[aaykarbhavan] DEPRECIATION TO BE ALLOWED TO TRUST

 ITAT AHMEDABAD - Income Tax

ITO (Exemption) Versus Sardar Public Charitable Trust

Deletion of depreciation u/s 32 of the Act – Charitable institution eligible for depreciation u/s 32 falling under Profits and gains from business and profession – Held that:- The decision in Commissioner Of Income-Tax Versus Sheth Manilal Ranchhoddas Vishram Bhavan Trust [GUJARAT High Court] followed - the income of the assessee-trust has to be computed on commercial principles and therefore, depreciation has to be allowed - allowing the deduction on purchase of assets as application of income u/s.11(1) is not equivalent to allowing deduction for the purpose of computing income, but in fact, the income remains same and the only effect of considering acquisition of asset as application of income is that such income is treated as exempt income – thus, it cannot be said that allowing exemption u/s.11(1) of the Act in respect of acquisition of asset on this basis that it is application of income is akin to allowing deduction of an expenditure but it is in fact an incentive provision allowing the charitable-trust the benefit of having exempt income - depreciation has to be allowed as per the decision of Hon'ble Gujarat High Court which is binding on us and it is not resulting into allowing of double deduction – Decided against Revenue.

Regards

Prarthana Jalan

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