2013 (11) TMI 123 - AT - Income Tax

Tribunal affirms depreciation allowance for charitable institution, dismissing Department's appeal.

The Tribunal upheld the Commissioner of Income-tax (Appeals) decision to allow depreciation for assessment years 2007-08 and 2008-09, following a previous ... Disallowance of depreciation – Charitable trust - The assessee had invested in building, which was held for the purposes of its objectives - The investment in building was taken as application of income - Held that:- Following findings in case of Institute of Banking [2003 (7) TMI 52 - BOMBAY High Court] - the amount of depreciation debited to the account of charitable institutions is to be deducted to arrive at an available income from charitable or religious purposes – Following Shri Adichunchanagiri Shikshana Trust [2010 (1) TMI 1100 - ITAT BANGALORE] - Wherein the Tribunal has allowed depreciation on an asset, even though the investment on the same was allowed as an application of income – Decided in favour of assessee. Issues:Department's appeal against Commissioner of Income-tax (Appeals) orders allowing depreciation for assessment years 2007-08 and 2008-09.Analysis:For the assessment years 2007-08 and 2008-09, the Department appealed against the Commissioner of Income-tax (Appeals) orders allowing depreciation. The Department contended that depreciation was disallowed as it amounted to double deduction, considering the investment in building as an application of income. The appellant, a registered charitable institution, argued for depreciation set-off against gross receipts under section 11 of the Act. The Commissioner of Income-tax (Appeals) allowed the appeal, citing the Tribunal's previous order in the appellant's case for the assessment year 2006-07. The Departmental representative referred to a Cochin Bench Tribunal order, affirmed by the Kerala High Court, to support disallowance of depreciation. The authorised representative relied on the Tribunal's previous order and a Punjab and Haryana High Court judgment favoring depreciation entitlement. The Tribunal upheld the Commissioner's decision, following its previous order for the appellant's case in 2006-07, stating that depreciation should be granted for the assessment years 2007-08 and 2008-09. The appeals by the Department were dismissed based on this reasoning.This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the arguments presented by both parties and the Tribunal's decision based on precedent and legal interpretations.