2015 (7) TMI 1434 - AT - Income Tax

Exemption u/s 11 - depreciation on fixed assets - Double deduction - HELD THAT - We note that the assessee is engaged in carrying out charitable activities by making donation to the different organizations, which are carrying out charitable activities as defined in section 2(15) - Before finalization of assessment, the assessee filed the necessary details, as called for by the Assessing Officer which were examined by him. Assessee filed copy of 12A certificate along with the certificate u/s 80G of the Act and also the certificate issued by Charity Commissioner. From the record of the assessee, it was found by the AO that the assessee has claimed depreciation through application within the meaning of section 11(1)(a) of the Act for availing exemption u/s 11 of the Act. The stand of the ld. DR as well as the conclusion drawn by the AO is that the assessee has claimed double deduction as the capital expenditure incurred on the assets has already been allowed as application of income. On appeal, before the CIT (Appeals), reliance was placed upon the decision from Hon ble jurisdictional High Court in CIT vs Institute of Banking Personnel 2003 (7) TMI 52 - BOMBAY HIGH COURT - AO was directed to allow claim of depreciation to the assessee. The Revenue is aggrieved and is in appeal before this Tribunal. We note that the Hon ble jurisdictional High Court in the aforementioned case is allowable as a application of income although the deduction was allowed, when the asset was purchase originally. The assessee before CIT (Appeals) explained that no capital expenditure was claimed by the assessee in its income and expenditure account in any of the earlier years. Respectfully following the decision from Hon ble jurisdictional High Court, we affirm the stand of the ld. Commissioner of Income Tax (Appeals). Appeal of the Revenue is dismissed.

Summary

Issues involved:
1. Interpretation of law regarding double deduction of depreciation.
2. Application of income under section 11 of the Income Tax Act, 1961.
3. Allowance of depreciation on fixed assets.
4. Consistency in decisions between the Tribunal and High Court.

Interpretation of law regarding double deduction of depreciation:
The appeal dealt with the question of whether double deduction could be presumed if not specifically provided by law, in addition to normal deduction. The Revenue contested the order of the ld. First Appellate Authority, Mumbai, arguing that the Hon'ble High Court ignored the ratio of previous judgments by the Hon'ble Supreme Court. The Tribunal reviewed the arguments presented by both sides and examined the material on record. The Tribunal referred to previous decisions and concluded that the assessee, engaged in charitable activities, was entitled to depreciation without double deduction as claimed by the Revenue. The Tribunal affirmed the decision of the ld. Commissioner of Income Tax (Appeals) based on the interpretation of the law and previous judgments.

Application of income under section 11 of the Income Tax Act, 1961:
The assessee, involved in charitable activities, claimed depreciation within the meaning of section 11(1)(a) of the Act for exemption under section 11. The Revenue contended that the assessee claimed double deduction as the capital expenditure on assets had already been allowed as application of income. However, the Tribunal, after analyzing the details provided by the assessee and considering relevant legal precedents, upheld the claim of the assessee regarding the application of income. The Tribunal emphasized that the assessee had not claimed capital expenditure in previous years, supporting the allowance of depreciation under section 11.

Allowance of depreciation on fixed assets:
The Revenue raised concerns about allowing depreciation on fixed assets, arguing that it would result in double deduction contrary to previous Supreme Court judgments. The Tribunal, after reviewing the facts and legal arguments, found in favor of the assessee. The Tribunal cited previous decisions by the Hon'ble Bombay High Court and the Tribunal itself, where similar issues were decided in favor of the assessee. The Tribunal dismissed the appeal filed by the Revenue, affirming the decision of the ld. Commissioner of Income Tax (Appeals) to allow depreciation claimed by the assessee.

Consistency in decisions between the Tribunal and High Court:
The Tribunal highlighted the consistency in decisions between the Tribunal and the Hon'ble High Court regarding similar issues in previous years. The Tribunal referred to specific cases where the High Court and Tribunal had ruled in favor of the assessee on matters related to depreciation and double deduction. By aligning with the decisions of the High Court and the Tribunal in previous cases, the Tribunal dismissed the appeal filed by the Revenue, maintaining the stance taken by the ld. Commissioner of Income Tax (Appeals).

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