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2018 (12) TMI 595 - AT - Income TaxDisallowance of depreciation to assessee trust - whether depreciation allowable on expenditure incurred for capital purpose where the expenditure was already treated as application of income for the objects of the assessee-trust in terms of section 11(1)(a)? - Held that:- The assessee is a charitable institution registered under section 12A and assessed accordingly. It is the case of the Revenue that once the capital expenditure has been claimed as deduction u/s 11(1)(a) as application of income for the objects of the trust, depreciation claimed on the same assets amounts to double deduction which is not permissible in law having regard to the provisions of section 11(6) of the Act which prohibits such deduction. We find that the Hon’ble Supreme Court in the case of Rajasthan and Gujarati Charitable foundation Poona [2017 (12) TMI 1067 - SUPREME COURT] has held that even if the entire expenditure incurred for acquisition of capital assets is treated as application of income for charitable purpose under section 11(1)(a) of the Act, the assessee would continue enjoy also the benefit depreciation under section 32 of the Act. Hon’ble Supreme Court observed that the argument that the grant of depreciation amounts to giving double benefit to the assessee is not acceptable. Hon’ble Supreme Court further held that specific provisions of section 11(6) which bars claim of depreciation of expenditure incurred for charitable purposes is prospective and applies only from the assessment year 2015-16. The assessee is entitled to depreciation allowance notwithstanding fact that entire expenditure incurred for acquisition of capital assets were admitted as application of income for charitable purpose under section 11(1)(a). - Decided against revenue.
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