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2024 (6) TMI 979 - AT - Income TaxIssues Involved: 1. Denial of depreciation to the assessee. 2. Classification of assessee's activities as charitable or commercial. Summary: The first issue pertains to the denial of depreciation to the assessee. The assessee's claim for depreciation was initially denied by the Assessing Officer (AO) on the grounds that it would amount to a double deduction since the assessee, being a trust, had already claimed a deduction for its capital expenditure. However, the CIT(A) allowed the claim, referencing multiple decisions that support the view that a charitable trust's claim for depreciation does not constitute a double benefit. The Tribunal, in its order for AY 2012-13, upheld this view, stating that the amendment to section 11(6) of the Income Tax Act, which restricts the claim of depreciation, is only applicable prospectively from AY 2015-16. Consequently, the Tribunal set aside the CIT(A)'s order and directed the AO to allow the assessee's claim for depreciation, thereby allowing the assessee's appeal. The second issue revolves around whether the assessee's activities qualify as charitable or commercial. The AO classified the income from statutory charges and other activities as business income, denying the benefit of exemption u/s 11 to 13 of the Act. The CIT(A), however, found that the assessee, a society registered under the Societies Registration Act, 1860, and u/s 12A of the Act, was primarily established for charitable purposes under the Software Technology Park of India (STPI) scheme. The CIT(A) noted that the assessee's activities, including promoting IT development and providing statutory services, were not profit-driven but aimed at public utility, thus qualifying as charitable activities. The CIT(A) also observed that in the subsequent AY 2012-13, the AO had recognized the assessee as a charitable organization, granting it the benefits of sections 11 to 13. The Tribunal, referencing its previous decision for AY 2012-13, upheld the CIT(A)'s findings and dismissed the Revenue's appeal, confirming that the assessee's income should be computed under the provisions of sections 11 to 13 of the Act. In conclusion, the assessee's appeal was allowed, and the Revenue's appeal was dismissed. The Tribunal's order was pronounced in the open court on 10th April, 2024.
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