2018 (6) TMI 1827 - AT - Income Tax

Assessment of trust - claim of depreciation as assessee had claimed the amount incurred on purchase of assets in earlier years as application of income - set off of loss of earlier deficit with current year income - HELD THAT - After hearing Ld. DR and on perusal of the impugned order we find that, since the issues raised in the grounds of appeal are squarely covered by the judgement of Hon ble Jurisdictional High Court and other High Courts which has been followed by the Ld. CIT (A), therefore, we do not find any merits in the grounds raised by the department and accordingly the assessee s current claim is allowed which is in lying with the judicial precedence of the aforesaid High Court judgments. Appeal of the revenue is dismissed.

Summary

Issues:
1. Claim of depreciation leading to double deduction.
2. Allowance of depreciation based on recent court decision.
3. Carry forward of losses disregarding provisions of Income Tax Act.
4. Applicability of provisions for exemptions u/s 11 & 12 of Income Tax Act.

Analysis:

1. Claim of Depreciation Leading to Double Deduction:
The appeals filed by the revenue challenged the order allowing the claim of depreciation to the assessee, contending that the depreciation claimed was already considered as application of income in earlier years. The Assessing Officer (AO) disallowed the claim citing double deduction concerns, supported by the judgment in Escorts Ltd. vs Union of India. The issue revolved around the interpretation of depreciation claims vis-a-vis application of income. The assessee's reliance on various court decisions highlighted the complexity of the matter.

2. Allowance of Depreciation based on Recent Court Decision:
The contention regarding the allowance of depreciation was further supported by a recent decision of the Hon'ble Delhi High Court in the case of DIT(E) vs Charanjiv Charitable Trust. The dispute centered on the interpretation and application of legal precedents in determining the eligibility of the assessee for depreciation claims. The reliance on court decisions underscored the significance of judicial rulings in tax matters.

3. Carry Forward of Losses Disregarding Provisions of Income Tax Act:
Another issue raised was the allowance of carry forward of losses by the Ld. CIT(A), despite provisions under sections 70, 71, 72, 73, and 74 of the Income Tax Act. The AO disallowed the set-off of losses from earlier years with the current year's income, emphasizing the statutory framework governing loss adjustments. The conflict between judicial precedents and statutory provisions added complexity to the decision-making process.

4. Applicability of Provisions for Exemptions u/s 11 & 12 of Income Tax Act:
The final issue questioned the applicability of Income Tax Act provisions on carry forward of losses to entities claiming exemptions under sections 11 and 12 of the Act. The Ld. CIT(A) directed the AO to allow the benefit of carry forward of deficits or losses, aligning with the precedents set by various jurisdictional High Courts. The interplay between exemptions and loss adjustments highlighted the need for a nuanced understanding of tax laws and court decisions.

In conclusion, the judgment by the Appellate Tribunal ITAT Delhi addressed multiple complex issues related to depreciation claims, loss adjustments, and the interplay between legal precedents and statutory provisions. The decision underscored the importance of judicial precedents in guiding tax assessments and the need for a thorough analysis of legal frameworks in resolving tax disputes.