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2015 (3) TMI 11 - HC - Income TaxDepreciation on capital assets - whether the Tribunal was justified in allowing depreciation claimed by the assessee on capital assets for which capital expenditure has already been allowed in the year under consideration? - Held that:- The assessee is a charitable institution registered under Section 12-A of the Act of 1961 and 100% capital expenditure was availed by it against the asset concerned i.e. a building. Section 32(1) of the Act of 1961 provides for depreciation in respect of building, plant and machinery owned by the assessee and used for business purposes. Income of a charitable trust like the present assessee derived from the depreciable heads is also liable to be computed on commercial basis, however, while doing so it is to be kept in mind that ultimately assessee is a charitable institution and its income for tax purposes is required to be determined by taking into consideration provisions of Section 11 of the Act of 1961 after extending normal depreciation and deductions from its gross income. In computing the income of a charitable institution/trust depreciation of assets owned by such institution is a necessary deduction on commercial principles, hence, the amount of depreciation has to be deducted to arrive at the income available. Thus ITAT rightly allowed depreciation claimed by the assessee on capital assets for which capital expenditure was already given in the year under consideration. See Director of Income Tax v. Framjee Cawasjee Institute (1992 (7) TMI 331 - BOMBAY HIGH COURT) and in CIT v. Institute of Banking Personnel (2003 (7) TMI 52 - BOMBAY High Court ). - Decided in favour of assessee.
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