Cit vs Institute Of Banking Personnel ... on 9 July, 2003
" These are the petitions and appeals filed by the Income Tax
Department against the orders passed by various High Courts granting
benefit of depreciation on the assets acquired by the respondents-
assessees. It is a matter of record that all the assessees are charitable
institutions registered under Section 12A of the Income Tax Act
(hereinafter referred to as 'Act'). For this reason, in the previous year to
the year with which we are concerned and in which year the
depreciation was claimed, the entire expenditure incurred for
acquisition of capital assets was treated as application of income for
charitable purposes under Section 11(1)(a) of the Act. The view taken by
the Assessing Officer in disallowing the depreciation which was
claimed under Section 32 of the Act was that once the capital
expenditure is treated as application of income for charitable purposes,
the assessees had virtually enjoyed a 100 per cent write off of the cost
of assets and, therefore, the grant of depreciation would amount to
giving double benefit to the assessee. Though it appears that in most of
these cases, the CIT (Appeals) had affirmed the view, but the ITAT
reversed the same and the High Courts have accepted the decision of
the ITAT thereby dismissing the appeals of the Income Tax Department.
From the judgments of the High Courts, it can be discerned that the
High Courts have primarily followed the judgment of the Bombay High
Court in 'Commissioner of Income Tax v. Institute of Banking Personnel
Selection (IBPS)' [(2003) 131 Taxman 386 (Bombay)]. In the said
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I.T.A. No.7019/Mum/2016
judgment, the contention of the Department predicated on double
benefit was turned down in the following manner: