ITAT Upholds Depreciation & Loss Carry Forward for Charitable Trusts

The ITAT upheld the CIT(A)'s orders allowing depreciation on fixed assets for a public charitable trust and the carry forward loss for subsequent years. The Revenue's appeal challenging these decisions was dismissed, with the ITAT emphasizing the legality of claiming depreciation for charitable trusts and the necessity of allowing carry forward losses to prevent double deduction. The decisions were pronounced in December 2018.

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Issues:
1. Allowability of depreciation on fixed assets for a public charitable trust.
2. Allowance of carry forward loss for subsequent years.

Issue 1: Allowability of Depreciation on Fixed Assets:
The Revenue challenged the order of the Commissioner of Income Tax (Appeals) directing the AO to allow depreciation on fixed assets for a public charitable trust. The AO had disallowed the depreciation claim, citing the principle that double deduction cannot be allowed. The CIT(A) allowed the claim, relying on relevant case laws and judgments. The ITAT observed that the issue of depreciation for public charitable trusts was settled by the Supreme Court and the Bombay High Court, emphasizing that claiming depreciation on fixed assets does not constitute double deduction. The ITAT upheld the CIT(A)'s order, dismissing the Revenue's grounds on this issue.

Issue 2: Allowance of Carry Forward Loss:
The Revenue contested the CIT(A)'s direction to allow the carry forward loss of a significant amount and set it off against subsequent years' income. The AO had rejected the claim, stating that the expenditure was out of corpus or loans and advances taken, hence not eligible for carry forward. The CIT(A) allowed the appeal, citing relevant case laws and judgments, including the decision of the Bombay High Court. The ITAT noted that the AO's disallowance would result in double deduction for the assessee and upheld the CIT(A)'s decision to allow the carry forward of the deficit for set off in subsequent years. The ITAT dismissed the Revenue's grounds on this issue as well.

In conclusion, the ITAT upheld the CIT(A)'s orders on both issues, emphasizing the legality of claiming depreciation on fixed assets for charitable trusts and the allowance of carry forward losses for subsequent years. The appeal of the Revenue was dismissed, and the decisions were pronounced in December 2018.

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