C.I.T.-Iii,Pune vs Rajasthan And Gujarati Charitable ... on 13 December, 2017
acquisition/purchase of fixed assets has been allowed as application of
income u/s.11(1)(a) of the Act, when such fixed assets were purchased,
but still depreciation on said fixed assets should be allowed as application
of income, because, income of a charitable institution claiming exemption
u/s.11 of the Act, should be computed like any other entity in normal
commercial accounting principles. This legal position has been upheld by
the Hon'ble Supreme Court in the case of CIT v. Rajasthan & Gujarati
Charitable Foundation, Poona, (supra), and said position is applicable up
to AY 2014-15. Since, the assessee Trust is a registered u/s.12AA of the
Act, and also claiming exemption u/s.11 of the Act, in our considered
view, depreciation on fixed assets should be allowed as application of
income up to AY 2014-15. Thus, we direct the AO to delete additions
made towards disallowance of depreciation on fixed assets for AYs 2012-
13 to 2014-15. In so far as AYs 2015-16 to 2018-19, the law has been
amended by the Finance Act, 2014 to provisions of Sec.11(6) of the Act
and as per said provisions, where any income required to applied or
accumulated or set part for application, then, for such purpose, the
income shall be determined without any deduction or allowance by way of
depreciation or otherwise in respect of any asset, acquisition of which has
been claimed as application of income under this section in the same or in
any other previous year. From the amendment provisions of sec.11(6) of
the Act, by the Finance Act, 2014, which is applicable from AY 2015-16
onwards, depreciation on fixed assets cannot be allowed as application of
ITA Nos.1632 to 1638/Chny/2023
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