2015 (11) TMI 849 - AT - Income Tax

Claim of depreciation on the assets, cost of which was allowed as a part of utilisation - assessee is a trust registered under section 12A - Held that - Issue of the assessee s claim for depreciation on addition to assets acquired in the relevant period is to be allowed even if the entire cost of the same assets have been claimed by the assessee and allowed as application of its income for charitable purposes, since this issue has been held in favour of the assessee in a number of decisions of the co-ordinate Bench of this Tribunal in the case of Asst. CIT v. Shri Adichunchana giri Shikshana Trust 2013 (11) TMI 123 - ITAT BANGALORE following the decision of the hon ble Bombay High Court in the case of CIT v. Institute of Banking 2003 (7) TMI 52 - BOMBAY High Court . - Decided in favour of assessee.

Summary

Issues:
Allowance of depreciation on assets claimed as part of utilisation by a trust registered under section 12A of the Income-tax Act, 1961.

Analysis:

1. Background:
The appeal filed by the Revenue challenges the decision of the Commissioner of Income-tax (Appeals) allowing the claim of depreciation on assets, the cost of which was considered as part of utilisation by the assessee, a trust registered under section 12A of the Income-tax Act, 1961.

2. Legal Precedents and Arguments:
The Assessing Officer disallowed the depreciation claim based on a decision of the apex court in Escorts Ltd. v. Union of India [1993] 199 ITR 43 (SC). The assessee relied on the decisions of the Tribunal in various cases, including Asst. CIT v. Shri Adichunchanagiri Shikshana Trust [2012] 19 ITR (Trib) 828 (Bang), to support their claim for depreciation.

3. Tribunal's Decision:
The Tribunal considered the issue of allowing depreciation on assets cost claimed as utilisation by the assessee. Referring to previous decisions, including Dr. T. M. A. Pai Foundation and Asst. CIT v. Shri Adichunchanagiri Shikshana Trust, the Tribunal held that depreciation on new assets acquired and utilized for charitable purposes should be allowed, even if the entire cost of the assets was claimed as application of income.

4. Arguments and Rulings on Depreciation:
The Revenue contended that allowing depreciation on assets claimed as utilisation results in double deduction, citing the Escorts Ltd. case. However, the Tribunal upheld the Commissioner's decision, emphasizing that previous Tribunal decisions and the hon'ble Bombay High Court's ruling supported the allowance of depreciation in such cases.

5. Final Decision:
After considering all arguments and legal precedents, the Tribunal dismissed the Revenue's appeal, affirming the Commissioner's decision to allow the assessee's claim for depreciation on new assets acquired and used for charitable purposes. The Tribunal found no reason to interfere with the Commissioner's order.

In conclusion, the Tribunal upheld the allowance of depreciation on assets claimed as utilisation by the trust, following established legal principles and previous decisions. The appeal by the Revenue was dismissed, affirming the decision in favor of the assessee.