Charitable institution depreciation remains allowable even after asset cost is treated as application of income, avoiding double deduction concerns.

Depreciation remains allowable for a charitable institution computing real income, even where the asset cost was earlier treated as application of income. The Madhya Pradesh High Court followed settled High Court authority that such treatment does not create impermissible double deduction, because depreciation is a necessary charge in income computation. On that basis, the Revenue's challenge was rejected and the assessee's depreciation claim was left intact.

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Issues: Whether a charitable institution is entitled to claim depreciation on fixed assets whose cost had already been treated as application of income, and whether allowing such depreciation amounts to double deduction.

Analysis: The appeals concerned charitable societies registered under section 12A of the Income-tax Act, 1961, which had claimed depreciation on assets already considered in the earlier year as application of income. The Court followed the settled view of several High Courts that depreciation is a necessary charge in computing the real income of a charitable institution and that treating the asset cost as application of income does not bar a subsequent depreciation claim. The Court held that the issue was covered by prior binding and persuasive decisions and that no contrary substantial question of law arose.

Conclusion: The claim for depreciation was held allowable, and the Revenue's challenge failed.

Final Conclusion: The appeals were dismissed as they did not give rise to any substantial question of law, leaving the assessee's depreciation claim undisturbed.

Ratio Decidendi: For a charitable institution, depreciation on assets continues to be allowable in computing income even where the acquisition cost of those assets has already been treated as application of income, because such treatment does not amount to impermissible double deduction.

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