Depreciation on immovable property funded by exempted funds for charitable trust upheld

The appeal by the Revenue, challenging the allowance of depreciation on immovable property funded by exempted funds for A.Y. 2006-07, was dismissed. The CIT(A) decision to allow the depreciation claim for a charitable trust running a hospital was upheld by the Appellate Tribunal, citing previous judgments and the High Court decision that depreciation is permissible on assets fully allowed as application of income in past years.

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Issues: Appeal against order allowing depreciation on immovable property funded by exempted funds.

Summary:
The appeal by the Revenue was directed against the order of CIT(A)-III Pune allowing the claim of depreciation on immovable property funded by exempted funds for A.Y. 2006-07. The assessee, a charitable trust running a hospital, had debited depreciation on three buildings in the income and expenditure account. The Assessing Officer disallowed the depreciation claim, considering it as a double benefit of deduction from exempted funds. However, the CIT(A) deleted the addition by relying on previous judgments and holding that depreciation is allowable on assets fully allowed as application of income in past years.

The Revenue opposed the CIT(A)'s decision, but no one appeared on behalf of the assessee. The Appellate Tribunal found that the issue was covered by the jurisdictional High Court decision, which held that depreciation is allowable on assets fully allowed as application of income in the past. The Tribunal upheld the CIT(A)'s order based on the precedent set by the High Court.

Therefore, the appeal of the Revenue was dismissed, and the order of the CIT(A) allowing the depreciation claim was upheld.

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