2021 (4) TMI 886 - HC - Income Tax

Depreciation claim to assessee trust - Assessee claiming exemption under Section 11 - allowable on the fixed asset (the cost of the capital asset) acquired for charitable purposes as if so allowed it would amount to double deduction, which cannot be the intention of the legislature? - HELD THAT - When the appeals are taken up for hearing, Mr.J.Narayanasamy, learned senior standing counsel appearing for the appellant Revenue fairly submitted the substantial questions of law which has been framed in these appeals, have been answered against the Revenue by the Hon'ble Supreme Court in CIT Vs. Rajasthan and Gujarati Charitable Foundation 2017 (12) TMI 1067 - SUPREME COURT . Following the judgment of the Hon'ble Supreme Court reported in RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA 2017 (12) TMI 1067 - SUPREME COURT and NATIONAL COLLEGE COUNCIL, TEPPAKULAM, TIRUCHIRAPALLI. 2021 (4) TMI 469 - MADRAS HIGH COURT and M/S. NATIONAL COLLEGE COUNCIL 2019 (8) TMI 1671 - MADRAS HIGH COURT Substantial question of law is answered against the revenue and the appeals are dismissed.

Summary

Issues:
Challenging orders passed in I.TA.Nos.1086 & 1087/Mds/2010 for assessment years 2005-06 & 2006-07 on the file of Income Tax Appellate Tribunal, Chennai, "D" Bench.

Analysis:
The Revenue filed appeals against the orders passed by the Income Tax Appellate Tribunal for the assessment years 2005-06 & 2006-07. The substantial question of law raised was whether the depreciation claimed by the assessee, seeking exemption under Section 11 of the Act, on fixed assets acquired for charitable purposes, would lead to double deduction, contrary to legislative intent. During the hearing, the senior standing counsel for the Revenue acknowledged that similar questions had been decided against the Revenue by the Supreme Court in a previous case. Referring to judgments in other cases, the counsel conceded that the substantial questions of law had been answered against the Revenue, leading to the dismissal of the appeals by the High Court.

The learned counsel for the Revenue cited a Supreme Court judgment and previous decisions of the High Court where similar issues had been addressed, resulting in the dismissal of appeals and adverse rulings against the Revenue. Following the precedent set by the Supreme Court and the High Court's Division Bench, the substantial question of law was resolved against the Revenue, leading to the dismissal of the appeals without costs. The judgments cited by the counsel established a consistent interpretation of the law regarding depreciation claims by entities claiming exemption under Section 11 of the Act, preventing double deductions and aligning with the legislative intent.

Therefore, the High Court, in line with the precedent set by the Supreme Court and previous decisions of the Division Bench, dismissed the appeals filed by the Revenue challenging the orders of the Income Tax Appellate Tribunal. The consistent interpretation of the law regarding depreciation claims by entities seeking exemption under Section 11 of the Act was upheld, ensuring that double deductions were not allowed, in accordance with legislative intent. The dismissal of the appeals without costs signified the alignment of the present judgment with established legal principles and interpretations in similar cases.