analysis:
1. The appeals by the Revenue were directed against the orders of the Commissioner of Income-Tax (Appeals)-II for AYs 2005-06 and 2010-11. The common issue raised in both appeals was regarding the justification of allowing the claim of depreciation on assets acquired by the Trust from the application of income, potentially leading to double benefit for the Trust.

2. The assessee's counsel argued that the issue was in favor of the assessee based on a Tribunal decision and various High Court judgments. The argument emphasized the necessity of providing depreciation to maintain correct accounts and arrive at the income available for charitable purposes. The counsel also pointed out that the legislature had subsequently barred the double claim of depreciation with an amendment, effective from 01.04.2015.

3. The Tribunal, after hearing both parties and considering the relevant judgments and legislative amendment, upheld the order of the ld. CIT(A). The decision was based on the precedent set by the Institute of Plasma Research case, the judgment of the jurisdictional High Court in the Sheth Manilal Ran Chhoddas Vishram Bhavan Trust case, and the amendment under section 11(6) by the Finance Act, 2015. Consequently, the Tribunal dismissed both Revenue's appeals and the assessee's Cross-objection.

4. The judgment was pronounced on 20th September 2016 at Ahmedabad, with the Tribunal affirming the decision to allow the claim of depreciation on assets acquired by the Trust from the application of income, in line with the legal precedents and the applicable legislative provisions up to the specified date.