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2016 (6) TMI 256 - AT - Income TaxRevision u/s 263 - as per CIT(A) AO allowing depreciation as allowable expenditure against receipts of the Assessee - trust during the previous year was erroneous and prejudicial to the interest of the revenue - Held that:- If depreciation is not allowed as a necessary deduction for computing income of charitable institutions, then there is no way to preserve the corpus of the trust for deriving the income as it is nothing but a decrease in the value of property through wear, deterioration, or obsolescence. Since income for the purposes of section 11(1) has to be computed in normal commercial manner, the amount of depreciation debited in the books is deductible while computing such income. It was so held by the Hon’ble Karnataka High Court in the case of CIT Vs. Society of Sisters of St. Anne (1983 (8) TMI 44 - KARNATAKA High Court ). It was held in CIT Vs. Tiny Tots Education Socieity (2010 (7) TMI 377 - Punjab and Haryana High Court ) that depreciation can be claimed by a charitable institution in determining percentage of funds applied for the purpose of charitable objects. Claim for depreciation will not amount to double benefit. In view of the aforesaid decisions on the issue, we are of the view that the order of the respondent cannot be sustained. The amendment by the Finance Act (No.2), 2014 by insertion of Sec.11(6) of the Act specifically providing for not allowing any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an application of income under this section in the same or any other previous year was admittedly effective only from 1.4.2014 and did not apply to AY 12-13. In the given facts and circumstances of the case exercise of jurisdiction u/s.263 of the Act would not be proper. We therefore quash the order u/s.263 of the Act and allow the appeal of the Assessee. - Decided in favour of assessee.
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