Each year Central Broad of Direct Taxes (CBDT) comes out with strategy called as Central Action Plan which prescribes the mechanism and approach for various internal tax departments and authorities to improve tax compliances, widening the tax base, litigation management, reduction in outstanding demand and most importantly, to meet the core objective of budget collection.
These petitions and appeals filed by the department arises due to the order of various High Courts, granting benefit of depreciation on the assets acquired by the assessee registered as charitable institutions under section 12A of the Income Tax Act (Act).
The Apex Court’s land mark ruling has once again affirmed the principle of ‘Purpose Test’ which determines whether the expenditure is capital in nature or revenue in nature; and the form of mechanism through which the subsidy is given, the point of time at which the subsidy is paid and the source of subsidy is immaterial.
