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Issues involved: Appeal against deletion of depreciation on assets purchased out of exempted income u/s 11 of IT Act for AY 2006-07.
Summary: 1. The Revenue disallowed depreciation claimed by the assessee on assets purchased out of exempted income u/s 11 of the IT Act, as it amounted to double deduction. The AO concluded that depreciation is not admissible on assets where 100% deduction has already been taken. The claim for deduction was disallowed. 2. On appeal, the CIT(A) allowed the claim of the assessee for depreciation, stating that the assets acquired by the appellant have value and the application of income for acquiring capital goods is eligible for deduction u/s 11. The CIT(A) referred to a Bombay High Court decision supporting the allowance of depreciation on such assets. 3. The Revenue appealed against the CIT(A)'s decision. The DR relied on the AO's order, while the AR for the assessee cited relevant case laws to support the CIT(A)'s findings. 4. The ITAT considered the arguments and cited decisions from the Bombay, Karnataka, Madhya Pradesh, Madras, Punjab, and Haryana High Courts, all supporting the allowance of depreciation on assets of charitable trusts. The ITAT upheld the CIT(A)'s decision to allow depreciation on the assets in question. 5. The ITAT dismissed the appeal, stating that the Revenue did not provide any contrary decisions or material to warrant a different view. Both grounds of appeal were dismissed, and the appeal was rejected. Judgment: The ITAT upheld the CIT(A)'s decision to allow depreciation on assets purchased out of exempted income u/s 11 of the IT Act for AY 2006-07, citing various High Court decisions supporting the allowance of depreciation for charitable trusts.
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