2015 (7) TMI 806 - HC - Income Tax

Disallowance of depreciation - Assessee claimed to be a charitable trust - ITAT allowed claim - Held that - Assessee had already claimed capital expenditure on assets as expenses and the claim of depreciation on assets was in addition to the capital expenditure claimed. In doing so, the Assessing Officer is stated to have ignored and not abide by the binding judgment of the Honourable Supreme Court of India in the case of Escorts Limited v/s Union of India 1992 (10) TMI 1 - SUPREME Court The view taken by the Tribunal and consistent with that of the Commissioner of Income Tax (Appeals) has been approved by this Court in the case of Commissioner of Income Tax v/s Institute of Banking reported in (2003 (7) TMI 52 - BOMBAY High Court ). - Decided in favour of assessee.

Summary

Issues:
1. Challenge to the order of the Income Tax Appellate Tribunal by the Revenue for the Assessment Year 2007-2008.
2. Disallowance of depreciation claimed by the Assessee and the Revenue's objection.
3. Interpretation of the binding judgment of the Supreme Court in Escorts Limited v/s Union of India regarding depreciation on assets.
4. Approval of the view taken by the Tribunal and Commissioner of Income Tax (Appeals) by the High Court in similar cases.
5. Application of legal precedents in determining the outcome of the Appeal.

Analysis:
1. The Revenue contested the order of the Income Tax Appellate Tribunal for the Assessment Year 2007-2008, raising substantial questions of law related to the treatment of depreciation claimed by the Assessee.
2. The Assessee, a charitable trust managing educational institutions, declared a deficit in its income and expenditure account, claiming depreciation on assets in addition to capital expenditure. The Assessing Officer deleted the depreciation disallowance, leading to the Revenue's objection.
3. The Assessing Officer's decision was challenged based on the Supreme Court's judgment in Escorts Limited v/s Union of India, where the proper treatment of depreciation on assets was a crucial aspect.
4. The High Court, citing previous judgments, including Commissioner of Income Tax v/s Institute of Banking, upheld the Tribunal and Commissioner of Income Tax (Appeals)'s view, indicating consistency in the application of legal principles in similar cases.
5. The High Court, after reviewing relevant judgments and legal precedents, concluded that the Appeal did not raise any substantial question of law, as the Tribunal had appropriately followed established legal principles. The Appeal was dismissed without costs, emphasizing the importance of consistency in legal interpretations.