2011 (7) TMI 955

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.... decided I.T.A. No.l71/Ind/2010 for the assessment year 2004-05, I.T.A. No.l72/Ind/2010 for the assessment year 2005-06 and I.T.A. No. l73/Ind/2010 for the assessment year 2006-07. 3. Briefly stated, the respondent assessee is a charitable trust formed with the main object to run educational institutions for the benefit of public. In the course of assessment under section 143(3) of the Act the A.O. vide order dated 8.12.2006 disallowed assessee's claim for depreciation on the fixed assets. The AO also denied the claim of the assessee to carry forward deficit in the application of funds. The said order of the AO was challenged before the CIT(A). The CIT(A) vide order dated 4.01.2010 partly allowed the assessee's appeal to the extent it held....

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....se. The object of providing for depreciation is to spread the expenditure, incurred in acquiring the asset, over its effective lifetime; the amount of the provision, made in respect of an accounting period, is intended to represent the proportion of such expenditure, which has expired during that period. If depreciation is not allowed as a necessary deduction in computing the income of a charitable trust, then there would be no way to preserve the corpus of the trust. A charitable trust is, therefore, entitled to depreciation in respect of the assets owned by it. (Also see Spicer and Pegler's. Book Keeping and Accounts, 17th edn. Pp 44, 45 and 46) 7. Having regard to the aforesaid settled legal position in our considered view, the Tribunal....