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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & Ms. SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JUDICIAL MEMBER :
This appeal is filed by Revenue against the order dated 09.03.2020 passed by the CIT(A)-9, Ahmedabad for the Assessment Year 2016-17.
The Revenue has raised the following grounds of appeal :-
“1. The Ld. CIT(A) has erred in the law and on facts in allowing the benefit of exemptions u/s.11 without considering the fact that the assessee has violated the provisions of section 11(5) and AO has correctly invoked the provisions of section 13(1)(d) of the Act.
2. The Id. CIT(A) has erred in law and facts in allowing the claim of exemption without appreciating the factual findings of the Assessing Officer.
3. The Id. CIT(A) has erred in law and facts in holding that advances given are for furtherance of objects of trust and cannot be treated as investment without appreciating the factual findings of the Assessing Officer.
Page 2 of 4 4. The Id. CIT(A) has erred in law and facts in holding that gold purchased are furtherance of objects of trust and cannot be treated as investment without appreciating the factual findings of the Assessing Officer.
The Id. CIT(A) has erred in law and facts in holding that contract expenses claimed are for furtherance of objects of trust and are therefore allowable without appreciating the factual findings of the Assessing Officer
6. The Id. CIT(A) has erred in law and facts in holding that assessee is eligible for claim of depreciation without appreciating the factual findings of the Assessing Officer.
7. On the facts and circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals) ought to have upheld the order of the Assessing Officer.
8. It is, therefore, prayed that the order of the Ld. Commissioner of Income- tax (Appeals) may be set aside and that of the Assessing Officer be restored.”
The assessee Trust is running educational Institutes such as Secondary and Higher Secondary School, Colleges of various Trade. The Trust is registered under Section 12AA of the Income Tax Act, 1961 on 27.07.2007. The Trust was also granted approval under Section 80G(5) of the Act dated 26.05.2008. The assessee trust filed its return of income on 17.10.2016 declaring total income at Rs. Nil. During the assessment proceedings, the Assessing Officer observed that the assessee claimed depreciation of Rs.1,85,00,339/- as application of money. The assessee was called for details for which the assessee replied that none of any assets being capital expenditure on which depreciation of Rs.1,85,00,339/- have been claimed in ITR and have been claimed as application of income in the year under scrutiny or in any other previous year and, therefore, the depreciation is allowable. The Assessing Officer observed that the contention of the assessee is not acceptable as Section 11(6) of the Act clearly says that depreciation claimed in respect of the asset acquired which has been claimed as an application of income in the same or any other previous year. The assessee simply said that they have not claimed capital expenditure as an application of income in the year under scrutiny or any other previous year and not filed any details with supporting documents for the previous year where the assets have been acquired and whether the same was claimed as capital expenditure. Thus, in absence of details, the Assessing officer made addition of Rs.1,85,00,339/-. The Assessing
Page 3 of 4 Officer further held that the assessee has clearly violated the provisions of Section 11(5) of the Act and thus looses the right to claim exemption under section 11 of the Act in view of Section 13(1)(d) of the Act and thus disallowed exemption claimed by the assessees under Section 11 of the Act.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee.
5. The ld. DR submitted that the CIT(A) erred in allowing the benefit of exemption under Section 11 without considering the fact that the assessee has violated the provisions of Section 11(5). The Ld. DR further submitted that the Assessing Officer has correctly invoked the provisions of Section 13(1)(d) of the Act. The Ld. DR submitted that the CIT(A) has erred in holding that the assessee is eligible for claim of depreciation without taking cognizance of the findings of the Assessing Officer that no details related to previous year including ad audited report, computation of income, balance sheet and the details of assets acquired by the assessee at the time of assessment proceedings. The Ld. DR further submitted that the CIT(A) has simply relied upon the earlier assessment order for A.Y. 2014-15 passed by the CIT(A) but no separate finding has been given as to whether the assessee has acquired assets during the previous year and whether the capital expenditures were claimed during the previous year.
The Ld. AR relied upon the order of CIT(A). The Ld. AR further submitted that computation of total income for the A.Y. 2016-17 till 2011-12 were before us but from the perusal of the records it appears that the details which were supposed to be given before the Assessing Officer were not in complete set. The Ld. AR submitted that the same may be taken into consideration.
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the observations of the Assessing Officer clearly set out that the details of previous year related to acquisition of assets and claim of capital expenditure during that year were not before the Assessing Officer during the assessment proceedings. The CIT(A) has also not taken cognizance of the same.
Page 4 of 4 From the perusal of the records it appears that there are certain details which need to be verified. Therefore, we remit back the issues to the file of the Assessing Officer by taking cognizance of all the previous assessment year’s records in respect of acquisition of acquiring of assets and claim of capital expenditure and if it is in order as required by the provisions of Income Tax Act, the same may be granted to the assessee. Needless to say assessee be given opportunity of hearing by following principles of natural justice. Appeal of the Revenue is, therefore, partly allowed for statistical purposes.
In the result, appeal filed by the Revenue is partly allowed for statistical purposes.
Order pronounced in the open Court on this 8th day of August, 2022.