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2006 (3) TMI 191 - AT - Income TaxDeduction of 1/5th of income from house property u/s 24(1)(i) - Charitable Trust - Disallowance of depreciation - Medical Expenses - HELD THAT:- It was found that despite the fact that no claim was made before AO, there was also no material on record to support such claim. But the position in the case of assessee is different. As pointed out earlier that depreciation claim has been claimed in the income and expenditure account. Therefore, the claim of assessee could not be denied on the ground that the said claim was not made before AO. Learned Departmental Representative had raised an issue that where the entire cost has been allowed as expenditure, no depreciation is eligible. However, it is not the case of AO or the CIT(A) that entire cost of the said building was allowed as an expenditure in the case of assessee. On the other hand, in the balance sheet the value of the building stands. Therefore, there being no supportive material with regard to this contention of learned Departmental Representative, we find no merit in such contention. No dispute to the fact that the object of assessee-trust includes merely establishment of hospital. Establishment of hospital in itself embedded the provisions for medical help to be extended to the public. Establishment of hospital is one of the modes to provide such medical help. Taking a liberal view we hold that providing medical help is also covered in the objects of the trust, particularly when genuineness of such payments incurred by assessee in respect of medical help have not been doubted. Therefore, we direct AO to delete the disallowance. To sum up, our findings are as under: (a) The assessee is not entitled to deduction u/s 24(1)(i). (b) The assessee is entitled to get depreciation as claimed by it in the income and expenditure account [we find that the claim of depreciation before CIT(A) in the grounds of appeal was Rs. 4,41,530 whereas in the grounds filed before us is Rs. 6,49,856]. According to decision in the case of CIT vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust [1992 (2) TMI 51 - GUJARAT HIGH COURT] the amount of depreciation debited to the accounts of the charitable institution has to be deducted to arrive at the income available for application to charitable and religious purposes. Therefore, we hold that the assessee is entitled for depreciation only to the extent of Rs. 4,41,530 in place of Rs. 6,49,856 mentioned in the grounds of appeal before us. (c) The disallowance of Medical Expenses is deleted. In the result, appeal filed by the assessee is partly allowed.
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