2014 (11) TMI 1075 - HC - Income Tax

Court rules in favor of appellant on depreciation for charitable assets, not addressing separate admissibility issue.

Jyotirmai Club Versus Director Of Income Tax (Exemptions) – 1

The Court, following a previous judgment, ruled in favor of the appellant regarding entitlement to depreciation for assets used for charitable purposes, ... Entitlement to depreciation in respect of its assets used for charitable purposes - Held that:- We find that issue raised by the first question is covered by the judgment of Commissioner of Income Tax, Siliguri Vs. Siliguri Regulated Market Committee [2014 (8) TMI 686 - CALCUTTA HIGH COURT ] holding that the appellant was entitled to depreciation in respect of its assets used for charitable purposes . We in respectfully following the judgment answer the question in the negative and in favour of the assessee. Issues Involved:1. Entitlement to depreciation for assets used for charitable purposes.2. Admissibility of depreciation under section 32 in computing business income.3. Application of judgment of the Hon'ble Karnataka High Court in a specific case.Entitlement to Depreciation for Assets Used for Charitable Purposes:The appeal under section 260A of the Income Tax Act, 1961 was filed against the order of the Income Tax Appellate Tribunal. The main issue was whether the appellant was entitled to depreciation for assets used for charitable purposes or if depreciation was admissible only under section 32 for computing business income. The Court found that the issue was covered by an unreported judgment of the Court in another case. The Court, respectfully following this judgment, answered the question in the negative and in favor of the assessee. Consequently, the appeal was disposed of on this issue.Admissibility of Depreciation under Section 32 in Computing Business Income:The second question raised in the appeal was whether the Tribunal was justified in not following a specific judgment of the Hon'ble Karnataka High Court and holding that it was neither good law nor binding. The Court did not delve into this question as the first issue regarding entitlement to depreciation for assets used for charitable purposes was already resolved in favor of the assessee based on a previous judgment. Therefore, the Court did not provide a separate analysis or decision on this specific question.Application of Judgment of the Hon'ble Karnataka High Court:The judgment of the Hon'ble Karnataka High Court in a specific case was cited as a reference point in the appeal. However, the Court did not directly address the question of whether the Tribunal was justified in not following this judgment. Instead, the Court's decision was primarily based on the resolution of the first issue related to the entitlement to depreciation for assets used for charitable purposes. Therefore, the application of the judgment of the Hon'ble Karnataka High Court was not a significant factor in the final disposition of the appeal.