2021 (4) TMI 548 - HC - Income Tax

Assessment of trust - depreciation allowable as application of income on charitable objects - Double deduction - Whether the Tribunal was right in holding that the assessee is entitled to claim depreciation on the assets, in the form of application of income, even though cost of purchase of asset was treated as application of income under section 11? - HELD THAT - As decided in M/s.National College Council, Teppakulam, Tiruchirapalli 2021 (4) TMI 469 - MADRAS HIGH COURT dismissed the appeals and answered the substantial questions of law against the Revenue.

Summary

Issues:
Challenging order on depreciation allowance under section 11 for Charitable Trust for AY 2009-2010.

Analysis:
The judgment revolves around the appeal filed by the Revenue against the order passed by the Income Tax Appellate Tribunal regarding the depreciation claimed by a Charitable Trust for the Assessment Year 2009-2010. The Assessing Officer disallowed the depreciation claimed by the assessee, stating that the entire cost of assets was already allowed as an application of funds when purchased. The Commissioner of Income Tax (Appeals) allowed the appeal in favor of the assessee, holding that depreciation should be deducted in arriving at the total income. The Tribunal upheld the decision of the CIT (Appeals), leading to the Revenue filing the current appeal.

The substantial questions of law admitted for consideration in the appeal were related to the allowability of depreciation as an application of income on charitable objects, entitlement of the assessee to claim depreciation on assets despite the cost being treated as application of income under section 11, and the issue of double deduction concerning depreciation claims. During the hearing, the Senior Standing Counsel for the appellant-revenue referred to a Division Bench judgment in a similar case where the substantial questions of law had been decided against the Revenue by the Hon'ble Supreme Court. The Counsel acknowledged that the questions raised in the current appeal had already been answered against the Revenue in previous judgments.

Based on the submissions made by the Senior Standing Counsel, the Court relied on the previous Division Bench judgment and dismissed the Tax Case Appeal, affirming that the questions of law were answered against the Revenue. The judgment highlighted the consistency in decisions regarding the allowability of depreciation for Charitable Trusts under section 11 of the Income Tax Act, emphasizing the legal precedents set by the Hon'ble Supreme Court and the Division Bench of the Court in similar cases.