ITAT Chennai upholds assessee's depreciation claim, dismissing Revenue's appeals.

The ITAT Chennai dismissed the Revenue's appeals and upheld the CIT(A)'s orders, allowing the assessee's claim of depreciation for both assessment years. The ITAT held that the depreciation should be deducted from income to determine the funds to be applied for trust purposes, emphasizing that it did not amount to double deduction. The decision was based on established legal principles and precedents cited, directing the Assessing Officer to allow the depreciation claim for the assessee.

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Issues:
The judgment involves the issue of whether capital expenditure should be treated as application of income of the Trust under Section 11, and if allowing depreciation would amount to double deduction, as well as the computation of income of the trust after providing for normal depreciation on commercial principles.

Analysis:
The appeals were filed against separate orders of the CIT(A)-XII, Chennai, where the assessee claimed common grounds of appeal in both assessment years. The primary issue in both years was the CIT(A) holding that capital expenditure should be treated as application of income of the Trust under Section 11, and allowing depreciation would amount to double deduction. The assessee argued that the income of the trust should be computed after providing for normal depreciation on commercial principles, citing various judicial decisions supporting their claim.

The Assessing Officer disallowed the assessee's claim of depreciation, stating that the entire investment in fixed assets was considered as application of income, leading to double deduction if depreciation was allowed. The CIT(A) upheld the Assessing Officer's decision, prompting the assessee to appeal. The assessee presented judgments from the P&H High Court and the Chennai Tribunal supporting their position that allowing depreciation to the trust would not result in double deduction.

After considering the submissions and relevant case law, the ITAT Chennai concurred with the decisions of the P&H High Court and the Chennai Tribunal. They held that the assessee was not claiming double deduction but seeking to reduce depreciation from income to determine the percentage of funds to be applied for trust purposes. As the issue was conclusively covered in favor of the assessee, the ITAT directed the Assessing Officer to allow the claim of depreciation for both assessment years, ultimately allowing the appeals of the assessee.

In conclusion, the ITAT Chennai dismissed the appeals of the Revenue, upholding the orders of the CIT(A) and allowing the claim of depreciation for the assessee in both assessment years, based on the established legal principles and precedents cited during the proceedings.

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