2021 (7) TMI 313 - HC - Income Tax

Assessment of trust - Depreciation on asset of Charitable trust - HELD THAT - As 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:
- Disallowance of depreciation claim by the Assessing Officer
- Appeal to Commissioner of Income Tax (Appeals) and subsequent order
- Appeal to Income Tax Appellate Tribunal and dismissal
- Admittance of appeal based on substantial questions of law
- Precedents cited in similar cases
- Final judgment and dismissal of appeal

Disallowed Depreciation Claim:
The appellant, a Public Charitable Trust, claimed depreciation on assets in its income tax return for the Assessment Year 2010-11. The Assessing Officer disallowed the depreciation claim, citing that the cost of assets had already been claimed as an application of income towards the Trust's objectives, leading to potential double deduction. This decision was based on a precedent set by the Apex Court in a specific case.

Appeals and Orders:
The appellant appealed to the Commissioner of Income Tax (Appeals), who ruled in favor of the appellant, directing the Assessing Officer to allow the depreciation claim. The Commissioner highlighted that both accounting principles and legal interpretations supported deducting depreciation while calculating income available for application under Section 11. Subsequently, the Revenue filed an appeal before the Income Tax Appellate Tribunal, which dismissed the appeal, leading to the Revenue challenging this decision.

Substantial Questions of Law:
The appeal was admitted based on three substantial questions of law, primarily focusing on whether depreciation could be considered an application of income towards charitable objects, the entitlement of the assessee to claim depreciation despite treating the asset cost as application of income, and the potential for double deduction if depreciation is allowed on already claimed assets.

Precedents and Legal Interpretations:
During the hearing, the Senior Standing Counsel for the Revenue acknowledged that similar substantial questions of law had been addressed in previous cases by the Division Bench and the Supreme Court. Citing specific judgments, it was noted that the questions raised in the present appeal had been decided against the Revenue in prior cases involving the same appellant. Following the legal precedents and decisions, the substantial questions of law were answered against the Revenue, leading to the dismissal of the appeal.

Final Judgment:
Based on the acknowledgment and legal precedents provided, the Court dismissed the appeal, upholding the decisions made in previous cases and affirming that the substantial questions of law raised by the Revenue had already been addressed and decided against them. No costs were awarded in this final judgment.