2021 (6) TMI 1003 - HC - Income Tax

Assessment of trust - depreciation allowable as application of income on charitable objects - Double deduction - HELD THAT -Substantial questions of law that are raised in the above appeal were already decided in M/s.National College Council, Teppakulam, Tiruchirapalli 2021 (4) TMI 469 - MADRAS HIGH COURT Substantial questions of law, which have been framed in these appeals, have been answered against the Revenue as relying on RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA 2017 (12) TMI 1067 - SUPREME COURT . - Decided against revenue.

Summary

Issues:
Challenge to order passed by Income Tax Appellate Tribunal regarding the allowance of depreciation as a deduction in the computation of funds available for application by a Charitable Trust for the Assessment Year 2009-2010.

Analysis:
The respondent-assessee, a Charitable Trust registered under section 12A of the Income Tax Act, filed its return of income for the Assessment Year 2009-2010. The Assessing Officer disallowed the depreciation claimed by the assessee as a deduction, stating that the entire cost of the assets was already allowed as an application of funds when purchased. The Assessing Officer differentiated between sections 11 and 14, asserting that deductions and allowances under chapter V cannot be used to determine income for section 11 purposes. The Commissioner of Income Tax (Appeals) allowed the assessee's appeal, leading the Revenue to appeal to the Income Tax Appellate Tribunal, which upheld the CIT (Appeals) decision, prompting the Revenue to file the current appeal.

The substantial questions of law admitted for consideration were related to the allowance of depreciation as an application of income on charitable objects, entitlement of the assessee to claim depreciation despite the cost of assets being treated as an application of income under Section 11, and whether allowing depreciation would result in double deduction. The Senior Standing Counsel for the appellant acknowledged that similar issues had been previously decided against the Revenue by the Division Bench and the Supreme Court in related cases. Following these precedents, the questions of law were answered against the Revenue, leading to the dismissal of the appeal without costs.

In light of the previous judgments and the consistent application of legal principles, the High Court dismissed the Tax Case Appeal brought by the Revenue. The Court relied on the decisions made in related cases to uphold the disallowance of depreciation claimed by the assessee, emphasizing the distinction between deductions under different sections of the Income Tax Act. The dismissal of the appeal without costs indicated the Court's alignment with established legal interpretations and precedents in similar matters.