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HC on allowability of depreciation & set off of deficit of earlier years claimed by Trust

Assessee education-trust could claim depreciation on assets acquired for purpose of carrying out charitable activities and could also carry forward deficit of earlier years and set it off against income of current year.

Assessee Trust can claim depreciation on capital assets acquired for the purposes of carrying out charitable activities and set off of deficit of earlier years against income of the current year. 

Full Text of the High Court Judgment / Order is as follows:-

1. This Appeal under section 260-A of the Income Tax Act, 1961 (the Act), challenges the order dated 21-3-2013 passed by the Income Tax Appellate Tribunal (the Tribunal) for the assessment year 2007- 08.

2. The Revenue urges the following questions of law for our consideration :–

“(a) Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in confirming the order of the Commissioner (Appeals) to allow the claim of depreciation relying on the decision of this Court in the case of CIT v. Institute of Banking Personnel Services 264 ITR 110 (Bom) ignoring the ratio of Hon’ble Supreme Court judgement in the case of Escorts Ltd. Vs. Union of India 199 ITR 43 wherein Hon’ble Supreme Court has held that double deduction cannot be presumed if the same is not specifically provided by law, in addition to normal deduction?

(b) Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in confirming the order of the Commissioner (Appeals) to allow to carry forward of deficit of earlier years relying on the decision of this Court in the case of CIT v. Institute of Banking Personnel Services 264 ITR 110 (Bom) while the revenue did not file SLP against the case of CIT v. Institute of Banking Personnel Services 264 ITR 110 (Bom) due to low tax effect?”

3. We find that the impugned order of the Tribunal has dismissed the Revenue’s appeal on both the issues namely allow ability of depreciation on capital assets acquired for the purposes of carrying out charitable activities and set off of deficit of earlier years against income of the current year. The impugned order in fact followed decision of this Court in CIT v. Institute of Banking Personnel Selection [IBPS] (2003) 264 ITR 110 while holding in favour of the Respondent-Assessee.

4. Mr. Malhotra, learned Counsel appearing for the Revenue very fairly states that the issue as raised by the Revenue stands concluded against Revenue by decision of this Court in Institute of Banking Personnel Selection (supra).

5. In view of the above, the questions as framed do not give rise to any substantial question of law.

6. Accordingly, Appeal dismissed. No order as to costs.

Categories: Income Tax
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