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Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the assessee against the order of CIT(A)- 1, Mumbai dated 16/08/2017 for A.Y.2012-13 in the matter of order passed u/s.143(3) of the IT Act 1961.
In this appeal, assessee is aggrieved for confirming the disallowance of deduction claimed by assessee of Rs.13,01,154/- u/s.24 in respect of income from House Property.
Rival contentions have been heard and record perused.
Facts in brief are that the assessee is a trust registered with DIT (E), Mumbai u/s. 12A under Registration No. TR/3243 and with Charity Commissioner, Mumbai vide Registration No. The assessee filed its M/s. Pallonji Shapoorji Charity Trust return of income on 28.9.2012 along with the Income & Expenditure Account, Balance Sheet and Audit Report in Form 10B declaring total income at Rs.Nil. However, the A.O completed the assessment vide order dated 16.3.2015 u/s, 143(3) of the I.T. Act, 1961 disallowing assessee’s claim of deduction u/s.24 in respect of income from house property. The facts of the case are that as per the Income & Expenditure Account, the assessee has received rent income of Rs.49,10,175/- and in the computation of income the assessee has shown rent income of Rs.30,36,025/- after claiming Municipal taxes of Rs.572996/- and deduction u/s.24(a) of the I.T. Act @ 30% of Rs. 13,01,154/-.
As per the computation of income so filed by the assessee, the Total Income of the Trust was shown at Rs. 70,38,734/-, 85% of which was worked out at Rs.59,82,924/-. As against this, the assessee claimed to have spent Rs. 57,15,790/- for the object of the trust, leaving a short fall of Rs.2,67,134/- which the assessee claimed would be offset by the amount of TDS claimed by it of Rs.6,72,607/-.
By the impugned order, CIT(A) confirmed the AO’s action for disallowing claim of deduction u/s.24.
The assessee's claim of alternative computation that it had spent 85% of Rs.70,38,734/- which works out to Rs.59,82,924/- and against this the assessee has spent Rs.57,15,790/- was rejected as in the original computation of total income assessee had shown amount spent toward the object of the trust including administrative expenses amounting to M/s. Pallonji Shapoorji Charity Trust Rs.44,04,469/- and the submission now being made was considered by AO an afterthought.
Against the above order of CIT(A), assessee is in further appeal before me.
I have considered rival contentions and carefully gone through the orders of the authorities below and found from record that AO has disallowed assessee’s claim of deduction u/s.24 in respect of income from House Property on the plea that assessee is a Trust. Income of the Trust is to be computed commercially, keeping in view the provisions of the Act, The Hon’ble Punjab and Haryana High Court in the case of Tiny Tots Education Society 330 ITR 21 held that assessee is entitled to claim depreciation even if entire amount of assets have been shown as utilization of funds. Jurisdictional High Court in case of Institute of Banking Personnel Selection has also held that claim of depreciation on fixed asset has to be allowed even if entire amount was shown as utilization of funds while computing surplus of the assessee’s funds. This decision of the Bombay High Court has been recently affirmed by the Hon’ble Supreme Court. Applying the proposition of law laid down in case of Institute of Banking Personnel Selection, I do not find any merit for the disallowance of claim of deduction u/s.24 in respect of income of assessee-Trust from House property. Accordingly, I direct the AO to allow deduction u/s.24 as claimed by the assessee.
M/s. Pallonji Shapoorji Charity Trust 10. In the result, appeal of assessee is allowed in terms indicated hereinabove.