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Issues involved: Appeal against disallowance of depreciation claimed by a public charitable trust u/s 11 of the Income Tax Act.
The assessee, a public charitable trust registered u/s 12A(a) of the Income Tax Act, claimed deduction on account of depreciation of Rs. 31,03,118/- in its income and expenditure account. The Assessing Officer disallowed this claim, stating it is not allowable while determining the surplus of the income after considering various revenue expenditure without depreciation, capital expenditure applied to the objects of the Trust, and the amount set apart u/s 11 subsection(2) of the Act. On appeal, the ld. CIT(A) referred to the decision of Hon'ble Punjab & Haryana High Court in the case of CIT vs M/s Tiny Tots Education Society, where it was held that depreciation on capital assets should be allowed as a deduction from the total income of the Trust. The revenue appealed this decision. The ITAT Delhi, after hearing both parties and considering the precedent set by the Hon'ble Punjab & Haryana High Court, upheld the order of ld. CIT(A) directing the AO to allow depreciation and reduce the same from the income of the trust for determining the percentage of funds to be applied for the purposes of the Trust. The appeal filed by the revenue was dismissed, and the order of the ld. CIT(A) was upheld. Separate Judgement: No separate judgment was delivered by the judges.
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