2013 (11) TMI 123 - AT - Income Tax

Disallowance of depreciation Charitable trust - The assessee had invested in building, which was held for the purposes of its objectives - The investment in building was taken as application of income - Held that - Following findings in case of Institute of Banking 2003 (7) TMI 52 - BOMBAY High Court - the amount of depreciation debited to the account of charitable institutions is to be deducted to arrive at an available income from charitable or religious purposes Following Shri Adichunchanagiri Shikshana Trust 2010 (1) TMI 1100 - ITAT BANGALORE - Wherein the Tribunal has allowed depreciation on an asset, even though the investment on the same was allowed as an application of income Decided in favour of assessee.

Summary

Issues:
Department's appeal against Commissioner of Income-tax (Appeals) orders allowing depreciation for assessment years 2007-08 and 2008-09.

Analysis:
For the assessment years 2007-08 and 2008-09, the Department appealed against the Commissioner of Income-tax (Appeals) orders allowing depreciation. The Department contended that depreciation was disallowed as it amounted to double deduction, considering the investment in building as an application of income. The appellant, a registered charitable institution, argued for depreciation set-off against gross receipts under section 11 of the Act. The Commissioner of Income-tax (Appeals) allowed the appeal, citing the Tribunal's previous order in the appellant's case for the assessment year 2006-07. The Departmental representative referred to a Cochin Bench Tribunal order, affirmed by the Kerala High Court, to support disallowance of depreciation. The authorised representative relied on the Tribunal's previous order and a Punjab and Haryana High Court judgment favoring depreciation entitlement. The Tribunal upheld the Commissioner's decision, following its previous order for the appellant's case in 2006-07, stating that depreciation should be granted for the assessment years 2007-08 and 2008-09. The appeals by the Department were dismissed based on this reasoning.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the arguments presented by both parties and the Tribunal's decision based on precedent and legal interpretations.