INCOME TAX ACT, 1961

Section 32(1) Section 11(1)(a)

Depreciation - Allowability - Entire cost of assets allowed as 'application of income' under section 11(1)(a) in assessee trust's case -

Assessee was a trust. It derived its income from depreciable assets. The assessee took into account depreciation on those assets in computing the income of the trust. The ITO held that depreciation could not be taken into account because, full capital expenditure had been allowed in the year of acquisition of the assets. Held: When the ITO stated that full expenditure had been allowed in the year of acquisition of the assets, what he really meant was that the amount spent on acquiring those assets had been treated as 'application of income' of the trust in the year in which the income was spent in acquiring those assets. This did not mean that in computing income from those assets in subsequent years, depreciation in respect of those assets could not be taken into account.

Followed:CIT v. Rajasthan and Gujarati Charitable Foundation (2018) 89 Taxmann.com 127 (SC) and CIT v. Agricultural Produce Market Committee (2018) 408 ITR 231 (Karn) : 2018 TaxPub(DT) 4047 (Karn-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

INCOME TAX ACT, 1961

Section 11(1)

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