The Madras High Court ruled that the depreciation is allowable as application of income on charitable objects.
The respondent-assessee, M/s.Ramananda Adigalar Foundation Kumaraguru College of Tech Campus is a Charitable Trust registered under section 12A of the Income Tax Act. The assessee filed its return of income for the Assessment Year 2009-2010. The Assessing Officer issued a notice under section 143(2) of the Act and the order under section 143(3) of the Act was passed. In concluding the assessment, the Assessing Officer inter alia held that the depreciation claimed by the assessee would not be allowable as a deduction in the computation of the funds available for application by the assessee on the premise that the entire cost of the assets were allowed as an application of the funds in the year when the same were purchased.
The Assessing Officer, held that the provisions of section 11 is distinct from that of section 14 and that the deductions and the allowances that are provided in chapter V cannot be applied in determining the income for the purpose of section 11 of the Act. Aggrieved over the order passed by the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) and the Commissioner of Income Tax (Appeals) allowed the appeal. Challenging the order passed by the CIT (Appeals), the Revenue filed an appeal before the Income Tax Appellate Tribunal, which confirmed the order of the CIT (Appeals) and dismissed the appeal.
When the appeal is taken up for hearing, Mr.J.Narayanasamy, learned Senior Standing Counsel appearing for the appellant-revenue fairly submitted that the substantial questions of law that are raised in the above appeal were already decided by the Division Bench of this court in the Common Judgment in the case of Commissioner of Income Tax, Trichy Vs. M/s.National College Council.
The division bench of Justice M.Duraiswamy and Justice Hemalatha relied on the judgement in the case of Commissioner of Income Tax, Trichy Vs. M/s.National College Council answered against the revenue and held that the Tribunal is right in holding that allowing the depreciation claim of the assessee would not result in double deduction, though the entire cost of the depreciable assets has already been allowed as application of income towards object of the trust.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
