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2015 (9) TMI 277 - AT - Income TaxDisallowance of depreciation - purchase of assets were allowed as application of income under Section 11 of assessee - allowing depreciation would amount to double depreciation as held by AO - Held that:- As decided in The Anjuman-E-Himayath- E-Islam v. ADIT [2015 (7) TMI 594 - ITAT CHENNAI ] this issue is elaborately discussed in the case of Lissie Medical Institution Vs. CIT reported in [2012 (4) TMI 115 - KERALA HIGH COURT] and held the issue against the assessee wherein held that after writing off the full value of the capital expenditure on acquisition of assets as application of income for charitable purposes and when the assessee again claimed the same amount in the form of depreciation, such notional claim became a cash surplus available with the assessee, which was outside the books of account of the trust unless it was written back which was not done by the assessee. It was not permissible for a charitable institution to generate income outside the books in this fashion and there would be violation of section 11(1)(a). It was for the assessee to write back the depreciation and if that was done, the Assessing Officer would modify the assessment determining higher income and allow recomputed income with the depreciation written back by the assessee to be carried forward for subsequent years for application for charitable purposes - Decided against assessee. Excess application - Tthe assessee cannot claim excess application/expenditure as application of income. Carry forward of excess application of fund in the commercial principles cannot be allowed as per the provisions of the Act because it would result in notional application of income in the subsequent year.Needless to mention that the income of the Trust refers to ‘income derived from the property held under the Trust’ and any ‘voluntary contributions received by the Trust other than contributions made with specific directions that they shall form part of the corpus of the trust’ - Decided against assessee.
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