2011 (9) TMI 1113 - AT - Income Tax

ITAT Pune Upholds Depreciation Allowance for Educational Trust

The Appellate Tribunal ITAT Pune dismissed the Revenue's appeal against the Commissioner of Income-tax (Appeals) order, affirming the allowance of ... - Issues Involved: Appeal against the order of the Commissioner of Income-tax (Appeals) regarding the allowance of depreciation on immovable property.Issue 1: Allowance of DepreciationThe Revenue contended that the Commissioner of Income-tax (Appeals) erred in allowing the assessee's claim of depreciation on immovable property amounting to Rs. 59,44,712, despite the capital expenditure on the assets being treated as application of income in previous years. The Assessing Officer disallowed the depreciation claim as the corresponding capital expenditure had already been allowed as application of income. The assessee, a trust running educational institutions, relied on the judgment of the Hon'ble Bombay High Court in DIT(E) v Framjee Cawasjee Institute to justify the claim. The Commissioner of Income-tax (Appeals) upheld the claim based on the High Court's decision. The Revenue argued that allowing depreciation would result in double deduction, but the Tribunal affirmed the Commissioner's order, citing precedents and stating that denial of depreciation solely based on past application of income was not justified.Issue 2: Legal Precedents and InterpretationThe Tribunal considered the Revenue's reliance on the decision of the Hon'ble Supreme Court in Escorts Ltd v. Union of India, where the Revenue claimed double deduction. However, the Tribunal found that the judgment was distinguishable, as there was no instance of double deduction in the present case. Referring to the judgment of the Hon'ble Punjab & Haryana High Court in CIT, Karnal v. Market Committee, the Tribunal concluded that the Revenue's plea based on the Escorts Ltd. case lacked merit. Upholding the Commissioner's order, the Tribunal emphasized that the allowance of depreciation should not be denied solely on the grounds of past application of income, as per the decisions of the jurisdictional High Court and relevant precedents.In conclusion, the Appellate Tribunal ITAT Pune dismissed the Revenue's appeal against the Commissioner of Income-tax (Appeals) order, affirming the allowance of depreciation on immovable property for the assessee trust running educational institutions. The Tribunal's decision was based on the interpretation of legal precedents and the principle that denial of depreciation should not be automatic based on past application of income, as established by relevant court judgments.