2017 (12) TMI 987

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....charitable trusts with objects to provide education by running several educational institutions. Both the Assessee's filed their return of income for AY 2008-09. Both the Assessee's in their return of income had claimed depreciation on certain assets. The cost of those assets on which depreciation was claimed by the Assessee had been claimed by the Assessee as application of income for charitable purpose and allowed as application of income for chartiable purpose by the AO in the year of acquisition. The AO allowed depreciation as claimed by the Assessee in an order of assessment passed u/s.143(3) of the Act dated 28.12.2010. 3. The CIT in exercise of his powers u/s.263 of the Act was of the view that the aforesaid two orders of assessment....

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....following the ratio laid down in the case of Escorts Ltd. (supra), the claim for deduction on account of depreciation should be disallowed. 4. The CIT therefore passed two orders u/s.263 of the Act in the case of the two Assessees both dated 29.2.2012 directing the AO to disallow claim for depreciation. The CIT also referred to the decision of the Hon'ble High Court of Kerala in the case of DDIT(E) v. Lissie Medical Institutions, 348 ITR 344 (Ker) wherein it was held that allowing depreciation of a depreciable asset when the cost of acquisition of depreciable asset was allowed as application of income for charitable purpose amounts to double depreciation and therefore depreciation cannot be allowed. 5. Pursuant to the order of the CIT....