Tribunal upholds assessee's depreciation claim for assessment year 2007-08

The Tribunal dismissed the Revenue's appeal challenging the disallowance of depreciation claimed by the assessee for the assessment year 2007-08. Despite the assets' cost being treated as application of income in earlier years, the Tribunal held that depreciation can be claimed, citing Supreme Court and Bombay High Court judgments. Allowing depreciation on such assets does not result in a double benefit to the assessee, as it is a legitimate deduction to calculate the real income. The Tribunal upheld the validity of the depreciation claim, following established legal principles.

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Issues:
1. Disallowance of depreciation claimed by the assessee.
2. Interpretation of whether allowing depreciation on assets already treated as application of income results in double deduction.

Analysis:

1. The appeal by the Revenue challenged the order disallowing depreciation of Rs. 80,66,227 claimed by the assessee for assessment year 2007-08. The Assessing Officer disallowed the claim stating that the assets' purchase amount was already allowed as application income in earlier years. The Ld. CIT(A) upheld the reassessment proceedings' validity but allowed the depreciation claim based on recent decisions of the Hon'ble Delhi High Court. The Revenue contended that allowing depreciation would lead to double deduction as the assets' cost was already treated as application of income. The Tribunal noted the issue of depreciation despite assets being treated as application of income was decided by the Supreme Court in a judgment dated 13/12/2017 in the case of CIT vs. Rajasthan and Gujarati Charitable Foundation, Poona. The Tribunal referred to judgments emphasizing that depreciation can be claimed even if assets' cost was treated as application of income, dismissing the Revenue's appeal.

2. The Tribunal highlighted the Bombay High Court's decisions supporting the allowance of depreciation on assets even if the cost was treated as application of income. The Tribunal reiterated that the depreciation claim is a legitimate deduction to compute the real income of the assessee. The Tribunal concluded that allowing depreciation on assets, despite being treated as application of income, does not result in a double benefit to the assessee. The Tribunal upheld the principles of law established by the judgments referenced, affirming that depreciation can be claimed irrespective of assets' cost being treated as application of income. Consequently, the Tribunal dismissed the Revenue's appeal, following the Supreme Court's judgment and the principles established by the Bombay High Court.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the legal interpretations made by the Tribunal based on relevant case laws and legal principles.

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