The Tax Publishers2020 TaxPub(DT) 4446 (Karn-HC) : (2020) 423 ITR 0616

INCOME TAX ACT, 1961

Section 11

Depreciation was to be taken into account in computing income of charitable trust, though full capital expenditure had been allowed in the year of acquisition of the assets.

Charitable trust - Exemption under section 11 - Allowability of depreciation - Cost of assets allowed earlier as application of income

Assessee-trust claimed depreciation on fixed assets. AO disallowed assessee's claim on the ground that cost of assets had been treated as 'application of Income' of trust in the year in which income was spent in acquiring those assets and, therefore, allowance of depreciation would amount to double deduction.Held: Income of charitable trust is required to be computed under section 11 on commercial principles. Although trust may not be carrying on any business and assets in respect whereof depreciation is claimed may not be business assets. It is because, depreciation is not allowed as a necessary deduction for computing income then there would be no way to preserve corpus of the trust for deriving the income. Accordingly, depreciation was to be taken into account in computing income of the trust though full capital expenditure had been allowed in the year of acquisition of the assets.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :


INCOME TAX ACT, 1961

Section 11

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