Revenue's Appeal Dismissed: Assessee Can Claim Depreciation on Income-Application Assets Per Section 11 of Income Tax Act.

The appeals filed by the Revenue under Section 260A of the Income-tax Act, 1961, were dismissed by the HC. The court ruled against the Revenue, affirming that the assessee is entitled to claim depreciation on assets treated as application of income under Section 11. This decision followed the precedent set by the SC in a similar case. No costs were awarded.

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Issues:
Appeal under Section 260A of the Income-tax Act, 1961 against a common order passed by the Income Tax Appellate Tribunal for the assessment year 2007-08. Substantial question of law regarding claiming depreciation on assets treated as application of income under Section 11 of the Act.

Analysis:

1. Background of the Case:
The appeals were filed by the appellant/Revenue under Section 260A of the Income-tax Act, 1961, challenging the common order dated 06.07.2012 passed by the Income Tax Appellate Tribunal 'A' Bench, Chennai, in I.T.A.Nos.927, 929 & 928/Mds/2012 for the assessment year 2007-08.

2. Substantial Question of Law:
The appeals were admitted based on the substantial question of law whether the assessee is entitled to claim depreciation on assets when the cost of purchase of the asset was treated as application of income under Section 11 of the Act.

3. Legal Representation:
During the hearing, Mr. M. Swaminathan, Senior Standing Counsel assisted by Ms. V. Pushpa, represented the appellant/Revenue, while Mr. A.S. Sriraman and Mr. S. Sridhar represented the respondents/assessees.

4. Submission and Precedent:
The Senior Standing Counsel for the Revenue acknowledged that the substantial question of law framed in the appeals had been decided against the Revenue by the Hon'ble Supreme Court in CIT vs. Rajasthan and Gujarati Charitable Foundation [2018] 402 ITR 441 (SC).

5. Judgment and Dismissal:
In line with the precedent, the appeals were dismissed, and the substantial question of law was answered against the Revenue. No costs were awarded in this matter.

This judgment highlights the importance of legal precedents in determining substantial questions of law and the impact of such precedents on the outcome of appeals. It also emphasizes the need for consistency in legal interpretations and application of tax laws to ensure fair and just decisions in tax matters.

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