ITO, COIMBATORE vs. KOVAI MEDICAL CENTRE RESEARCH AND EDUCATIONAL TRUST, COIMBATORE

The Revenue filed this appeal against the order of Commissioner of Income Tax (Appeals)-I, Coimbatore in dated 01.05.2014 for assessment year 2010-11.

M/s. Kovai Medical Centre Research and Educational Trust, the assessee, is a charitable institution. While making the assessment for assessment year 2010-11, the AO rejected the assessee’s claim of depreciation for computing the income u/s. 11(1) on the ground that the cost incurred by the assessee as addition to fixed assets has already been treated as an application of funds for charitable purposes and therefore, a further claim of depreciation would amount to double deduction, which is not permissible in law. Aggrieved, the assessee filed this appeal and the CIT(A) allowed the appeal.

Against the order of the CIT(A), the Revenue filed this appeal, primarily seeking confirmation of disallowance of depreciation made by the AO.

We heard the rival submissions. The Apex Court in Rajasthan and Gujarati Charitable Foundation Poona in Civil No. 7186 of 2014 dated 13.12.2017 found that even though the cost of asset was allowed as application of income in the year of acquisition of asset, the charitable institution is still entitled for depreciation. In view of this judgement of Apex Court, this Tribunal is unable to uphold the contention of the Ld. DR. By respectfully following the judgement of Apex Court in Rajasthan and Gujarati Charitable Foundation Poona, supra, and for the reasoning stated therein, the orders of both the authorities below are set aside and the Assessing Officer is :-3-: ITA No. 2098/Mds/2014 directed to allow the depreciation as claimed by the assessee and the Revenue’s appeal is dismissed.

In the result, the Revenue’s appeal is dismissed.