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Income Tax Appellate Tribunal, DELHI BENCH “F”, NEW DELHI
Before: SHRI R. K. PANDA & MS. SUCHITRA KAMBLE
PER R. K. PANDA, AM : This appeal filed by the Revenue is directed against the order dated 18.12.2015 of the CIT(A)-40, New Delhi relating to assessment year 2010-11.
The only effective ground raised by the Revenue reads as under :-
“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing depreciation by ignoring the fact that where the capital expenditure has been treated to have been applied for the object of the trust, allowance of deduction on account of depreciation will amount to double deduction in view of the recent decision of Hon’ble Delhi High Court in the case of DIT (E) vs. Charanjiv Charitable Trust dated 18.03.2014.”
After hearing both the sides, we find the issue to be decided in the grounds of appeal is regarding the allowance of depreciation on assets purchased during the earlier years which have been claimed as application of income in earlier years. The Assessing Officer did not allow depreciation on assets purchased during the earlier years on the ground that those assets have been claimed as application of income in earlier years and allowing depreciation on the same will amount to double benefit.
4. In appeal, the ld. CIT(A) relying on various decisions held that the assessee is entitled to claim depreciation on assets as well as application of income of the same. It is the grievance of the Revenue that the order of the ld. CIT(A) is not correct in view of the decision of the Hon’ble Delhi High Court in the case of DIT (E) vs. Charanjiv Charitable Trust order dated 18.03.2014. We find the Hon'ble Supreme Court in the case of CIT vs. Rajasthan & Gujarati Charitable Foundation Poona vide order dated 22.12.2017 has held that even if the entire expenditure incurred for acquisition of a capital asset is treated as application of income for charitable purposes u/s 11(1)(a) of the Act, the assessee is also entitled to depreciation u/s 32. The argument of the Revenue that the grant of depreciation amounts to giving double benefit to the assessee is not acceptable. Section 11(6) which bars depreciation on expenditure applied for charitable purposes is prospective and applies only from assessment year 2015-16. Since the impugned assessment year is 2010-11, therefore, in view of the decision of the Hon’ble Supreme Court cited (supra), we find the no infirmity in the order of the ld. CIT(A) allowing depreciation on assets purchased during the earlier years which have been claimed as application of income. The grounds raised by the Revenue are accordingly dismissed.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open Court at the time hearing itself i.e. on this 27th day of December, 2017.