BAHUJAN HITAY TRUST,,PUNE vs. INCOME-TAX OFFICER, (EXEMPTIONS), WARD-1,, PUNE

The only issue raised in this appeal is against the confirmation of disallowance of depreciation amounting to Rs.15,52,438/-.

Brief facts of the case are that the assessee is a charitable trust, which was registered u/s 12AA of the Income Tax Act, 1961 (hereinafter also called as ‘the Act’) in 1987. The Assessing Officer observed during the course of assessment proceedings that a sum of Rs.15,52,438/- was claimed as depreciation in the Income and Expenditure account. Invoking the provisions of section 11(6) of the Act, the Assessing Officer made the addition of the said sum, which came to be confirmed in the first appeal.

I have heard both the parties and gone through the relevant material on record. Sub-section (6) of section 11 was inserted by the Finance (No.2) Act, 2014 w.e.f. 1.4.2015. This provision reads as under :-

On going through the above provision, it is clear that if income is applied or accumulated or set apart for application by way of purchase of assets, then no deduction on account of depreciation shall be allowed in respect of such assets. The ld. AR submitted that the amount of depreciation claimed by the assessee in the year under consideration does not pertain to the assets which were purchased by applying the income in terms of section 11 of the Act. A detailed working has been placed on record to buttress such a contention. In view of the fact that the Assessing Officer has proceeded on the basis of provision as applicable without examining the assessee’s contention about the non-purchase of assets from application of income u/s 11 of the Act, I am of the considered opinion that it would be in the fitness of things if the impugned order is set-aside and the matter is restored to the file of the Assessing Officer. I accordingly order and direct him to decide the issue afresh as

In the result, the appeal of the assessee is allowed for statistical purposes.