Depreciation for charitable trusts remains allowable as application of income without double deduction where asset cost was already applied.

Depreciation on assets used by a charitable trust for charitable objects is allowable as application of income under section 11, and the allowance does not amount to impermissible double deduction merely because the acquisition cost was earlier treated as application of income. The governing principle, as applied by the Madras HC following the Supreme Court and earlier connected decisions, was decided in favour of the assessee, so the Revenue's challenge failed.

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Issues: Whether depreciation is allowable to a charitable trust as application of income for charitable objects, even though the cost of the assets had already been treated as application of income under section 11 of the Income-tax Act, 1961.

Analysis: The questions raised in the appeal were already answered against the Revenue by the Supreme Court and followed by the Division Bench in earlier connected matters involving the same legal issue. The governing principle applied was that allowing depreciation does not amount to impermissible double deduction in the computation of income of a charitable trust, notwithstanding that the acquisition cost of the asset had been treated as application of income in the year of purchase.

Conclusion: Depreciation was held allowable to the assessee and the issue was answered against the Revenue.

Final Conclusion: The legal position on depreciation for charitable trusts was applied in favour of the assessee, and the Revenue's challenge failed.

Ratio Decidendi: For a charitable trust, depreciation on assets used for charitable objects is allowable as application of income, and such allowance does not amount to double deduction merely because the asset's purchase cost was earlier treated as application of income.

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